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Profit growth for the Morning Bid AMERICAS - US
What's important in the U.S. and international markets today by Mike Dolan Editor-at-Large of?Finance and Markets As a stark example of how difficult it is for Big 'Tech to impress the markets, South Korean chip maker SK Hynix fell again on Wednesday morning after a six-fold increase in quarterly profits?missed expectations. This is a warning before the?release of U.S. megacaps earnings later today. The markets will first digest Kevin Warsh's comments and the Federal Reserve Chair's policy announcement as he speaks on the podium today. Below, I'll go into more detail. Check out my midweek column where I discuss hyperscalers' cash burn, the new British Prime Minister's poll surge and whether the Ukraine war and the Iran war could converge. 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. US PROFIT GROWTH MUSHROOMS SK Hynix plunged nearly 10% in the early hours of Wednesday, dragging down the chip-heavy KOSPI by as much as 12,6%. Index pared losses and closed down 6%. It is now at levels seen last in early April. Samsung will also report this week. The tremors in South Korea have created a more tense environment for investors, as they await Microsoft and Meta's earnings after the bell today. Alphabet, Tesla and other companies have raised alarms with their AI capex. Investors will be watching closely for cash burn and leverage. According to LSEG, the 'overall U.S. earning picture is still a ballooning one. Estimates for the annual aggregate S&P500 profit growth through the 2nd quarter are now a whopping 39 percent - which is more than 10 points above estimates made at the beginning of the month. But before we move on to earnings, the Fed's decision is one of the most uncertain in recent years. Deutsche Bank says that the market is split by a one in three chance of an increase in interest rates, which has been priced into futures. This is the highest level of uncertainty the market has seen before a Fed meeting. The Fed's hopes for a more clear picture of the energy markets after this week’s drop in oil prices were dashed overnight when the tension in the Iran conflict broke. The global crude price rose to over $87 per barrel. Washington announced on Tuesday it had carried out strikes in Iraq with Saudi Arabia against groups aligned to Iran, and intercepted Iranian rockets launched at U.S. bases. Chart of the Day Despite a surge in corporate profits and optimism over AI spending by U.S. companies, U.S. consumer sentiment is still relatively low. The Conference Board's consumer confidence index fell to 90.8 in July from 92.2 last month, contrary to expectations of economists. This month's high energy prices played a role, but also the percentage of consumers who viewed jobs as "plentiful". It has fallen to its lowest level since Febuary 2021. Watch today's events * Fed announcement of interest rate (2 p.m. ET) and press conference at 2:30 p.m. * U.S.?corporate earnings Meta, Microsoft * U.S. 2-year floating rate note auction (11:30 ?a.m. EDT) 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 by the author are their own. These opinions do not represent those of News. News is bound by the Trust Principles to maintain integrity, independence and freedom from bias. (By Mike Dolan).
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Valterra profits soar on rising prices as AI drives future platinum demand
?Valterra Platinum, a South African miner, expects that?AI --?and data centres needed to drive it -- will propel demand for Platinum Group Metals (PGM), said CEO Craig Miller on Wednesday. The company had reported a 17 fold increase in its half-year profits. Valterra, world's largest platinum producer in terms of value, has reported headline earnings per shares of 82.02 Rand ($4.9) in the six-month period ending June 30. This is up from 4,73 rand?a year ago, mainly due to an 85% increase in metal prices and an 18% rise in sales volume. Electric vehicles, which do not need to control emissions, are threatening the future of PGMs. The recent massive growth of AI has created a new growth path. AI-DRIVEN DEMAND FOR PGM Valterra believes that there will be a?potential demand for PGM of 10 million ounces per year in industrial applications, jewelry, the growth of Hydrogen as a source of clean energy as well as supporting AI technology. Miller said in an interview that there is a real demand of about 2 million ounces. "We are actively working with a high level of confidence to meet this demand," Miller stated. "AI wasn't necessarily on our radar 24 month ago." What 'we are seeing, however, is that PGM is being used in AI-related activities, and we estimate the demand to be between 200,000 to 400,000 ounces. Miller stated that the demand for PGMs based on AI could increase by as much as five times by 2030. For the fourth consecutive year, global platinum supply is expected to be less than demand, with about 7 million ounces. According to the World Platinum Investment Council, PGMs are a good choice for the AI industry because of their exceptional electrical, thermal, and catalytic qualities. Miller stated that PGMs can also replace about 10% of gold used for electroplating, and other electronic applications. This could create a demand for a further 1 million ounces PGMs per year. Valterra announced that it would pay an interim dividend per share of 57 rand, up from 2 rand, representing a payout ratio of 70%. This represents a return to shareholders of 15.1 billion rand.
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Palm oil prices rise on bargain-buying, and crude oil is rebounding
Malaysian palm futures ended higher on Wednesday. This was due to bargain-buying following a two session decline and a recovery in crude oil prices. The benchmark contract for?October?delivery at the Bursa Malaysia Derivatives Exchange gained 21 ringgit or 0.45% to 4,663 Ringgit ($1,140.93). It had lost 1.67% over the two previous sessions. Anilkumar bagani, commodity research director at Sunvin Group, explained that crude palm oil futures rose on the back of bargain-buying due to a rebound in prices for energy and some good palm?oil coverage from India. He said that the optimistic increase in palm oil exports from Malaysia this month has cushioned the prices. Exports of Malaysian Palm Oil Products for the period July 1-25 increased between 8.1% to 15.9%, according to cargo surveyors. Bagani said that the lack of Indonesian B50 biodiesel allocations and higher production estimates for July 1-20 capped gains. Oil prices rose more than 3% after tensions escalated in the Middle East following U.S., Saudi and Iranian strikes on U.S. forces and intercepted Iranian missile attacks. Palm oil is more appealing as a biodiesel feedstock because crude oil futures are stronger. Dalian's palm oil contract increased by 0.64%, while the most active soyoil contract dropped by 0.23%. Prices of soyoil on the Chicago Board of Trade rose by 0.04%. As it competes to gain a share in the global vegetable oil market, palm oil closely tracks the price fluctuations of rival edible oils. The ringgit (palm's currency) has risen 0.05% in value against the dollar. This makes the commodity slightly more expensive for foreign buyers. The European Union soybean imports, which began in July, were 0.56 million metric tons by July 26. This was down 39% compared to a year ago. Palm oil imports also fell 39%, from 0.13 million tonnes, according to data provided by the European Commission.
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Cenovus increases its annual production forecast on the strength of oil sands performance
Cenovus Energy increased?its production outlook for 2026 on Wednesday.?This was after reporting an increase in quarterly profit, as higher?oil price sands output and record oil prices helped boost earnings. The Canadian oil producer increased its full-year upstream production forecast by 25,000 barrels of oil equivalent per day (boepd) to between ?970,000 and 1.01 million boepd, citing stronger-than-expected performance across ?its oil sands assets and optimized turnaround activity. Cenovus and other integrated oil companies are benefiting from the global fuel market that has been impacted by the Iran War. The war has slowed down supply, pushed up prices, and increased earnings for both production and refinement. The company reported that its total upstream output was 970.400 barrels equivalent per day (boepd), up from 765.900 boepd a?year earlier. This is due to the MEG?Energy?acquisitions and growth projects in Christina Lake, Foster Creek, and Sunrise. Calgary-based MEG Energy's net profit grew to C$2.87 Billion ($2.04 Billion) or C$1.53 a share in the second quarter. This was up from C$851 Million ($603.67?million), 45 Canadian cents a share, one year ago.
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Ukrainian miner reduces operations following Russian attacks on ships
The company stated that the Ukrainian Iron Ore Concentrate Producer, Pivdennyi Mining and Processing Plant, has begun to suspend operations due to the disruption caused by Russian attack on civilian ships heading for Ukraine's Black Sea Ports. The company said it hopes to resume production by August. After intensifying Russian strikes, other companies have also reduced their operations. Last week, shipowners stopped vessel arrivals to Ukraine's Black Sea ports in southern Odesa. The ports are responsible for a large part of Ukraine's grain and ore exports, which are the largest source of foreign currency and one of its biggest exports. The company issued a press release stating that "Pivdennyi Mining and Processing Plant" has started the process of temporarily reducing the?work and suspending production. According to Metinvest's Annual Report, the plant was owned by Metinvest in part and produced?nearly 11000 metric tons iron ore last year. BUILDUP IRON ORE The company stated that it could not store the production of several shiploads intended for export. It was forced to temporarily stop operations. Ferrexpo, a Ukrainian iron ore producer that manufactures iron pellets, announced on Tuesday that it does not expect to have the ability to?load ships via the Black Sea route in the near future. Geneva-based Allseeds, a producer of vegetable?oil, halted operations last week in the Odesa area. Ukraine's largest grain exporter Kernel Holding also suspended operations earlier this month at Chornomorsk port on the Black Sea. Moscow claims it targets port infrastructure and vessels that support Ukrainian military. Ukraine has increased its attacks on Russian vessels, most of which are carrying fuel, in the Sea of Azov as well as?the Black Sea to isolate Russia's occupied Crimea and undermine Moscow’s revenue sources. Five industry sources said on Tuesday that three Russian Black Sea grain terminals had restricted truck intake. (Reporting and editing by Barbara Lewis; Anna Pruchnicka)
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France and Spain battle to contain wildfires when temperatures soar once again
The temperatures were expected to rise again in France and Spain on Wednesday, in the fourth heatwave of summer. This will increase the risk of wildfires, which have already forced people to evacuate in large numbers, burned through forests, and killed wildlife. Weather agency AEMET in Spain said temperatures 'were expected to hit 40 degrees Celsius on Wednesday, 104 degrees Fahrenheit, at least six regions were on orange alert. This is the second highest level. Meteo France predicts that temperatures in France's southwest, which has been devastated by fires, will rise from 33 C to 42 C. Dry winds in the morning from the southwest and in the afternoon from the west are likely to fan the flames. French firefighters managed to keep a major fire west of Bordeaux under control overnight, but officials warned that the blaze was not yet out. Firefighter Commander Matthieu Jomain said to reporters that "as we speak the situation is stable, but the fire still is not under control." "We are, of course, vigilant today, given the forecasted weather conditions with an increase in temperatures and wind speed in the afternoon." Fire kills deer in Spanish forest The heatwaves in Europe have been unprecedented this year. Climate change caused by humans is causing the heat to increase and the droughts to worsen, allowing wildfires spread more quickly. Heatwaves that are more frequent and intense cause thousands of deaths in excess and disrupt?everyday living, from slowing down road and rail traffic to affecting river shipping. Drone footage from El Tiemblo in Spain's Avila Province, near Madrid, shows charred carcasses of deer in a forest that has been reduced to ashes. Cintia, a Madrid resident who goes by Cintia, was horrified at the scene she saw in El Tiemblo. She has visited this place many times. "We love the wildlife, everything around us. We used to feed the animals, because they are from here. "They belong to this country," she said. "And look at where it is now." VILLAGERS TRY PROTECTING THEIR HOMES Forests have been affected in a wide range of ways. Wildfires in the Landes region west of Bordeaux have destroyed 42,000 hectares (104, 000 acres) of pine trees. About 220,000 people were evacuated, including tourists and locals, because the fire threatened Cap Ferret Peninsula on the Atlantic Coast, which is only accessible via one road. On specially chartered ferries, hundreds of people left. The flames were as close as 9 miles (15 km) away from the Bordeaux metropolitan area. Several companies in the suburbs closed their doors to prevent the fires spreading. Volunteers in Lanton, a village also in the southwest of France, ravaged by wildfires have tried to protect their community with buckets of water. It's really hard because we have few resources. "We try to help people in any way we can with the little resources we have," said 29-year-old local pastry chef Jonathan Segalas Talous on Tuesday. "We want to stay here. We've been living here for many years. We will do everything in our power to help. "We help." Meteo France stated that the danger level in southwest France is likely to drop from Thursday due to thunderstorms, cooler temperatures, and higher humidity. FIRE IN CASTELLON RAGES FOR FIFTH DATE Authorities in Spain said that the situation in central provinces Avila and Madrid had improved, but the fire in eastern Castellon was still out of control, despite having burned over 10,000 hectares due to weather conditions. Castellon residents who were evacuated are still unable return to their homes. As the fire entered its fifth day, regional authorities estimated that the perimeter of fire was 75.5 km. Madrid's emergency services reported on?X, that the wildfire had not spread over night. Firefighting crews "kept trying to consolidate the perimeter of the fire and extinguish any remaining hot spots" to prevent it from re-igniting. Fernando Grande-Marlaska, the Interior Minister, said that evacuees were returning to their homes in 15 towns of Madrid and Avila. (Additional reporting from Leonardo Benassatto, Yves Herman, Emma Pinedo and David Latona in Madrid, Inti, Kate Abnett, and Sudip, Kar-Gupta, in Brussels; Janis Laizans, in Bordeaux; Writing and editing by Alison Williams; Ingrid Melander)
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Sources say that Russia will extend the ban on diesel exports but it could be lifted quickly if conditions improve.
Two sources who are familiar with the discussions on Wednesday said that Russia is planning to extend its diesel export ban by one month. However, the restriction could be lifted mid-August, if domestic supply improves. The ban was introduced by Russia from July 8 until July 31, as part of an overall package of measures designed to support the domestic market for fuel after repeated Ukrainian drone strikes on oil refineries caused fuel shortages and price increases. Moscow has already placed restrictions on the export of jet fuel and gasoline. Alexander Novak, the Deputy Prime Minister, said last week that the gasoline export restrictions would be extended to the end of the year. The diesel export ban, however, will be lifted as the market recovers. The ministry of energy declined to comment before a decision by the government on this ban. The ban has caused a global uproar in the energy market, causing shortages and a rise in prices, even for countries that do not buy diesel from Moscow. The ban on Russian diesel imports was a result of domestic?shortages?caused by Ukrainian drone attacks. According to?Kpler?, the average daily loading of diesel and gasoil from Russia was 234,000 barrels between July 1 and 10. This is down from 400,000 barrels in June. In 2025 this will average to about 817,000 barrels. The Russian export ban reduces global diesel supply, forcing regular buyers like Brazil and Turkey to compete against European countries and other importers of U.S. cargoes. Reporting by. Mark Potter (Editing by Mark Potter).
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Sources say that ADNOC, the UAE's oil company, sold crude to Asian refiners at a premium in its seventh tender.
Trade sources reported on Wednesday that Abu Dhabi National Oil Co had sold 12 million barrels of spot crude at a premium to Asian refiners, trading firms and other companies in its most recent tender. The renewed U.S. - Iran hostilities have disrupted the?supplies, and this has sparked an 'impulsive buying spree. Since the fighting between Iran and the United States intensified in the first half of this month, oil?flows have dropped sharply through the Strait of Hormuz. ADNOC uses a shuttle fleet to move crude oil out of the Gulf of Oman and onto other tankers, despite exports slowing this month. Asian refiners are increasing their purchases of alternative grades and ADNOC cargoes as shipments have been delayed. Indian Oil Corp bought 2 million barrels Upper Zakum crude for loading in August at a flat rate or $1 more than the Dubai prices of August on a delivered-basis. Sources said that Chinese majors, including?Sinopec’s trading arm Unipec and PetroChina, each bought 2,000,000 barrels of Upper Zakum at a premium of $3 to $4 per barrel over September Dubai quotations. Sources said that the cargoes would be delivered between September and October. Idemitsu Kosan, a Japanese refiner, bought 2,000,000 barrels of Das crude on a free-onboard basis at a price premium of about $1 per barrel over September Dubai prices. Companies rarely comment on the?trades. This was the seventh tender issued by the United Arab Emirates since June began. ADNOC has offered Murban and Upper Zakum crudes for loading between August to October. Uncertainty remained as to whether Murban cargoes had been awarded. A trader claimed that ADNOC wanted a premium around $10 per barrel for the grade. ADNOC has now sold more than 86,000,000 barrels of crude oil through seven tenders. According to Kpler data, before the war the UAE exported 103 and?95 millions barrels of crude oil for January and February, respectively. ADNOC, according to a trader, has asked South Korean buyers for better bids before Wednesday afternoon in order to finalize the sales.
Aluminium and copper rise on Gulf war, but copper falls ahead of Fed rate announcement
Copper fell on Wednesday, as traders remained cautious ahead of the Federal Reserve's interest rate announcement later that day. They also looked for signs of an easing of supply constraints in China, the world's largest consumer. Aluminium rose due to renewed fighting in Middle East.
Benchmark three-month Copper on the London Metal Exchange fell 0.4% to $13,631 per metric ton at 1002 GMT. However, it held above the moving average of 50 days, which provided support at $13,576.
Investors remained on the sidelines as the Fed made its decision. The markets are pricing in roughly 30% of a 25 basis-point increase.
The strong dollar makes metals priced in dollars more expensive to buyers who use other currencies. Meanwhile, the expectation of rising rates dampens demand for growth-dependent metals.
The 'Asian stock market' extended the sell-off caused by 'concerns about AI valuations. This added further pressure to copper and zinc.
Yangshan Copper Premium
Copper stocks available on the LME
After a heavy cancellation of?contracts earlier in the month, the available stocks are still at their lowest level since January. The premium for the LME cash copper contract over the three-month forward contract is also unchanged.
Aluminium prices rose sharply to $3,176 per ton on the LME as tensions in Middle East escalated, causing concern about metal supply from the Gulf and a rise in oil prices.
Available LME aluminium ?stocks
LME zinc fell 0.1% to $3.572, while lead increased 0.8% to $1.909, and tin and Nickel rose 1.2%, respectively, to $54,180, and $17.175. (Reporting and editing by Barbara Lewis; Additional reporting by Solomon Cefai)
(source: Reuters)