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IMK: Germany's recession risk increases as Iran war raises energy prices
A study from the IMK Institute, seen by?, shows that Germany's risk of slipping into a?recession is now much higher due to?the Iran war. The IMK institute released a study on Thursday that showed the risk of Germany slipping into?recession has increased sharply due to?the Iran war. The Institute for 'Macroeconomics' and Economic Research (IMK), which compiles the monthly business cycle indicators, showed a 33.5% chance of a?recession in the second quarter. This is up from 11.6% when the IMK started collecting the data at the beginning of March. For the first time since October, the indicator has shifted from "yellow green" - which indicates moderate growth - to "yellow red", reflecting increased?economic uncertainties. On Wednesday, Germany's Economy?Ministry cut its growth projections for 2026-2027 and increased its inflation forecasts. IMK stated that the worsening of the outlook was due to deteriorating financial markets and sentiment indicators. These include higher corporate credit risks premiums, increased volatility on the stock market, and changes in interest rates, which suggest investors expect a 'rate tightening' by the European Central Bank. IMK reported that the?business climate of German companies and their export expectations has also deteriorated partly due to the?hit the Iran war is having on the global?economy. Thomas Theobald, a researcher at the IMK, said that U.S. Israeli attacks against?Iran have increased the likelihood of production decreases, particularly in Germany's high-energy industries. (Reporting and writing by Klaus Lauer; Editing by Madeline Chambers).
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The biggest risk to your investment right now is ROI. Risk aversion: McGeever
Investors could be forgiven if they hunkered down in a world of increased uncertainty and minimized their exposure to the proliferating risks. Paradoxically, risk aversion may actually be the greatest risk. The 'largest energy shock since the 1970s is now entering its third month. It's stifling global growth, inducing inflation and confusing policymakers. Investors were still trying to understand the new world order, which was marked by deglobalization, dollarisation and trade wars, before the Iran War began on February 28. These are all good reasons to adopt a defensive approach and reduce exposure to "risk assets" like equities. No. Money does indeed speak. Specifically, profit. The artificial intelligence boom continues to drive U.S. company earnings. This narrative has many holes, such as the unsustainable capex spree and the high sector concentration. The fear of missing out, or "FOMO", continues to be more important than anything else. Investors who hold the line are rewarded. Since the start of the war, safe havens such as gold, U.S. Treasuries and the Swiss Franc have depreciated while Nasdaq, S&P 500 and other traditional assets have reached new highs. Since February 28, the Nasdaq has risen 9%. Investors seeking cover have found that they are not covered. Wall Street is not the only market that has risen. Other markets around the globe have also risen -- Japan's Nikkei and South Korea's KOSPI reached new highs this week. BlackRock, with its $14 trillion in assets under management, went overweight U.S. stocks last week. JPMorgan's equity analysts upgraded their S&P year-end price forecast from 7,200 points to 7,600, which is a 7% increase from current levels. The AI outlook led to an upward revision of their earnings per-share forecast to $330 – a figure that is well above the LSEG consensus estimate of $315. They believe that if a permanent ceasefire is achieved in the Middle East, the S&P 500 may reach 8000. The outlook is either excellent or very good. No Reward for Underperformance Standing on the sidelines has real costs. The U.S. remains the world's most dynamic economy - it is home to the most innovative, profitable companies and the most liquid, efficient and effective markets. The market cap of U.S. shares is over 70% of the world's shares, and U.S. stock prices have been higher than world stock prices for 24 years. Brad Setser, global capital flows specialist at the Council on Foreign Relations, says that no one has ever been rewarded for selling U.S. stocks. There is a deep reluctance among investors to underweight the U.S., and thus risk underperformance. This is similar to the narrative of "U.S. exceptionalism" that became popular in 2024. Investors can't afford to not have a large exposure to U.S. equities, particularly tech. This thesis was questioned in the past due to President Donald Trump's unorthodox and controversial policy. However, the overwhelming dominance of U.S. Hyperscalers has quelled any concerns about the current administration. Investors may be concerned about the direction U.S. foreign or fiscal policy is taking, but selling America is too risky. RUN OUT OF STEAM? The current Wall Street rally may not last forever. S&P 500 has just experienced its third consecutive week of gains greater than 3%. Jefferies analysts point out that this only happened twice over the last 75 years, in August 1982 and May 2020. Trading volume for "call" contracts - which are derivatives contracts?effectively bets on future price increases - is at historically high levels, particularly in the tech sector. There is very little room for error with this hyper-bullishness. There are other options. Investors who want to be exposed to the AI boom and?tech explosion have options in Asia. They can choose from companies like SK Hynix, Samsung, or Taiwan's TSMC. Several European firms will also benefit from the splurge in defense and tech spending that is expected in the future. Diversifying on margins is not necessarily a performance hit for investors. The big three U.S. indexes are recovering strongly from the lows they reached in March due to the Iran war, but Japanese stocks and the benchmark MSCI Asia ex Japan as well as MSCI emerging markets indices performed better so far this year. They don't have the same size or liquidity as Wall Street. In the U.S. a combination of loose financial conditions and strong earnings as well as ample liquidity continue to reduce volatility. This, in turn should attract more capital. Investors are prompted to reduce their risk exposure and leverage when volatility increases. Risk appetite can remain relatively buoyant when volatility is contained. Few can afford the risk of being cautious at this time. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. 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Dangote offers joint refinery to Kenya, Tanzania, and neighbours
William Ruto, the Kenyan President, said that East African countries were discussing plans for a joint refinery in?Tanzania’s port of Tanga modeled after Nigeria’s Dangote Plant. East Africa imports all of its refined petroleum, mainly in the Middle East. This leaves the region susceptible to disruptions of supply and price spikes, as was seen with the fallout from the Iran conflict. Ruto said at a Nairobi conference on infrastructure financing that "we're going have a shared refinery in Tanga, which will benefit us all, because this refinery will take the oil coming from DRC, the oil coming from Kenya, the oil flowing from South Sudan and the oil flowing from Uganda." Africa's richest man Aliko Dangote, who also ?attended the conference, said he ?could replicate his 650,000-barrel-per-day Nigerian refinery in East Africa, provided governments in the region supported the initiative. Dangote stated, "My commitment is to lead the way and ensure that the refinery is built in the next four or 5 years if we can agree with three or four governments about it." Uganda has announced plans to build a refinery. It hopes to begin commercial crude oil production in this year. ?In 2024, it announced a deal with United Arab Emirates-based Alpha MBM Investments to develop a 60,000-barrel-per-day ?plant. Dangote said that he also planned to set up?about twenty fertilizer blending factories across Africa by the year 2028, to meet most of Africa's needs. Dangote, when asked about the planned listing of his Nigerian refinery said that African investors should take part, adding, "All of Africa should be investing." I will pay dividends in US dollars. Reporting by Duncan Miriri, Writing by Elias Biryabarema; Editing by Bate Fenton and Susan Fenton
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Bloomberg News reported that Anglo American had at least three bidders for its Australian coal business.
Bloomberg News reported that Anglo American had at least three potential buyers for its Australian steelmaking coal business, after the deal with Peabody Energy fell through. The report was based on people familiar with this matter. The report said that Stanmore Resources of Australia, Mitsubishi Corp. from Japan, and PT Buma Internasional Grup, based in Indonesia, were among the 'bidders' for the coal assets. Stanmore, Mitsubishi, and Buma International did not "immediately" respond to the request for comment. Bloomberg reports that a deal could be announced in the coming months. Peabody retracted its $3.78billion bid in August for Anglo American’s Australian coal assets, and the London listed miner launched an arbitration against the U.S. based coal miner. Anglo plans to sell off its non-core assets, including mines located in Queensland's Bowen Basin. Anglo, who has agreed to merge Teck Resources and De Beers to create the fifth largest copper producer in the world, is currently selling its nickel assets and struggling De Beers diamonds. It sold its Platinum business in 2025.
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Copper falls from multi-week peak on Middle East insecurity
The copper price fell from a?multi-week peak on Thursday due to the stalled U.S. Iran peace talks, the continued closure?of Strait of Hormuz as well as a stronger dollar. Benchmark three-month Copper on the London Metal Exchange fell 1.4% to $13,247 per metric ton during 'official open-outcry' trading after reaching its highest since February 27, at $13,481.50. No signs of a return to peace talks between Iran and the U.S. have emerged, while Iran has tightened the grip it holds on the Strait of Hormuz. This has sent oil prices over $100 per barrel. Standard Chartered's head of base-metals research, Sudakshina UNNIKRISHNA, said that the LMEX had reached an all-time-high yesterday. The base-metals complex has pulled back on early trading due to the lack of progress in the U.S.Iran ceasefire negotiations and the uncertainty they continue to create. The LMEX Index, which is comprised of six major?base metals that are traded on the exchange has gained 11% this year. The copper price rose in the previous session, along with the equities. It then grew a little more on Thursday morning on the relief of the U.S. extending a ceasefire. Concerns about a sulphuric-acid shortage are increasing, which is pointing out copper supply constraints. China's Customs data revealed that its exports of sulphuric acids to Chile, its largest overseas acid market had dried up by March. This was even before news broke this month that China planned to ban exports in May. The Shanghai Futures Exchange's most active contract for copper closed the dayday trading session up 0.3%, at?102.780 yuan (15,046.33) per ton. This was a slight decline after it had risen as high as 1.7%. Copper prices have been boosted by the strong demand from China, the world's largest metal consumer. However, there are signs that this could be changing. The premium over SHFE price paid to 'buy copper on the spot market After commanding a premium of 115 yuan on April 15, the price has dropped to 5 yuan a ton. Nickel was the only LME material in positive territory, after French miner Eramet announced that it planned to halt production of its Weda Bay Nickel mine in Indonesia by next month. LME nickel rose 0.9% to $18,620 per ton in official activity after reaching its highest level since January 29, at $18,680. LME?aluminum fell 0.7%, to $3.588 per ton. Zinc dropped 0.7%, to $3.447. Lead was down 0.2%, to $1.960.50. Tin was down by 0.1%, to $50,395.
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Zambia's Luanshya Copper Mine will restart in August following a two-decade stoppage
The mines ministry announced on Thursday that Zambia's Luanshya Copper Mine will resume production in August, after more than a decade of idleness. CNMC purchased Luanshya and now holds 80% of the company. Zambia's mining arm ZCCM IH owns 20 percent of the mine. Production had to be halted after severe flooding destroyed infrastructure. According to the Mines Ministry, as of 'March 27, approximately 87.9 millions cubic metres of water have been pumped out of the mine. This has allowed for the development of infrastructure and construction. The ministry announced in a statement that "Luanshya Mine... will resume production at its upper mining in August 2026." The lower mine production is scheduled to begin in 2029, under the ongoing redevelopment by China Luanshya Mine. The 28 Shaft's Redevelopment represents an Investment of Around $710 Million,?covering New Shaft Systems, a Concentrator Plant, and Related Infrastructure, according to the Ministry. It said that more than 75?million had already been invested into the project. CLM is also exploring the possibility of collaborating with ZCCM Investments Holdings to develop mining opportunities within newly acquired areas in the region. Once fully operational, the Luanshya copper mine will?produce approximately 100,000 metric tonnes of copper per year by 2030. This will?boost output for Africa's second-largest producer of copper as it aims to?more than triple its production to 3,000,000 tons by 2031. Reporting by Chris Mfula and Olivia Kumwenda Mtambo, Johannesburg; editing by Joe Bavier
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Gold falls on inflation fears as high oil prices, stronger dollar and concerns about inflation weigh
The gold price?fell? on Thursday as investors tried to gauge the direction of conflict from stalled U.S. Iran talks. As of 1135 GMT, spot gold was down by 0.9%, at $4,696.71 an ounce. U.S. Gold Futures for June Delivery fell 0.8% to $ 4,714.0. The dollar grew, making greenback bullion prices more expensive for holders?other currencies. Meanwhile, benchmark 10-year U.S. Treasury Yields rose to a one-week-high, increasing the opportunity costs?of holding bullion that does not yield. Ole Hansen is the head of commodity strategy for Saxo Bank. He said that gold continues to be influenced by the oil market. Iran has seized two'ships' in the Strait of Hormuz, tightening its grip on this strategic?waterway. This comes after U.S. president Donald Trump announced that he would be halting all attacks indefinitely and there was no sign of a restart of peace talks. The Iranian officials have not confirmed that they agreed to an extension of the ceasefire. They accuse Washington of violating this truce by continuing to blockade Iranian trade via sea. Brent crude oil prices rose to $100 per barrel due to the stagnated peace talks, and both nations' continued restrictions on trade across the Strait. The likelihood of interest rates remaining high is increased by higher crude oil prices. Gold is often viewed as an inflation hedge. However, as rates rise, the appeal of gold diminishes as it offers no return. A poll of economists revealed that the U.S. Federal Reserve is likely to wait at least six more months before reducing?interest rates in this year, as energy shocks caused by war reignite inflation. Hansen continued, "The current consolidation is more of a pause caused by rate uncertainty rather than a structural change. We maintain that gold will 'likely' reach a new?record-high later this year or early in?2027." Spot silver dropped 3.9%, to $74.63 an ounce. Platinum fell 3.2%, to $2,007.98. This is a new low for both metals. Palladium fell 4.8% to $1,470.79. This is a two-week high.
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Israeli strikes kill four people in Gaza, doctors say
Palestinian officials said that Israeli airstrikes on Gaza killed at least 4 Palestinians on Thursday. Local medics confirmed that one person was killed and several others injured in a'strike' in Khan Younis, a town in the southern Gaza Strip. Israel's military claimed it targeted militants who were transporting munitions and posed a danger to Israeli soldiers. Health officials reported that three others, including an?rescue worker were also killed in a separate attack in Maghazi. This is a 'Palestinian Refugee Camp in Deir al Balah, central Gaza. Israel's military did not comment immediately on the strike. Israel has carried out numerous strikes in Gaza since a ceasefire brokered by the U.S. came into effect last October. Israel and Hamas both accuse each other of violating ceasefires. No mechanism exists to enforce the ceasefire. Since the ceasefire began, more than 780 Palestinians and four Israeli soldiers have been killed in Gaza. In Gaza City's Al Shifa Hospital - the largest medical facility in the territory - relatives stood with mourners to bury five people, including three children, killed by an Israeli airstrike against a town in northern Gaza on Wednesday. Mohammed Baalousha said that there was no 'ceasefire', no truce and nothing else. "There is no safety in any area." Israel's military has not made any comments on the attack. Reporting by Nidal Al-Mughrabi from Cairo and Dawoud Ab Alkas from Gaza; editing by Alex Richardson
Traxys CEO: New derivatives could be developed for critical minerals that are niche.
Mark Kristoff is the chief executive officer of commodity trader Traxys. He said that derivative contracts for niche-critical?minerals? including rhenium, could be developed over time, as industrial users seek to find better hedging instruments due to supply concerns and volatility in prices.
Minerals such as rhenium and halfnium, which are not well-known outside of specialist markets, are essential to the aerospace and defence industries, and the energy industry. Prices of essential minerals have already been pushed up by the growing demand and limited supply.
Kristoff says that many so-called minor and strategic metals today are too illiquid to be exchange-traded, but this could change with the growth of demand and maturation of markets.
Kristoff said, "Some of these market?are too small at the moment, but in five years, it could be a completely different conversation," on the sidelines of Financial Times Global Commodities Summit, held in Lausanne, Switzerland.
"Derivatives tools will become increasingly important." He said that the concern about availability, and how to manage volatility and price in many of these products will be driving this.
CRITICAL MASS
It is difficult to invest directly in minor or strategic materials because they are typically by-products of commodities with larger volumes. Rhenium is a copper by-product, while gallium comes from the production of alumina (used to make aluminum).
Kristoff said, "If you can build critical mass for some of these derivatives and products, then any?investors who want to express their views could,"
Kristoff cited the London Metal Exchange's nickel contract, launched in 1979. He said that the contract "didn't?really reflect the reality of nickel?market? for a decade because?of small volumes and the market participants acceptance."
Kristoff stated that the recent attention on critical metals and mineral availability may accelerate this transition.
(source: Reuters)