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Italy warns EU that it could pull out of SAFE Defence Scheme without budget flexibility on energy
Italy may not be able to access the SAFE financing scheme of the European Union for defence if budget rules on energy spending aren't more lenient, said?Prime Minster Giorgia Meloni in a letter sent to EU Commission president Ursula von der Leyen. The Security Action for Europe instrument (SAFE), backed by EU budget, is a joint loan scheme that helps member states reach more ambitious NATO expenditure targets. Meloni escalated her diplomatic efforts with the EU by urging the Commission to give member states the same amount of budget flexibility to reduce the soaring energy costs that is currently permitted for defence expenditures. Meloni, in a letter sent late Sunday to the. It would be very difficult for the Italian government to justify the SAFE program to the public without this political consistency. The "escape clause" allows the European Union to allow countries to exceed their deficit limits, either to increase defence spending or to address advers economic conditions. The budget flexibility for defence spending would last four years, starting in 2025. However, any increase in deficits through 2028 must not be more than 1.5% of the national output each year. If the clause was extended to include energy expenditure, Italy could potentially fund aid measures worth over 30 billion euros (34.90 billion dollars) for firms and families. Rome would have to 'drop its current plans' in order to reduce its budget deficit under the EU ceiling of 3% GDP this year. According to the EU, energy crisis does not justify deviations from budget rules. Last month, Italy warned that it might not be able honour its commitments for boosting defence spending because of the need to combat surging energy costs. Meloni wrote von der Leyen: "We can't justify to our citizens the fact that the EU allows financial flexibility to secure and defend the country in the strictest of terms, but does not protect workers, families and businesses against a new energy crises that could deal a serious blow to the economy."
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Oil prices rise and global stocks fall as bonds falter
The global share market fell on Monday, as new drone attacks in the Gulf pushed oil prices and bonds yields higher. This stoked inflation concerns in a week where the tech bull will be tested with?earnings by Nvidia. The United Arab Emirates reported that a drone attack caused a fire at a nuclear plant. Saudi Arabia also reported intercepting three drones. The Strait of Hormuz, which is vital to the oil and gas industry in the world, remains closed for all but a small amount of shipping. This is because Tehran wants to formalise control of this waterway. George Lagarias is the chief economist of Forvis Mazars. He said, "Markets are currently panicking because they are pricing in the possibility of the Strait of Hormuz remaining closed." Brent crude was up about 1% to $110.50 per barrel. U.S. crude rose 1.2% to $106.72 per barrel. Importantly, September futures rose?above 100 and December reached a contract high. Markets were bracing for prolonged shortages. The G7 finance ministers will meet in Paris to discuss the Strait of Hormuz, and the critical raw materials supplies. Concerns that energy prices will continue to rise and drive inflation hit the global bond markets again on Monday. The yield on U.S. 10 year notes reached a 15-month high of 4.631% after soaring 23 basis points in the past week. The yield on 30-year bonds has reached 5.159%, after a jump of 18 basis points in the last week. The yield on Japan's 10-year bond reached a level not seen since 1996, as the government announced plans to issue new debt in order to "fund" a planned budget increase to help cushion the economic impact of the Iran War. Germany's 10-year yield has reached a level that it has not seen for 15 years. Lagarias of Forvis Mazars stated that "as long as it is not a credit-related event and we do not have any evidence to call it a credit-related event, I'd be surprised if this causes a large rout also in the equity market." It can be an opportunity for some investors who want to withdraw money from the market, but I would be surprised if there was a real correction as a result of the bond volatility. STOCKS SKID The major European markets, Frankfurt, Paris, and London, all fell between 0.5% and 1.1%. Nikkei, the Japanese stock market, fell 1% overnight, after falling 2% from its record highs last week. South Korean stocks increased 0.3% as Samsung Electronics gained nearly 4% following a partial court injunction against a strike. MSCI's broadest Asia-Pacific share index outside Japan fell 0.7%. Chinese blue-chips lost 0.6% as disappointing economic data weighed on the market. Retail sales in China rose 0.2%, when analysts expected growth of 2.0%. Industrial output also increased a slow 4.1%. S&P futures dropped 0.4%, while Nasdaq futures declined 0.2%. AI, RETAIL EARNINGS TO TEST FOR THE BULL RUSH The rising yields increase borrowing costs, and a discount is applied to future earnings of the company. This can affect stock valuations. Earnings from Nvidia, the world's largest company, are due to be released on Wednesday. Expectations for this company are sky-high. Nvidia's shares have risen 36% from a low in March, and the Philadelphia SE Semiconductor Index has soared over 60% amid a voracious demand for semiconductors as tech companies invest massively to create AI-related infrastructure. This week, Walmart and a number of other retailers will also release their results. These will give us an idea about how consumers are coping with the high cost of energy. The greenback has been the most liquid currency in forex markets due to risk aversion. The U.S. also exports energy, which gives it a relative advantage over Europe and most of Asia. The euro remained unchanged at $1.1630, after losing 1.4% the previous week. The pound remained at $1.3353 after a 2.3% drop last week due to political unrest in Britain. The dollar held steady against the yen, at 158.91. Only the threat of Japanese interference prevented another speculative attack on the 160.00 chart. Gold was almost flat on commodity markets at $4,544 per ounce, after attracting little support as a safe-haven or a hedge against inflation risk. (Reporting and editing by Gus Trompiz, Sonali Desai and Wayne Cole)
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Environmental concerns are a challenge for Equinix to Cape Town data centers
The plan of U.S. listed Equinix, to build two data centres in Cape Town, should not be approved unless its full water, power, and environmental impact is fully disclosed, according to an official objection filed with 'city planners. Housing Assembly (HA), a South African social movement that represents more than 20 communities, and UK non profit Foxglove claim the application can't be approved without key information for officials to evaluate the project. Technology firms are racing to increase computing power around the world, but they're facing local opposition as communities worry about rising electricity bills, water stress and pollution. Rosa Curling said that there was not enough information to make a decision about a project this size. There were no details on water usage, emissions, electricity demands, diesel generators or noise. According to the document, this project includes two large data centers in Cape Town that will use a total of up to 160 megawatts of power. However, there are still questions about how backup power generation for the site is going to be handled. Curling stated that the water requirements of the site were also important, given Cape Town's history with water scarcity. Cape Town experienced a severe water shortage in 2017-2018. This is known as 'Day Zero Crisis', where the city shut down most household taps due to dangerously low reservoirs. Saadiyah kwada, an lawyer at Legal Resources Centre, a non-profit organization in Cape Town, said: "There is a rush to build data centres, without properly considering the impacts." Equinix, which according to their website operates a 100% renewable energy site in Johannesburg, declined to comment about the objections lodged by HA 'and Foxglove. King David Golf Club and Equinix, owners of King Air Industrial (the development site on which the data centers are to be built), have 30 days in which to respond. After that, 'the City' has 180 days in which to decide. KAI refused to comment. The City of Cape Town has not responded to any requests for comments. South Africa's Government pledged on Wednesday to increase investment in digital infrastructure including data centers through tax incentives, policy reforms and regulatory barriers. (Editing by Simon Jessop and Kirsten Donovan).
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No one bids on the auction for Russia's stake in UGC, a gold miner.
The Russian state did not auction the seized stake in Uzhuralzoloto, a gold producer, that it had taken last year. A state auction website showed this on Monday. It said no one had bid. Last July, a Russian court decided that the majority of UGC owned by Konstantin Strukov should be confiscated and transferred to state. This was part of an 'overall pattern of nationalisations for Russian companies. The Russian federal property management agency Rosimushchestvo auctioned off Strukov’s assets earlier this month. They valued them at $2.22 billion (?162.02 bn roubles). His former 67.2% share in UGC, one of Russia's 10 largest gold miners, was valued at 140.4 billion roubles. The state auction website announced on Monday that the planned sale failed. The website stated that "the bid was declared invalid as no applications were received by the deadline to submit applications." It wasn't clear if there was a plan for a new auction. Last year, prosecutors moved to seize Strukov's stake after accusing him and "several other" of obtaining their properties "through corruption." Strukov is not in custody and hasn't been charged. The Russian Finance Ministry has put up for auction a number confiscated 'assets, in an attempt to replenish the 'federal treasury. In January, Russia sold one of its largest and modern airports, Moscow’s Domodedovo to a subsidiary of another Moscow Airport, Sheremetyevo for just 66 billion Rubbles. This is only half the price it was originally listed at, 132.3 billion Rubles. $1 = 72,9000 roubles (Reporting and writing by Anastasia Lyrchikova. Editing and proofreading by Mark Trevelyan).
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Estonian spy chief: Putin is faced with'very hard choices' in Ukraine, as sanctions bite
Estonia's chief of foreign intelligence said that Russian President Vladimir Putin is limited in his options for a victory in Ukraine, as his military forces are unable to make significant progress on the battlefield and Western sanctions are eroding his resources. Kaupo Rosin is a leading'spy' on NATO’s eastern flank. He told us that Russia was losing more men in its?fifth full-scale year of war than they were recruiting. A general mobilisation, he said, would be unpopular and could undermine stability. "All these factors are creating a scenario where some people, including those at the highest levels in Russia, understand that they have an enormous problem. In an interview with Tallinn, he stated that it is hard to know what Putin's thoughts are on the matter. However, I believe all of these factors have started to influence his decision making. In recent months, Russian forces have made some of the slowest advances in Ukraine since 2023 - one year after they invaded Ukraine. The economy of Russia, which is worth $3 trillion, contracted by 0.3% during the first quarter. Putin has said that government measures to boost Russia's economy are starting to yield positive results. He has also repeatedly stated that Russian forces will continue to fight until they achieve all of their goals. Rosin stated that the "real, real hurt" of sanctions against the financial sector was the primary reason for the "bad" financial situation in Russia. He also said that punitive measures taken on Russia's crude oil exports are also limiting the country's income. It's a very difficult choice for them right now. In this situation, it's difficult to predict what they will do. Estonia, which has a land border to Russia, is one of the most vocal supporters of Ukraine within NATO and in the European Union. It has also urged its allies repeatedly to increase pressure on Moscow. "My message is to push ahead with (sanctions). He said that now is not the right time to hesitate. No sign of a 'big breakthrough' towards peace Unidentified, another European intelligence chief said that there are clear signs of increasing pressure on Russia but that this has not yet changed Moscow's war calculus. The chief stated that it was difficult to imagine Russia abandoning its goal to take the entire Donbass area. Russia insisted that Ukraine withdraw from eastern Donbas as part of any agreement, but Kyiv rejected this proposal. The Donbas region includes the Russian-occupied Luhansk province and the Donetsk area, parts of which Ukraine was able to defend for years against the Russian offensive. The spy chief said that it did not appear as if Russia was attempting to change its war objectives or if there was going to be a "big breakthrough". The spy chief characterized Russian society as resilient. The official stated that it was "wishful thinking" to think that Russia's leadership is in some way diminishing or Putin has been challenged (domestically )..."). BIG MILITARY AMBITIONS The Estonian spy chief said that Russia would not abandon its goal of subjugating Ukraine as long as Putin was in power. They also predicted they would keep a large military force on the borders of Ukraine even after the war ended. He also said that once the fighting has ended, Moscow will expand its military along NATO's border and "achieve military dominance" from the Arctic to the Black Sea. He said that the Russians' military ambitions were "very, very large" and predicted they would continue to carry out a sabotage campaign in the West, regardless of the danger it poses to civilian lives. Russia has always denied involvement in any sabotage plans or attacks and dismisses these accusations as Western scaremongering. Rosin stated that "Russia views this (such attacks as) something which does not ignite a war." (Editing by Chizu Nomiyama).
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Australian shares fall to a record low of over a month as rising oil prices intensify inflationary concerns
The Australian share market closed Monday at its lowest level in over a month, with mining and gold stocks dragging it down. This was due to a fall in commodity prices. Meanwhile, the stagnation of Middle East peace negotiations boosted crude prices, fueling inflation fears. The benchmark S&P/ASX 200 ended 1.5% lower, at 8,505.30 point, its lowest close since March 31, As commodity prices fell, the number of miners dropped 2.8% to a new low. BHP and Rio Tinto fell between 2.8% to 3.6%. Gold miners fell 4% while real estate dropped about 3%, and financials fell 0.3%. Santos and Woodside Energy both reached a new high of 2.7% after the first oil was produced from the initial phase in Alaska. Oil prices increased after a drone attack set off a fire in a nuclear power station in the United Arab Emirates. This compounded global energy shocks that have caused central banks to reassess their growth and inflation outlooks. The Australian central bank has raised its inflation forecasts, downgraded the outlook of economic growth and increased its main cash rate to 4.35%. The market was already fragile prior to today. Mark Gardner, MPC Markets' founder and chief executive officer, said that the RBA has 'just revised' its inflation forecasts. Bond yields have also risen globally. Now, oil is spiking as a result of the Hormuz crisis, which won't be resolved any time soon. Tuas was the worst performing benchmark, falling as much as 68.7%, to its lowest level since September 2023, after Singapore suspended the review of the merger between Simba Telecom's M1 and Keppel. The benchmark S&P/NZX 50 Index in New Zealand fell 1.6%, to 12,762.92 - its lowest closing since March 30. (Reporting by Anjali Singh in Bengaluru; Editing by Nivedita Bhattacharjee)
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Anglo American sells Australian coal mines up to $3.88 Billion
Anglo American announced on Monday that it would sell its steelmaking mines in Australia for up to 3,88 billion pounds to UK-based Dhilmar. The move is part of Anglo American's strategy to exit the sector and reduce debt, as well as streamline assets, ahead of a planned merger between Teck Resources, Canada, and Anglo American. Anglo, listed in London, is selling the mines located in Queensland's Bowen Basin - the world's leading steel-making coal region - as part of its plan of divesting -or spinning off - non-core assets before completing the merger between Teck Resources and Anglo that will create a heavyweight focused on copper. The company stated that the deal includes $2.3 billion in cash up front and up to $1.58 Billion linked to coal prices. Proceeds will be used to reduce debt. Anglo CEO Duncan Wanblad stated?in a statement that "Through this deal, we will complete?our exit from steelmaking coal." Peabody retracted its $3.78billion bid for Anglo’s Australian coking coal assets last year after the companies couldn't agree on a lower price in the wake of a minefire. Anglo said that it will continue to pursue arbitration against 'Peabody for the failed deal' in parallel with Monday's deal.
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Anglo American sells Australian coal mines up to $3.88 Billion
Anglo American announced on Monday that it would sell its steelmaking mines in Australia for up to?to $3.88billion to UK-based Dhilmar. The move will exit the sector and reduce debt, as well as streamline assets ahead of an upcoming merger with Canada's Teck Resources. London-listed Anglo is selling mines in Queensland’s Bowen Basin - the world’s leading steelmaking coal region - as part of the company's plan to 'divest or spin-off' non-core assets before completing its merger with Teck Resources, which will create a heavyweight copper focused firm. The company stated that the deal includes $2.3 billion in cash upfront and up to 1,58 billion dollars linked to coal price, with a portion of the proceeds going to reduce debt. Anglo CEO Duncan Wanblad said in a?statement that "through this transaction we will complete our exit from steelmaking coal". Peabody retracted its $3.78billion bid for Anglo’s Australian coking coal assets last year after the companies couldn't agree to lower the price in the wake of a minefire. Anglo said that it will continue to pursue arbitration with Peabody in parallel to Monday's deal.
Aluminium gains after a UAE smelter is forced to face lengthy repairs
The price of aluminium rose on Tuesday, and the key spread for the metal on the London Metal Exchange also increased. This is due to the prolonged repairs that a smelter located in the United Arab Emirates has been facing since an Iranian attack late last month.
In official open-outcry trade, the three-month contract for aluminium on London Metal Exchange (LME), gained 1.1% and reached $3,507 per metric ton.
Emirates Global Aluminium announced on Friday that it could take up to one year to fully restore production at its Al Taweelah Smelter. The smelter produced 1.6 millions tons of cast iron?in the year 2025. It entered an emergency shut down after?the attacks of March 28.
In a recent note, Marex analyst Ed Meir stated that it is "a considerable amount of time" to be down. He also added that an outage in Gulf will likely cause the market to fall into a large deficit this year.
The LME Cash Aluminium?contract premium over the three-month Contract
Investors were waiting and watching on the markets as President Donald Trump's deadline for a deal between the U.S. and Iran threatened to escalate the conflict.
LME copper fell 0.1% to $12,344 per ton during official activity due in part to the pressure of rising LME stocks.
Goldman Sachs raised its forecast for a surplus on the global copper market this year from 380,000 to 490,000 tons. Its economists had estimated that higher energy costs could reduce global GDP growth by 0.4 percentage points.
Daily LME data showed that copper stocks in LME-registered?warehouses increased to 378.775 tons on April 2 after 16,125 tonnes of inflows from Asia, Europe, and the U.S.
Zinc, meanwhile, remained unchanged at $1,933 while it gained 1.8% on the LME. Both reached their highest levels since March 11, earlier in the session. Nickel was down 0.5% to $17,000 and tin fell 0.6% to $46,000. (Reporting and editing by Tasimzahid; Polina Devtt)
(source: Reuters)