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The new chip ad is MORNINGBID EUROPE. An AI model Breaking Bad
Gregor Stuart Hunter gives us a look at what the future holds for European and global markets. The AI trade is roaring back Wednesday, as export demand surges throughout?Asia. This has lifted chipmaker stocks to their highest level in a week and pushed the regional benchmark up. MSCI's broadest indice of?Asia-Pacific stocks outside Japan rose by 1.3%, extending gains into a second session. The KOSPI soared up to 6.2% while Japan's Nikkei increased by 1.9%. It's a curious coincidence that the rally of tech hardware names has taken place. The rally in tech hardware names comes at a curious time. But that's not the only reason for concern about Big Tech. S&P 500 futures fell 0.1% during Asian trading, ahead of Alphabet's and Tesla's results. Investors are watching Alphabet closely as questions about delays in a flagship AI product mount. Tesla, meanwhile, is expected to report its first quarter cash burn since more than two years. This could lead to a bumpy week as we approach the weekend. The Middle East conflict is still a major issue, driving oil prices up and causing policymakers to face more challenges. Brent crude is up 1.2% to $92.13 following the Tuesday reverse of two oil tankers that were carrying Saudi crude from Asia towards Asia after threats by Yemen's Iran aligned Houthis. The closure of the Bab el-Mandeb could cause more shipping disruptions in the Middle East. The U.S. Dollar was unchanged at 163.105 yen against the yen after Japanese Finance Minister Satsuki katayama stated on Wednesday that the government is ready to take "decisive actions" in the currency markets, if necessary, but refused to comment?on specific levels of foreign exchange. The Japanese currency fell to its lowest level since 1986 Tuesday. The combination of a battered Japanese yen and rising oil prices has made life difficult for Tokyo policymakers. Japan's imports reached a record-high in June. Exports were also above expectations, thanks to booming demand for AI-related data centers and a weaker currency which continues to boost overseas sales. Early European futures rose?0.1% while German DAX and FTSE futures grew 0.3%. Key developments which could affect markets on Wednesday include: U.S. earnings from Alphabet and Tesla; European earnings from Equinor, UniCredit, Deutsche Boerse and Experian; Economic events in the UK: CPI, PPI and RPI for June. (Reporting Gregor Stuart Hunter, Editing Shri Navaratnam).
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Oil gains from new Mideast supply risk
The oil prices rose on Wednesday, as concerns about a 'further disruption of supply' grew after U.S. troops struck Iranian military targets for the 11th consecutive night. Meanwhile, oil tankers reacted to warnings from the Houthi-backed militia by making U-turns at the Red Sea. Brent crude futures increased $1, or 1.1% to $92.01 per barrel at 0330 GMT. U.S. West Texas Intermediate Crude climbed 82 Cents, or 1.0 %, to $85.16. Gains were made after oil reached a five-week peak on Tuesday, following U.S. strikes against targets in western and southern Iran. Iran also attacked U.S. installations in Bahrain, Kuwait, and Jordan. The U.S. army said that it had begun its "latest strike on Iran" late Tuesday night in the United States or early Wednesday morning in Iran. The U.S. attack came just a few hours after the Kuwaiti military said that its air defences intercepted Iranian drones Wednesday. Constant trading of'strikes' has raised concerns about further disruptions in global energy supplies. Yemeni Houthis, who are Iran-aligned, opened a new front for the Iran War by?threatening vessels carrying Saudi Oil in the Bab el-Mandeb Strait. They also announced a naval blockade? of Saudi Arabia. Since the collapse of the ceasefire agreement between Iran and the United States earlier this month, the Bab el Mandeb 'waterway? at the southern entry to the Red Sea is becoming an increasingly important route for Saudi oil exports. Following a warning by Yemen's Iran aligned Houthi militia, three oil tankers carrying Saudi crude bound for China and India turned around in the Red Sea Tuesday. They headed towards the Suez Canal instead of braving the Yemeni coastline. ING commodity analysts?on Wednesday said that this would force tankers into and out of the Red Sea through the 'Suez Canal. This would add significant time and cost to voyages to Asia. They also noted that 'tensions in Black Sea added to the uncertainty regarding supply. Caspian Pipeline Consortium stopped receiving oil from Kazakhstan on Monday after suspending loadings due to attacks against oil tankers in its Black Sea terminal that were blamed on Ukrainian drones. Ukraine has not made any comments on the attacks. ING said that the longer the suspension continues, the more likely it is that Kazakhstan will have to reduce its upstream production. Market sources reported that data from the American Petroleum Institute revealed that U.S. crude and distillate stocks rose last week while gasoline inventories fell. The data on inventories comes before official figures released by the U.S. Energy Information Administration Wednesday. Reporting by Siddharth Cavale in New York, and Jeslyne Lerh in Singapore. Editing by Lincoln Feast.
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Shanghai copper reaches 7-week high due to supply concerns and strong China demand
Shanghai copper prices rose a week on Wednesday, as supply concerns and a strong?Chinese market boosted the price. London copper fell after reaching a six-week high just a day earlier. As of 0300 GMT, the most traded copper?contract? on the Shanghai Futures Exchange had risen 1.21% to 106,100 Yuan ($15.672.55) per metric ton. It had reached its highest level since June 3, at 106760 yuan, earlier in the day. The benchmark three-month copper price on the London?Metal Exchange fell 0.39%, to $13,831.5 a tonne after reaching a six-week-high on Tuesday. Copper inventories have dropped in LME-registered storage warehouses Warehouses that are SHFE monitored . The Chinese demand is strong, and the market is waiting for any news about possible U.S. metal tariffs. "Traders continue to?deliver metal to the U.S. due to the CME-LME?arbitrage import?ahead of the 'U.S. Craig Lang, Principal Analyst at CRU said that the U.S. would decide whether or not to impose tariffs on refined copper. The Chinese market remained active. The Yangshan Copper Premium Tuesday, the, which measures import demand, reached its highest level since December 2023 at $109 per ton. Lang explained that typhoon-related smelter maintenance and stockpiling are impacting the supply of?copper? cathode. Meanwhile, a tight scrap supply has increased demand for this metal. The Middle East conflict has also pushed up oil prices, and economists polled predicted that the U.S. Federal Reserve will keep interest rates the same for the rest of the year. Copper became more expensive for copper buyers who use other currencies as the dollar strengthened. Aluminium ticked up by 0.14%, while zinc rose?0.17%. Lead was unchanged, while nickel added a?0.18%. Tin was also up?0.02%. Aluminium gained 0.59% on the SHFE. Zinc gained 0.59%. Lead lost 0.91%. Nickel advanced 1.05%. Tin gained 0.76%.
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Chile rains leave 13 dead, 7 missing, authorities say
Authorities?reported on Tuesday that a heavy rainstorm?hit most of Chile, leaving?13 dead and seven people missing. The?government?said they would seek sanctions against electricity distributors if there were prolonged power outages. Storms hit the central part of the country and then moved southwards, causing flooding, road closures, and damage to homes. Alicia Cebrian is the head of Chile’s Senapred 'emergency? office. She said that the rain over the last few days has weakened the waterways, streams and riverbanks. There?is still a danger of rising levels of water in some of these areas. Cebrian said that, in addition, to the deaths, 2281 people were displaced, and 81 homes had been destroyed. 2,761 houses also suffered major damage. 87,000 people are still without electricity. Claudio Alvarado said that the government intends to take disciplinary action against companies involved in electricity distribution for their delays in restoring services. In four different regions, lessons were suspended in a number of schools. The weather has forced some operations to temporarily reduce their activity in the region. Reporting by Fabian Cambero and Editing by Thomas Derpinghaus
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Shares of Australia's Lynas tumble after cost overruns and revenue miss
Lynas Rare Earths, a company based in Australia, warned on Wednesday of an overrun cost at its expansion project for heavy rare earths in Malaysia. The warning came after the company reported fourth-quarter revenues below analyst expectations. Its shares fell to a five-month-low. The cost of the Malaysia project has increased from A$180 to A$294 millions, highlighting the difficulties Western producers face in producing these niche metals. Lynas stated that the next step in the project will be the production of gadolinium early in fiscal year 2028, followed by yttrium early in calendar year 2028, and finally lutetium. The company's shares?fell by as much as 9.1%, to A$14.510. This was their lowest level since February 6, and they were the top laggards on the benchmark S&P/ASX 200 index, which rose 0.1%. Lynas reported its highest quarterly revenue in four years. This was largely due to incentives that helped Western producers of rare Earths, which are metals used for renewable energy and defense. Due to geopolitics, and export restrictions, customers continue to be focused on securing "sustainable" supply chains outside China. The Visible Alpha consensus estimate was around 20% lower than the actual quarterly sales revenue. The lower-than-expected sales result has overshadowed the gains in pricing. The average selling price increased to A$98.2 a kilogram from A$60.2 a kilogram a year ago. Jefferies said that the company reported ore quality problems at its Mt Weld Project in Western Australia, which affected production. Total rare earth oxide production rose to 3,481 metric tons, from 3,212 metric tons, a year ago, but came in 10% below Visible Alpha's consensus estimate.
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Asian stocks continue to rise as US stocks rebound, with chipmakers leading the way
Investors took their cues from a recovery in U.S. stock markets and shrugged off the 'climbing' oil prices, as Houthi rebels threaten to open a new front in the escalating Middle East conflict. South Korea's Kospi index jumped over 6%, while MSCI's broadest Asia-Pacific share index outside Japan gained 1.2%. Japan's Nikkei gained 1.9% while S&P500 e-minis futures were down 0.1%. Brent crude climbed 0.6% to $91.55 per barrel on Tuesday, after two oil tankers transporting Saudi crude from the Middle East to Asia reversed their course in?Red Sea after being threatened by Iran-aligned Houthis of Yemen. Analysts at Westpac wrote in a report that equity markets ignored geopolitical risk and focused instead on the tech sector's?returns. After large losses in the past few days, semiconductor stocks have bounced back. Overnight, S&P 500 shares were up 0.9%. This ended a three-day losing run, and was driven by the rebound in semiconductor stocks after data showed that Korean semiconductor exports nearly tripled in the first weeks of July, and a gauge of Taiwanese orders for exports exceeded estimates. The market will be focused on the earnings of Alphabet. It is under 'heightened investor scrutiny due to the delayed launch?of a key model to its AI ambitions. And Tesla. It is widely expected that it will report its first quarter cash burn since over two years, as its spending for AI and robotics is on a steep rise. Pharmaceuticals are also a focus, after U.S. president Donald Trump announced that all generic drugs imported into the United States would carry a tariff rate of 0% from August 1 for two years. After this period the tariff will increase to 100% for one year and then 200%. The U.S. Dollar Index, which measures the strength of the greenback against six currencies, remained near its one-week high at 101.20. The dollar fell 0.1% against the yen to 163.06 yen after hitting a four-decades high on Tuesday. The jump in oil prices, which reached a five-week peak on Tuesday, had little impact on the bond and currency market ahead of next week's central bank meetings. According to the median forecast in a recent poll of economists, the U.S. Federal Reserve will keep its key rate constant for the remainder of 2026. However, they also said that the chances of a rate increase are high. FedWatch, an online tool from CME Group, showed that while a?hike is likely by December, one of more than?50 basis point by the end of the year is just a coin flip. The yield of the 10-year Treasury Bond was up 0.2 basis points at 4.628%. Gold rose 0.5% to $4,097.67. Bitcoin was up 0.3% to $66,611.73, and ether rose 0.7% to $1936.18. (Reporting and editing by Christopher Cushing; Gregor Stuart Hunter)
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McGeever: 'Stagflation' in the war on Iran is quietly increasing.
A dark cloud of Middle East conflict is once more looming above the financial markets. Geopolitical risks are back on the radar of investors, despite the fact that 'the shock of initial U.S. - Israeli strikes on Iran will not be repeated, barring a shocking twist such as a U.S. invasion on ground. The relief from falling oil and inflation pressures that followed the US-Iran truce struck in April has now evaporated. Investors, however flimsy the ceasefire may have been, took it as an opportunity to re-position themselves for economic growth and to re-expose to risk. Washington and Tehran have escalated their attacks, and now the conflict is spreading throughout the region. The prospects for either side to back down are limited. Escalation seems to be more likely right now than reconciliation. The economic risks are greater in some respects than when the war began five months ago. The oil inventories have been reduced significantly, and the refining capacity has been severely constrained. "Central banks, financial markets and the world economy are once again faced with the negative supply-shock scenario that they hoped to avoid when the US and Iran agreed on the interim agreement in mid-June. Barclays strategists said on Monday that "stagflationary impulses have returned." Wall Street has largely ignored this, focusing on bullish AI and corporate earning narratives. The S&P 500 remains within 2% from its June 2 all-time high, despite chip stocks continuing to be volatile. Credit markets are at their calmest in years, with spreads on high-yield U.S. bonds being the tightest they have been since the Global Financial Crisis. But some markets, such as Treasuries and the dollar, are starting to move. If the conflict continues to escalate, this dynamic could easily spillover into corporate bonds and stocks. RISK PREMIUM RISING Oil has been the most affected market so far. In the last few weeks, the world has been reminded that oil prices must include a "significant risk premium" as long as Iran can continue to block tanker traffic through the Strait of Hormuz. Brent and WTI futures prices have risen by around 30% over the past few weeks. This is a worrying sign for consumers and policymakers alike, as oil has now risen 25% on an annual basis. The average price at the US pump is also above $4 per gallon. This psychological threshold has been reached by gas-guzzling Americans in mid-summer, when "driving" season begins. All of this has reduced the likelihood of a Federal Reserve rate cut in this year. Last week, Fed officials began to sound a louder warning that interest rates may need to rise. Bonds are starting to feel the heat. In recent weeks, yields across the curve have increased as the so-called "term premium" has surged higher. This is essentially what investors want to compensate them for choosing longer-term Treasuries versus short-term debt. The term premium on the 10-year Treasury Note fell to 0.46% by the end of the month, its lowest level in more than a year. Since then, the term premium has risen back towards 0.70%. SUMMER HEAT Trump may be motivated to take any action necessary to end the conflict and bring fuel prices down in time for the November midterm elections. Trump may not be able to control a quick resolution of the conflict, as Iran is unwilling to compromise on its demands. The "glass half-full" perspective is that both parties choose peace, whatever it means, while they can. This could be to avoid bloodshed, or for financial and economic reasons. In this scenario the Strait of Hormuz slowly reopens. Energy markets will normalize and global inflationary forces will cool. Mark Zandi is the chief economist at Moody's Analytics. He is cautiously optimistic that this will happen in the next few weeks, maybe by the end August. The risks are enormous if not. According to our calculations, the oil inventories would be so low by Labor Day that the prices of crude oil will skyrocket and physical shortages will occur around the world. We expect that President Trump and the Iranian regime will reach an agreement by Labor Day, given the potential economic and political damage this could cause. Already, it's been a hot summer. The markets could soon become even more sticky. The opinions here are those expressed by Jamie McGeever who is a columnist at. Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
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Oil prices slightly rise after US announces new strikes against Iran
Early trading on Wednesday saw oil prices rise as concerns about further supply disruptions increased after U.S. forces said they began attacking Iranian military targets for an 11th night in a row and Kuwait reported attacks by Iranian drones. Brent 'crude 'futures increased 0.55% or 50 cents to $91.51 as markets opened on the third day of trading. U.S. West Texas Intermediate Crude rose 0.36% or 30 cents to $84.64 during low volume trades. The oil price settled at its highest level in five weeks on Tuesday, after U.S. forces struck targets in western and southern Iran. Iran also attacked U.S. installations in Kuwait, Jordan, and Bahrain. U.S. forces said they began their latest attacks on Iran either late Tuesday or early Wednesday morning in Iran. The U.S. attack came just a few hours after the Kuwaiti military said that its air defences intercepted?Iranian swarms of drones on Wednesday. Constant?trading? of strikes has raised concerns about further disruptions in global energy supplies. Yemen's Iran-aligned Houthis have opened a new front to the Iran War by threatening to attack vessels carrying Saudi Oil in the Bab el-Mandeb Strait, and announcing a maritime blockade of Saudi Arabia. Bab el-Mandeb, the waterway that runs through the southern entrance of the Red Sea to the Red Sea, has become a more important route for Saudi crude 'exports' as the traffic in the Strait of Hormuz is down sharply since a ceasefire agreement between the United States of America and Iran fell apart earlier this month. Pete Hegseth said that the U.S. war against Iran had cost the country $37.5 billion so far. This is an increase of almost $8 billion from the previous estimate. Market sources reported that data from the American Petroleum Institute showed that U.S. crude oil and distillate inventories increased last week while gasoline stocks fell. The data is released ahead of the official figures that will be released by the U.S. Energy Information Administration Wednesday. (Reporting and editing by Lincoln Feast in New York, Siddharth Cavale in New York.)
Gold reaches two-week highs as Fed outlook and Middle East conflict remain in focus
On Wednesday, gold rose to a two-week peak on technical purchases as investors assessed the escalating conflict in the Middle East and awaited next week's Federal Reserve meeting for hints on interest rate expectations.
Gold spot rose 1.6%, to $4,139.64 an ounce, by 0307 GMT. It had already reached its highest level since 7 July earlier that day. U.S. Gold futures for August delivery rose 1.7% to $4144.20.
Last week, the escalating tensions in Middle East pushed up oil prices and inflation concerns. This boosted expectations for interest rate hikes which led to gold's steepest weekly decline since early June.
"Buyers are looking for a bargain after the recent pullback. Hopes of diplomatic progress between the U.S.A. and Iran also help to drive price movements," said Tim Waterer, chief analyst at KCM Trade.
The Middle East conflict has disrupted shipping in two of the most important energy chokepoints. On Tuesday, three oil tankers transporting Saudi crude to Asia changed course after being threatened by the Houthis from Yemen.
On Monday, a senior Iranian official said that Tehran received a proposal from mediators to implement a 10-day truce in an effort to salvage the June interim ceasefire agreement. Eskandar Mumeni, Iran's interior minister, visited Pakistan mediators and asked Islamabad for continued efforts.
A poll has revealed that the Fed will maintain its 'key interest rate' for the remainder of 2026. However, a majority who responded to a separate question about the likelihood of a hike in this year have now described it as a "high" probability, a change from last month, when most thought the likelihood was "low".
The opportunity cost of holding non-yielding gold increases as interest rates rise for longer periods.
Spot silver, among other metals rose 1.9% to $59.87 an ounce. It had earlier reached its highest level since July 10.
Palladium grew 3%, to $1320.75, while platinum rose 2.4%, to $1667.22. (Reporting and editing by Rashmi aich and Subhranshu sahu in Bengaluru, and Pablo Sinha from Bengaluru.
(source: Reuters)