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El Nino's economic effects on Peru are broader than just the impact of hungry pelicans
Hundreds of hungry Pelicans are flocking into Peruvian ports,?coastal markets and other areas in search of food. This is an increasing visible sign of the strengthening El Nino climate pattern which threatens a number of key sectors of?country?s economy. Scientists claim that warmer ocean temperatures, linked to El Nino, are disrupting marine eco-systems along Peru's Pacific Coast. This is reducing fish stock and driving pelicans into urban areas. Some birds are fed by fishermen and traders but some may not survive. Carlos Zavalaga, a marine biologist, said: "The birds leave their breeding areas and die of lack of food." Climate experts warned that this year could see a strong El Nino or even a super-strong El Nino, which would increase the risk of heatwaves, droughts and floods. Economic concerns are growing. Peru's fisheries industry is concerned that exports may fall short of the projected $5 billion for this year after sales had reached $4.6 billion by 2025. This was according to Alfonso Miranda - former vice minister of fisheries, and chairman of the committee responsible for sustainable management of giant squids in the South Pacific. Miranda stated that there was a great deal of uncertainty as to what could happen. According to El Nino monitors in the country, ENFEN, sea surface temperatures are between 2 and 5 degrees Celsius higher than normal. This has led to commercial species moving into deeper water. The fishing industry's industrial activity fell by 31% during the first five months of this year. Agriculture grew by 0.4%. The Peruvian Congress approved an increase in the budget of $2.8 billion on July 15, to finance infrastructure?works, and to bolster preparations to heavy rains associated with adverse weather conditions. Agro-export sectors claim that these are inadequate. Peru is the third largest copper producer in the world. It also exports a lot of agricultural products, including blueberries. Agriculture exports hit a record of $15.1 billion by 2025, but producers warn that the outlook is deteriorating now that the main growing season has begun. Gabriel Amaro from the Peruvian agriculture producers' association AGAP said that El Nino will cost the sector an extra $1 billion in export revenue, which was forecasted for this year. He said, "We think this El Nino may be the worst for 50 years."
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Malta's capital suffers power cuts as temperatures soar
Malta's capital Valletta lost power on Wednesday, just a day after its prime minister apologized "unconditionally" for the wave of power cuts that swept the country over several days. "I would like to apologize to everyone who was without electricity during the last few hours. This apology is unconditional," Robert Abela, Prime Minister of the Republic of South Africa, said on Tuesday as people reported that they had spent the night without air conditioning or fans. Media reported that the outage affected many businesses and offices including the Prime Minister's Office, as well as various ministerial departments. The media reported that restaurants?had no choice but to throw out food. The power outage on Wednesday briefly interrupted the trial of a businessman charged with association in the 2017 car bombing murder of Daphne Caruana Galizia, a journalist. On the Mediterranean island, temperatures have reached 42 degrees after a heatwave lasting five days. On?Saturday, a July record of 43.3 centigrades was set. Enemalta, the state energy company, said that the power cuts were caused by faults on the distribution network due to extreme temperatures and the'record demand for electricty. "We have done a lot but the challenges are huge." Abela stated that the effects of climate changes are'showing, and temperatures are constantly increasing and lasting longer. The Nationalist Party, the opposition party, demanded compensation from businesses and families for damage. (Reporting and editing by Louise Heavens, Christopher Scicluna)
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Investors watch Middle East conflict as gold climbs to a two-week high
The price of gold climbed to its highest level in two weeks on Wednesday. This was largely due to technical 'buying' and safe-haven demand. Investors were also watching diplomatic efforts to calm the Middle East conflict, while looking forward to the Federal Reserve meeting next week for any clues about the future interest rate outlook. By 1010 GMT the spot gold price had risen 1%, to $4,115.89 an ounce, after hitting its highest level in over a month earlier that day. U.S. Gold futures for August delivered gained 1.1%, to $4120.60. Safe-haven demand is offset by concerns that higher oil costs could fuel inflation and keep interest rates high for longer. He said that the current price rebound is likely to be hampered by volatile energy prices. However, the $4,000 an ounce level still provides strong technical support. Marco Rubio, the U.S. secretary of state, said earlier on Wednesday that Washington was willing to negotiate a solution to the Iran Crisis but that Tehran wasn't serious about talking. Three oil tankers carrying Saudi crude bound for China and India turned back in the Red Sea after receiving threats from Yemeni Houthis who are aligned with Iran. This pushed up oil prices. Gold prices are down from the record highs reached in January after the war stoked inflation fears, and increased the likelihood of higher interest rates for longer. Gold is often seen as a hedge against inflation, but high interest rates can make it less appealing. A poll shows that the 'Fed' is likely to maintain its key interest rate for the remainder of 2026. Markets are pricing in two rate increases by the end March next year. CME FedWatch Tool data shows that traders now expect a 68% probability of an interest rate increase in September. Silver spot rose 1%, to $59.35 an ounce. Platinum gained 1.1%, to $1.646.63, while palladium climbed 1.8%, to $1.305.41.
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MORNING BID AMERICAS-Alphabetting
By Mike Dolan LONDON, JULY 22 - What's important in U.S. and Global Markets Today By Mike Dolan Editor-at-Large for Finance and Markets The oil prices, bond yields, and chip stocks all rose in tandem again over night as the renewed fighting between the U.S.A. and Iran entered day eleven with no end in site. The chip rally in Asia stalled during a volatile session.?Wall Street futures are lower as investors wait for Alphabet's and Tesla's results later today. All that and more will be discussed below. Check out my midweek article on some important market stories not in the news. This week, I focus on the jobs market puzzle. Also, I discuss shifting monetary goals and volatility in single stocks. Listen to the Morning Bid podcast. Subscribe to the Morning Bid daily podcast and hear journalists discussing the latest news in finance and markets seven days a weeks. Alphabetizing Amid the fog and volatility of the market, Japan's currency is back in the red, reaching its lowest level in over 40 years at 163 to the dollar. This latest yen slide may be due to two factors: a recent surge in crude oil prices, which is a major inflationary threat for a country like Japan that imports a lot of oil, and a resumption by the United States of tariff threats. In the second case, it was reported that Japan wants to raise 'dollar financing in order to increase its investment in America under the February trade truce. Only about $2 billion of the $550 billion pledged at the time has been allocated so far. Tokyo traders have been apprehensive about the possibility of an official intervention to help support the yen, after Finance Minister Katayama again warned against it on Wednesday. Chip stocks were again the major movers overnight. The U.S. SOX index rose 5% on the Tuesday after the release of strong early July trade figures. However, it has since given back much of its gains. The news comes just as Alphabet prepares to release its second-quarter results, making it the first of the U.S. Big Tech companies to do so. The bar will be high. Analysis shows that the four AI hyperscalers' capex will exceed their operating cashflow by next year. This is a surprising shift, given that these companies are known for printing money. Tesla will also likely show that cash is being burned again when it releases its earnings today. It is notable that the tech stocks bounced back, however brief it may have been. This was due to the tightening bond markets in the world as a result of crude oil returning to its six-week-high near $95 a barrel. The Pentagon says that there is no sign of a quick resolution to the Iran conflict, which has already cost the U.S. Government more than $37.5billion. Fuel storage for winter has returned to the forefront of the public's mind now that summer's peak is behind us. Goldman Sachs said this week that "if there is not a resolution to the Gulf Conflict soon, crude oil could reach $120/bbl by the fourth quarter." The UK market held steady after the new prime minister, Andy Burnham, said he wouldn't tinker with income-tax thresholds that could have cost government billions. UK inflation also eased to 2.6%. DAY'S CHART Brent crude oil prices rose to $95 per barrel on Tuesday, a six-week peak, amid fears that supply disruptions would continue after U.S. forces hit Iranian military targets the 11th consecutive night. Following a warning by the Iran-aligned Houthi, three oil tankers carrying Saudi crude bound for China and India turned around in the Red Sea to head towards the Suez Canal instead of navigating the Yemeni coastline. A new front in the escalating conflict has opened, causing concern about winter fuel storage. Today's Events to Watch * Earnings of Alphabet, Tesla and other companies, including AT&T, Moody's CSX, Philip Morris Northern Trust, CME ServiceNow, Texas Instruments The U.S. Treasury is selling?20-year Bonds * Chicago Fed June Business Survey, Kansas City Fed Manufacturing Survey Want to receive Morning Bid every morning in your email? Subscribe to the newsletter by clicking here. Follow us on LinkedIn, X and ROI. The opinions expressed here are the author's. These opinions do not represent those of News. News is committed, as part of the Trust Principles to independence, integrity and freedom from bias. (Written by Mike Dolan).
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Marco Rubio warns diplomats not to mention the 'kill switch" in American technology
According to a recent cable, U.S. State Secretary Marco Rubio asked diplomats to fight against the idea of a "kill button" on American technology products. This follows the White House's decision to keep foreigners away from America's advanced AI models. The talking points that were distributed worldwide show how U.S. Diplomats are dealing with the international backlash caused by Trump's attempts to control who and how American AI companies release models. The State Department refused to comment, and the White House didn't respond to a comment request. Anthropic was forced to suspend global access to its most advanced models Mythos and Fable after the Trump administration blocked non-U.S. citizens from using them on June 12, citing national security concerns. Asian tech executives used the "disruption" to promote their own alternatives, while European legislators redoubled calls for digital independence. The fallout from the ban lingers even though it was lifted the following month. The U.S. government's desire to police AI products, and possibly yank them from allies' hands at any moment, was heightened by the June 2 executive orders of?Trump, who asked AI companies to submit their models for 30 days to cybersecurity testing before their release. The episode, according to European legislator Christophe Grudler, showed that the U.S. has a "kill-switch" over vital technologies that it is more than willing to use. Aura Salla of the European People's Party (the largest political group in the European Parliament) said that Europe "cannot continue building its tech stack on access that could be turned off overnight by a foreign government." The State Department cable dated July 16 did not refer to Anthropic or specifically to Trump's executive orders or last month's banning of the company, but provided American diplomats talking points designed for countering arguments that have arisen in their wake. The cable stated that "Kill Switch" is not the requirement of a 30-day test window or the suspension of certain uses prior to releasing a new, highly-potent technology. There is no'magic' button on the government's part. This narrative is exaggerated, and it doesn't capture all the nuanced aspects of U.S. Technology Policy." AMERICAN AI SALE PITCH Rubio’s cable urged diplomats to oppose "so-called "digital sovereignty" initiatives. It defined these as?efforts that restrict American tech companies' access to foreign market, subject them localization requirements, or force them follow local rules such as content moderating. Rubio already told American diplomats earlier this year to oppose similar measures against data sovereignty. The cable discussed also how to counter "AI sovereign" arguments. It instructed American diplomats that American AI products were the best available tools and to describe efforts to build rival AI systems from scratch as a waste time and resources. The cable stated that "American AI firms can build large, autonomous AI infrastructure with secure and robust supplies chains that minimize backdoor risks." They build it. It's yours." Edward Fishman, the director of the Maurice R. Greenberg Center for Geoeconomics, at the Council on Foreign Relations said that he understood the safety concerns which led the U.S. Government to impose first restrictions on Anthropic’s models. These can be used to turbocharge complex hacking activities. Fishman, however, said that Trump's administration's tendency to use coercive economic instruments such as tariffs or sanctions against friends and enemies alike made the State Department pitch difficult to sell. He said that European partners were worried that if they became "ultra-reliant" on U.S. frontier AI models, such as those produced by Anthropic or OpenAI, the U.S. might use this against them in the future. Salla, a European legislator, said that Trump's administration had repeatedly threatened countries such as Denmark, creating an atmosphere of distrust that could not be dispelled by rhetoric. She said, "They haven't shown us any evidence that they are reliable business partners." (Reporting and editing by Deepa Babyington, Raphael Satter)
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Wall St futures fall as caution grows ahead of Big Tech earnings
Investors were cautious as they awaited the first batch Big?Tech earnings that will determine whether Wall Street's AI driven rally still has room to run. After months of gains, which lifted the major indices from their lows in March, momentum has slowed as volatility among heavyweight semiconductor stocks has slowed risk appetite. Investors will be looking for new evidence after the bell that the multi-billion dollar AI investments of these companies are paying off. Alphabet is 'under special scrutiny? after the delay in launching a model that was central to their AI ambitions heightened concerns. Ipek Ozkardeskaya is a senior analyst at Swissquote Bank. She said that if Big Tech, which funnels its free cash into the pockets of chipmakers, shows signs of slowing down the pace of their spending, another selling wave could hit the semiconductor industry. In premarket trading Texas Instruments, which is also scheduled to report after close, fell 1.7%, following broader weakness in semiconductor stocks. Geopolitical risk and the heavy earnings schedule set up markets for a potentially volatile week. The Middle East conflict remained in the spotlight as the Houthi militia of Yemen, backed by Iran, threatened shipping and a wider conflict disrupted the two most important energy chokepoints in the world. U.S. Secretary of State Marco Rubio stated that Washington is still willing to discuss an end to Iran's crisis but Tehran "is not serious" in its talks. The oil price hovered around a six-week high, which complicated the outlook for central banks. According to a median forecast of economists in a recent poll, the Federal Reserve will likely keep interest rates steady through the remainder of 2026. However, respondents indicated that the risk of an increase was still high. CME Group’s FedWatch tool revealed that traders are pricing in a probability of more than 70% that the Fed will leave rates unchanged during?next weeks meeting. At 5:39 am. Dow E-minis fell 45 points or 0.09% and S&P E-minis dropped 22 points or 0.29%. Nasdaq?E -minis fell 208.75 or 0.71%. Super Micro Computer, one of the premarket movers, soared 16.8%. The AI server maker announced that it had received more than $60 billion worth of new orders for its fourth quarter and expects to see a gross margin exceeding its previous forecast. (Reporting and editing by Amanda Cooper, Joyjeet Das, and Ragini Mathur from Bengaluru)
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Gold reaches two-week highs as investors watch Mideast developments
Gold reached a two week high on Wednesday. This was supported by some technical 'buying' and safe-haven demand. Investors were watching developments in the Middle East, while also preparing for the U.S. Federal Reserve Meeting next week to get clues about interest rate outlook. Gold spot rose by 0.9% to $4.112,29 per ounce at 0811 GMT. It had already reached its highest level since the 7th of July earlier in that day. U.S. gold futures for delivery in August gained 1%, to $4116.80. Safe-haven demand, and the hope that diplomatic efforts between the U.S., and Iran, could lead to a reduction of tensions, are reducing concerns that higher oil costs could fuel inflation and keep interest rates high for longer. The current price rebound is likely to?face headwinds due to volatile energy prices, but the $4,000 an ounce level still provides strong technical support. Marco Rubio, the U.S. secretary of state, said earlier on Wednesday that Washington was willing to negotiate a solution to the Iran Crisis but Tehran wasn't serious about talking. Three oil tankers carrying Saudi crude bound for China and India changed course in the Red Sea after receiving threats from Yemeni Houthis who are aligned with Iran. This pushed up oil prices. Gold prices are down from the record highs reached in January, after the war stoked inflation fears and increased the likelihood of longer-term higher interest rates. Gold is often seen as a hedge against inflation, but high interest rates can make it less appealing. A poll showed that the Fed will likely keep its main interest rate steady until the end of 2026. Markets are pricing in two rate increases by the end of March next year. CME FedWatch Tool data shows that traders now expect a 67% probability of an interest rate increase in September. Silver spot rose by 0.7% per ounce to $59.2135, platinum rose 0.8% to 1,642.74, while palladium grew by 1% to $1,294.19.
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Investors focus on US tech earnings as South Korean shares lose early gains
South Korean shares closed slightly higher on Tuesday, after a sharp rise in the early going. However, caution before key U.S. technology earnings and chip earnings underscored the market's reliance on heavyweight chipmakers. The benchmark KOSPI Index settled 0.7% higher, at 6,797.7, after rising 6.2% during early trading. This was largely due to a 9% increase in AI memory chips maker SK Hynix. SK Hynix reversed its course and ended marginally lower, while Samsung Electronics finished slightly higher. The'sharp swings' highlighted the dominance and power of Samsung Electronics, SK Hynix and other companies that together account for more than half of the KOSPI. These companies can have a major impact on the benchmark by leveraging their products and share prices. Wei Li is the head of multi-asset investment at BNP Paribas Securities in China. The performance of an equal-weighted index would be lower because traditional exporters like shipbuilders and autos, as well as?chemicals, have seen limited upside due to a softer global market. The KOSPI surged in early trading, but the 11th sidecar trading ban in 15 sessions in this month was triggered by it. This highlights the increased volatility caused by the heavy concentration of chipmakers, at the heart of the AI boom. Wall Street's overnight rebound set the tone for Wednesday's rally. Market participants, however, remained focused on Alphabet's results and those of chipmakers Intel and Texas Instruments. Jason Lui is the head of APAC equity derivate strategy at BNP Paribas. He said that after the sharp drop in share prices, which was largely due to valuation, there should be a less crowded positioning going into major tech earnings. Lui explained that this will help investors "better assess the growth prospects of companies in a fundamental way." Other notable stocks included Hyundai Motor, Kia?Corp, and Samsung BioLogics. In the week ending Tuesday, foreigners have invested around 2.71 trillion dollars. However, they remain net sellers for the year with more than $100 billion of?outflows. On the onshore settlement platform the won last traded at 1.478 U.S. dollars, up from the previous day's 1,471.
Copper prices rise, but Chinese buyers are wary, and inflation worries arise.
Copper prices rose on Wednesday, after reaching a six-week high the day before due to shortages and falling inventories outside of the U.S. However, gains were capped by resistance from China to higher 'prices and inflation fears.
The benchmark three-month copper price on the London Metal Exchange rose 0.1% to $13,894 per metric tonne by 0930 GMT, after reaching its highest level in over six weeks on February 22 at $13,934.
Alastair Munro is a senior base metals strategist with broker Marex. He said: "That it stalls before $14,000 reminds all of us that China is not a chasing price, but there on dips."
The dollar's rise amid rising crude prices was "some sort of overnight headwind" with rates markets reflecting the inflationary risks.
As hostilities in the Middle East escalated, oil prices reached near six-week highs.
The dollar index has risen?during the last four sessions?, but was slightly lower on Wednesday. Traders weighed the possibility that Japan would intervene to support the weak yen.
The dollar is stronger, making commodities priced in U.S. dollars more expensive to buyers of other currencies.
Due to local shortages, the most traded copper contract at the Shanghai Futures Exchange reached its highest level since June 3, reaching?106.760 yuan.
Craig Lang, principal analyst at CRU, said that "Traders continue to deliver metal to the U.S. because they are incentivized by the CME and LME import arbitrage before the U.S. decides whether or not to impose tariffs on refined copper."
He said that typhoons and smelter maintenance are impacting the supply of copper cathode in China. A tight scrap supply also adds to demand.
Yangshan Copper Premium
Other metals saw a 0.7% increase in LME aluminium to $3179 per ton. Zinc rose by 0.9% to $3585.50; lead increased 0.5% to $1877.50; nickel grew 0.3% to $17.135; and tin climbed 0.4% to $54,100. ($1 = 6.7722 Chinese Yuan) (Reporting and additional reporting by Solomon Cefai, Singapore; Editing Leroy Leo).
(source: Reuters)