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Stocks fall but bond sales slow down
On Wednesday, global bond yields were at their highest level in decades as fears of a swelling sovereign debt drove borrowing costs up and roiled stock markets around the world. U.S. stock futures and European stock futures wiggled around 0.2% lower in the Asia session. Japan's Nikkei dropped 3.3% and South Korea's KOSPI fell nearly 6% as Wall Street's selling of'semiconductor' stocks spilled into Asia. The yield of the U.S. Long Bond has remained stable at around 5.27%, after reaching its highest level in almost 20 years on February 2, 5.3371%. German and French debt were also stable following a sell-off which took German 10-year and 30 year yields to the highest levels since 2011. French 30-year rates have risen by almost 50 basis points in just six months. When bond prices fall, yields rise. This is important because long-end sovereign rates are used as a benchmark to determine mortgage rates and act as an anchor. Sally Auld, chief economist at National Australia Bank, said: "Whether you're in property, equity or infrastructure, it could be a challenge for certain asset classes if there's a significant (bond) sell-off." The rise of Japan's 10-year benchmark sovereign yield to 3% is also a warning for global debt markets, which have relied for years on low Japanese interest rates driving a steady flow of Japanese investments abroad. Brent crude futures are also?parked at $90 per barrel despite no progress in a deal for the opening of the Strait of Hormuz. The debt demand is also stretched by the soaring sales of AI hyperscalers. Bloomberg News reports that Alphabet is the latest to do this, as it reportedly wants A$5 billion ($3.5billion) from a bond sale in Australian dollars. The U.S. Federal Reserve will release minutes of its July meeting, where rates were held. But Chair Kevin Warsh scared the markets by giving few hints about how it might react to persistent inflation. The U.S. will also sell 16 billion dollars of debt with a 20-year maturity. Investors no longer believe that government spending will be brought under control. Nigel Green is CEO of financial advisory deVere group. Markets will continue to test which option governments choose. DOLLAR STEADIES, STOCKS WOBBLE Unitree shares, the world's largest humanoid robot maker, rose 600% in China on their debut. Retail investors bought the listing more than 8, 000 times, while the rest of the stock market followed the global mood. Anthropic shares were sold after the bond sale and reports that Anthropic had a revenue run-rate of $65 billion by July's end, which was behind market expectations. Although the movements were modest, the risk-averse sentiment has helped to support a softer?dollar on currency markets. The Canadian dollar increased a little after U.S. president Donald Trump said that the two countries had agreed to a deal and he would pause imposing a tariff of?50% on Canadian goods for a period of three days. The euro was hovering at $1.1586, and the yen at 159.23 dollars. This is just below 160, a level that investors believe could trigger another round of official intervention. The European and British inflation figures are due on Wednesday, along with the earnings of Lowe's Target and TJX. These will be closely monitored after the softer than expected U.S. Retail Sales data last week. Home Depot surpassed estimates for sales and profits in the second quarter on Tuesday. This was due to strong demand for repairs and maintenance from customers, despite U.S. statistics showing that homebuilding fell sharply in July as a result of rising mortgage rates. Reporting and editing by Shri Navaratnam, Sam Holmes and Tom Westbrook. $1 = 1.4128 Australian Dollars.
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Climate-resilient agriculture gains momentum as Europe bakes
Sam Squier’s 200-acre farm in South?east England, amidst scorched brown fields, stands out as an oasis of lush greenery. Squier’s Aberdeen Angus herd feeds on dense 'pasture' maintained by plantings that have retained water and improved the soil quality. Squier said, "This year's a great example of what you can achieve in a year without rain." He said, "Our vision was improving the soil structure and building resilience within our business to mitigate against both prolonged hot and dry weather periods and prolonged wet weather periods." His cattle, which are genetically modified to produce tender Japanese Wagyu beef, graze a mixture of grasses and deep-rooted herbs, also known as herb leys. The method was inspired by ancient farming practices. It reflects the decades-long effort to introduce climate resilient farming, as governments and regulators around the world sought to reduce supply chain vulnerability. The extreme weather this year has heightened the urgency of the debate about whether climate change is changing the economics. According to interviews conducted for this article with over 25 people involved in the issue, banks and insurance companies, water companies, governments, and major food groups like McDonald's, are all funding a change in farming practices. Financial Losses from Extreme Weather Meteorologists expect to declare Britain’s summer officially ending on August 31 as the hottest ever. Europe has experienced extreme heating this year with five heatwaves, and rainfall far below average. Nearly three quarters of England are officially in drought after its hottest June on record and the driest month of July. Farmers in the UK have warned that the UK's crop of cereals will be the worst ever since records began. Fruit and vegetable producers have also said they expect a reduction in production. This is echoed by warnings across Europe. According to the Energy and Climate Intelligence Unit, the losses to farmers in Europe and Britain due to failed crops during the heatwave in June could be up to EUR2.3bn ($2.7bn). The increased costs of energy and fertilizer due to the Middle East war have already had a knock-on effect on inflation. NUTRIENT-ENHANCING & ENERGY RICH The herbal leys on some Squier's farms, near Chelmsford are still standing over knee-high even after two months of no rain and without irrigation. The herbs and grasses are rich in energy, they help control parasites, reduce medication requirements, and the legumes fix nitrogen into the soil to eliminate the need for artificial fertilizers. They are concentrated on a small area, where they graze the vegetation. The cows move twice daily. The cows create a layer of protection over the soil and their manure helps to return seed back into the ground. This improves the soil's health and increases water retention. Squier hasn't had to purchase winter feed in eight years. He believes that the soil now holds 400,000 litres more water per acre compared to before he started regenerative agriculture. Earthworm numbers increased from 80 million in the first six months to 680 millions after the switch. Big Companies Help Farms Switch Techniques Squier was able to make the switch thanks to grants from the government. He said that without the support, his farm would be unable to survive. Other people also have problems with ownership and rental arrangements, financial restrictions and resistance to changes. As evidence grows that investing in new farming methods is worthwhile, it's becoming more popular to work with companies across different sectors, including banks and insurers, who have an interest in protecting their own interests from extreme weather. Andrew Voysey of the agriculture consultancy Soil Capital said that farms adopting... regenerative techniques consistently outperform more conventional holdings in terms both of yield and profitability during drought stress. He cited an organisational study that showed farms adopting regenerative practices were able to reduce drought-related losses in yield by at least 10% around 85%. In Britain, Lloyds Bank, Affinity water, Severn Trent, and AXA XL have joined forces to create the Food & Nature Fund. Funds are pooled and distributed to farmers for soil health improvement. Ben Makowiecki is the Agriculture Sustainability Director at Lloyds. He said that water companies could reduce their costs by removing farm chemicals in river systems. They would save PS4 ($5) or PS6 for each pound invested in farms. Insurers can also access data on how regenerative farming can help mitigate flood risks. He said that "systemic changes" in the industry cannot be achieved by working individually. Routes to Regen is another scheme, which involves companies such as McCain, McDonald's and UK supermarket Waitrose. It also includes banks like Lloyds, Barclays, and NatWest, and insurers such as Aon and Tokio. Instead of creating a pooled funds, the aim is to offer farmers a variety of options for support. Options include preferential loan terms, technical assistance, incentives from food companies, peer-to-peer learning, and insurance products. A spokesperson stated that after launching the initiative last year with only 100 farmers, the goal is to expand to at least 200 this year and to include six additional counties in addition to the original six. Major Food Groups are Increasingly Involved Jon Banner, global chief-impact officer at McDonald's said that building a resilient food system was bigger than any single company. The company aims to invest at least $1 billion in supply-chain reliability over the next decade. McCain Foods is a Canadian frozen potato company that offers a variety of support programmes to its farmers, including financial assistance, guarantees, incentives, and long-term contracts. Charlie Angelakos, Vice President of Global External Affairs and Sustainability at the company, said that supply concerns were behind its decision to focus on regenerative agriculture. He added: "This is not just a climate-change play for us." We see this as an 'assured supply initiative.' Some have been able to change their lives because of the support they received from the insurance industry. Nestle is the largest food and beverage company in the world by market capitalisation. Insurers have offered lower insurance fees against natural disasters or yield declines for regenerative farming practices. Nestle's Chief Sustainability Officer, Antonia Wanner said: "That's a new tool. This year, Generali Italia launched a pilot project involving 500 farms. The program links sustainable farming practices with 'higher indemnity limitations for climate-related incidents. Future phases could include lower premiums. The British farming officials could not say how many farms use regenerative technologies because it means different things to different people. Andy Gray is also an English farmer who has switched. He pointed a thermometer at two areas of his farm on one of the hottest days of the summer. Under a clover cover crop, the soil temperature registered at 32 degrees Celsius. He said that on a nearby bare spot, the temperature reached 51 C (123.8 F), which is a temperature high enough to kill most of the soil biology plants need. Gray, a farmer in Devon, a county located in the southwest, said, "If I maintain soil moisture for two weeks before the drought begins, that will give me an additional fortnight of growing." If it stays green, it will continue to produce.
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Oil extends climb on prolonged Hormuz export uncertainty
The oil price rose for the fourth consecutive day on Wednesday as investors considered conflicting messages from Washington and Tehran about whether the Strait of Hormuz was open to ships. Brent crude futures rose 69 cents or 0.8% to $91.71 at 0415 GMT. U.S. West Texas intermediate crude futures gained 76 cents or 0.9% to $85.70 per barrel. As hopes for peace between Iran and the U.S. faded, both contracts closed Tuesday at their highest level in over three weeks. Donald Trump, the U.S. president, said that no talks are taking place with Iran. He also insisted that the Strait of Hormuz is open. This contradicts Iran's claim that the waterway was closed to shipping. The temporary ceasefire agreement expired Monday, and a senior Iranian official said that the diplomatic impasse was forcing his country to adopt a more "offensive" military posture. However, there were no new reports of?strikes on either side on Tuesday. The shipping risks have increased again, as the attacks by Iran and Houthis'remain predominant in both key chokepoints. This keeps oil prices supported for the near-term," said June Goh senior oil market analyst, Sparta Commodities. She was referring to the Strait of Hormuz, and Bab el-Mandeb strait. Data showed that shipping through Hormuz was slowed on Wednesday as many shipowners avoided this key waterway because of a lack clear signals on its reopening after a blockade. Goh said that Gulf producers were finding alternate export routes for oil to reach the Gulf of Oman. If this is sustainable, it could increase the shut-in production of these two producers. The government announced on Tuesday that the Iraqi cabinet had approved mechanisms to?export Iraqi crude via specialized local and international companies, and through multiple export outlets. According to a press release issued following the cabinet meeting, the contracts?under the new mechanisms will run for three-months starting on September 1. Due to the Middle East conflict, two Chinese shipping giants have stopped sending oil tanks through the Hormuz and Bab el-Mandeb and instead are collecting oil cargoes from outside the Gulf. Market sources cited data from the American Petroleum Institute to say that crude oil and distillate stocks fell in the U.S. last week while gasoline inventories?rose. The U.S. Energy Information Administration will release official inventory numbers at 10:30 am ET (1430 GMT). Analysts polled expect crude stock to have fallen by approximately 600,000 barrels during the week ending August 14. Reporting by Jeslyn Leh in Singapore, and Georgie McCartney in Houston. Editing by SonaliPaul.
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MORNING BID EUROPE-Dancing robots, dumping bonds
Tom Westbrook gives us a look at what the future holds for European and global markets. Long bond yields remained near multi-decade highs, and Unitree, a Chinese humanoid robots company, jumped out of the 'blocks on Wednesday by trading six times above its offer price. The long bond sale of the summer has traders wondering what is really behind it. Is it a better outlook for growth or a growing concern over inflation and runaway government expenditure? The Federal Reserve will release its minutes of the last meeting on Wednesday. Later that day, the U.S. will add to its 'almost 40 trillion dollar debt with an auction of $16 billion in 20-year notes. Investors are focusing on both as they question the Fed's capability to control long-term inflation and demand higher compensation when lending to the U.S. government. China's contrast is striking. Investor demand for hyperscaler bonds has not cooled, despite 10-year'sovereign' futures reaching a new record high on Tuesday. Alphabet bond sale, which is the latest deal, attracted a lot of interest. Unitree's listing is 8,000-fold oversubscribed, which shows the demand for technology exposure. At the same time, more than 300 companies will be attending the World Robot Conference. They are competing to prove that robots are not only impressive feats of agility and strength but are also businesses capable of delivering real returns. In Europe and Britain final inflation figures will be released. In the UK, the number is expected to rise from 2.6% to 2.9%. Earnings at Target, TJX, and Lowe's in the U.S. are also likely going to be a focus following the soft retail sales numbers last week. Key developments on Wednesday that may influence the markets: - Economy: Eurozone inflation and British inflation; - Earnings, Target, TJX and Lowe's; - Policy, Fed minutes, Lagarde's speech; - U.S. debt auction of 20 years (by Tom Westbrook, edited by Shri Navaratnam).
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Indian shares fall on higher crude and Treasury yields
Indian?shares declined on Wednesday as high crude oil prices and rising global bond yields dampened appetite for risk assets worldwide. As of 9:45 a.m. IST, the Nifty '50 fell 0.35%, to?24.070.65, and the BSE Sensex dropped 0.32%, to 76.991.33. In the six previous sessions, the 50-stock index has dropped by 1.7%. 13 of 16 major sectors posted losses. Small-caps and middle-caps both fell by 0.5%. U.S. president Donald Trump said Tuesday that no talks are taking place with Iran. He also insisted that the 'Strait of Hormuz is open, contrary to Iran's claim that the waterway remains closed for?shipping. Brent crude futures rose to $92 a barrel on the back of improving prospects for a peace deal in the Middle East, which has lasted nearly six months. The long-term borrowing costs of the United States to Germany and Japan are also reducing the appeal for emerging-market stocks, as the higher returns on developed-market bonds attract capital and reduce appetite for riskier investments. "Despite a resilient earning season, the markets have remained muted. This reflects the belief that there is not a quick fix to India's dependence on energy. "A renewed spike in crude oil could intensify the stress on markets and the economy," said Gaurav Kulshreshtha. Chief investment officer at Nexedge Capital. Financials with high weights fell by 0.5%. IT index increased by 0.8%, after falling 4% over the last three sessions. Prism Johnson, bucking the trend, gained 8.7%. The building materials company had secured 10-year contracts for coal supply worth?704.9 millions rupees per year from Eastern Coalfields. Indraprastha Gas and Mahanagar Gas both gained 3,1% and 3,8% from the incentives given by the government to city gas distributors in order to "boost domestic connections" of piped cooking gas. Shiprocket, a Temasek-backed ecommerce logistics service?firm, jumped 35 percent in its debut trade after a strong response to the $170 million initial IPO last week. Reporting by Vivek M and Bharathrajeswaran, Editing by Subhranshu Sahu & Mrigank Dhaniwala
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Copper prices cool as large warehouse deposits reduce stock concerns
Prices of copper fell on Wednesday as a large increase in warehouse stocks pushed supply concerns that had supported prices to the background. By 0300 GMT, the benchmark three-month copper contract on the London Metal Exchange was down 0.06% to $13,978 per metric tonne. The Shanghai Futures Exchange's most traded copper contract fell by 1.02%, to 106 880 yuan per ton. Ed Meir, Marex consultant, wrote that copper was "tripped" by a surprise increase in inventories at the LME. The LME data on Tuesday and Monday showed total copper stock The number of large parcels delivered to warehouses increased by nearly 20,000 tonnes. After 2,575 tonnes of re-warranted stock, the proportion of stocks available in the warehouse grew further. Since May, copper stocks have plummeted in LME and SHFE storage warehouses as traders prepared for a possible U.S. tariff against refined copper. Away from the Middle East, markets watched the conflict. On Tuesday, there were no reports of new strikes between the U.S.A. and Iran after a temporary truce agreement expired without a longer-term agreement on Monday. The war has affected industrial metals as well as the global economy, by raising oil prices and increasing interest rate bets. It has also?disrupted' the supply of aluminum from large producers in the area. The CME's FedWatch tool shows that interest rate traders have not changed their expectations for a rate hike, despite the inflationary concerns. On Wednesday, aluminium prices were soft. They fell 0.31% at the LME and by?1.13% at the SHFE. On the expectation of production restarts across the Middle East, wartime price support is fading. Suppliers have also turned to alternate shipping routes in order to avoid disruption. Nickel slipped 0.13% while tin rose 0.15%. (Reporting by Solomon Cefai; Editing by Janane Venkatraman) (Reporting and editing by Janane Vekatraman; Solomon Cefai)
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Gold prices rise as Treasury yields fall; Fed minutes are in focus
Gold rose on Wednesday as Treasury yields fell. Investors are awaiting the minutes of the U.S. Central Bank's July meeting to get new clues about the outlook for monetary policy. Gold futures in the U.S. fell 0.2% to $4410.20, after falling nearly 2.5% on Tuesday. Spot gold rose 0.5% to $4356.55 an ounce at 0327 GMT, following a fall of almost 2% yesterday. U.S. yields fell from their earlier highs, changing directions on Tuesday amid a global bond sale that saw borrowing costs for long-term in major economies rise to?their highest level in decades. Kelvin Wong is a senior analyst at OANDA. He said that the reduced expectations of Federal Reserve interest rates hikes, and growing fiscal budget concerns, are positive factors for gold. Minutes of the Federal Market Committee's July Meeting are due to be released at 1800 GMT. According to the CME FedWatch Tool, traders are pricing in a 64% chance of a Fed hold next month and a 36% probability of a rate increase. After a string of weak U.S. data, bets on a rate hike have decreased. Gold's opportunity cost is reduced by lower interest rates. Lukman Otunuga is the head of FXTM's market research. He said that a sustained break above $4390 would open up gold to $4505. A break below $4300 could reveal $4200 or $4150. The geopolitical front saw U.S. president Donald Trump say on Tuesday there were no talks with Iran, and that 'the Strait of Hormuz is open, contrary to Iran's claim that the crucial waterway was closed for shipping. The oil price has risen for the fourth session in a row. Silver spot fell 0.4%, to $63.03 an ounce. Platinum rose 0.5%, to $1720.10, and palladium remained at $1289.45. TD Securities stated that silver and platinum metals would 'benefit from a supporting macroeconomic?backdrop? in the second half 2027.?An easing of inflation risks, a lower U.S. Dollar and lower carry costs are likely to drive a greater price response than gold. (Reporting and editing by Rashmi aich and Subhranshu sahu in Bengaluru and Sukanya mitra in Bengaluru.
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Bonds selloff slows, but stocks wobble
On Wednesday, global bond yields were at their highest level in decades as fears of a swelling sovereign debt drove borrowing costs up and roiled stock markets around the world. On Tuesday, the yield on the U.S.?bond reached its highest level in almost 20 years, at 5.3371%. It then settled around 5.28% on Wednesday in?Asia. The yields on the 10-year and 30-year 'bonds have reached their highest levels since 2011. The yield on the?French?30-year bond has risen by nearly 50 basis points from June's end, and Japan's formerly zero 10-year bond is now approaching 3%. Investors are worried that policymakers will not act quickly enough to combat inflation as it rises. Investors no longer believe that government spending will be brought under control. Nigel Green is the CEO of deVere Financial Group. The bond market remained steady in the morning Asian trade but inflation remained a concern. Brent crude futures were trading above $90 per barrel with no sign of progress towards a deal to open the Strait of Hormuz for oil tankers. The U.S. Federal Reserve will release minutes of its July meeting, where the central bank left rates on hold. However, Chair Kevin Warsh scared the markets by giving few clues as to how it might react to persistent inflation. The U.S. will also sell 16 billion dollars of debt with a 20-year maturity. MSCI's broadest Asia-Pacific index outside Japan dropped 1.7%, while Japan's Nikkei fell 2.6%. This was in response to overnight tech-driven losses on Wall Street. U.S. stock futures and European stock prices fell by about 0.1%. DOLLAR STEADIES, STOCKS WOBBLE Unitree shares, the world's largest humanoid robot maker, surged by 600% in China on their debut. Retail investors oversubscribed this listing more than 8, 000 times. The Asian technology and semiconductor stock market was under pressure following overnight losses in Wall Street, and reports that Anthropic’s annual revenue run rate topped $65 billion by the end of July. This report had some markets hopeful. Although the moves on currency markets were modest, the risk-averse sentiment has given a little boost to the dollar. The Canadian dollar increased a little after U.S. president Donald Trump stopped imposing a tariff of 50% on Canadian goods, saying that the two countries had reached a deal. The euro was hovering at $1.1576, and the yen at 159.44 dollars. This is just below the 160 mark that investors see as the potential trigger for a new round of intervention. The British inflation data is due on Wednesday, along with the earnings of Lowe's Target and TJX. These will be closely watched after the softer than expected U.S. Retail Sales data last week. Home Depot's second-quarter profit and sales exceeded expectations on Tuesday due to strong demand for repairs and maintenance from customers, even though U.S. homebuilding data shows that it plummeted in July as a result of rising mortgage rates. The debt demand is also being stretched by the soaring sales of AI hyperscalers. Bloomberg News reported that Alphabet, Google parent, was the latest example. It is reportedly looking to raise about?A$5bn ($3.5bn) via an Australian-dollar bonds sale. Jack Chambers, senior rates strategist at ANZ, said that the marginal investor of bonds (long-end, sovereign, and long-term) is becoming more price sensitive in a period where a large amount of debt issuance occurs. ($1 = 1,4128 Australian Dollars) (Reporting and Editing by Shri Navaratnam).
Sources say that the sale of Brazil's CSN Cement unit is still undecided due to price differences.
According to two sources familiar with the situation, the sale of Brazil's CSN's cement unit is still undecided. The final price tag has been a major obstacle to a quick?deal.
CSN, Cementir's parent company, confirmed earlier this month in a regulatory filing it had received bids for the unit, but did not name the bidders. Previous reports had stated that China's Huaxin, a Brazilian Votorantim consortium and Italy's Cementir were the top bidders.
Although sources confirmed that bidders are still in the running, CSN's initial expectations were not met by initial offers.
One of the sources, who requested anonymity due to the private nature of the talks, said that CSN's initial target of 15 billion reais has been reduced to 12 billion reais. The second source confirmed that CSN's original target of 15 billion reais and said that they might accept an offer lower than that. However, they did not specify a new number.
The sale is intended to reduce CSN?debt and raise cash. Morgan Stanley will be advising the deal.
One of the two people added that the market is concerned that CSN may pivot to other debt-management strategies if the bids continue falling short. This would delay the divestment.
Votorantim Cement declined to comment. Huaxin did not respond immediately to requests for comment.
CSN also hired Bradesco BBI to handle the sale of its infrastructure and logistic operations. (Reporting and editing by Aurora Ellis; Luciana Magnalhaes)
(source: Reuters)