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Brent prices rise on Ukraine concerns, WTI is disrupted by CME failure
Brent crude oil futures rose Friday, as geopolitical risk remained elevated due to the prolonged Russia-Ukraine talks. Traders also kept an eye on the outcome from Sunday's OPEC+ gathering for any clues on possible output changes. The exchange operator CME group experienced a system failure that resulted in the freezing of U.S. West Texas Intermediate Crude Futures. The traders said that they were Inform yourself CME informed Globex just before 0300 GMT that trading on all futures and option contracts was suspended due to an issue with cooling at CyrusOne's data centres. Brent oil is traded on the Intercontinental Exchange (ICE). Brent crude futures for the front-month, which expires on Friday, rose by 24 cents or 0.38% to $63.58 per barrel at 0452 GMT. They had risen 21 cents Thursday. The February contract, which is the most active, changed hands for $63.10 - up 23 cents. The price of U.S. West Texas Intermediate Crude froze at $59,08 per barrel, an increase of 43 cents or 0.73%. Due to Thanksgiving in the U.S., there was no settlement Thursday. Prices are expected to fall by a combined total of 4% in the next month, which is the longest loss streak since 2023. This is due to expectations that global supply will increase. Oil prices fell sharply this week on signs that a deal could be near between Ukraine and Russia. However, they have since recovered as the negotiations continue. Brent and WTI will both close the week with gains greater than 1%. While a final agreement between Russia, Ukraine, and the EU could pave way for sanctions on Russian oil producers to be loosened, increasing global supplies, this outcome appears still distant, said Sugandha Sahdeva, founder of SS WealthStreet in New Delhi, a research firm. Vladimir Putin, the Russian president, said that the outline peace proposals that the U.S., Ukraine and other countries discussed could be the basis for future agreements that end the conflict in Ukraine. If not, he added, Russia will continue to fight. Putin said that Steve Witkoff, Trump's special representative to Russia, plans to arrive in Moscow at the beginning of next week. Ukrainian President Volodymyr Zelenskiy announced that Ukrainian and U.S. delegations will meet in this week to develop a formula, which was discussed during talks at Geneva, to bring peace to Kyiv and to provide security guarantees. In a research note, Tony Sycamore, IG Markets' analyst said that after several false dawns participants were reluctant to take aggressive positions until they saw concrete progress -or a breakdown - materialize. Two delegates and a source with knowledge of OPEC+ meetings said that OPEC+ will likely leave oil production levels unchanged on Sunday and agree on a method to measure the maximum production capacity of members. The rise in market bets on the U.S. Federal Reserve cutting interest rates next week, which could boost economic growth and increase energy demand, has also boosted oil prices. The price of oil has also been supported by a drop in the number operating oil rigs in the U.S., which reached a four-year high this week. Reporting by Mohi N. Narayan from New Delhi, and Florence Tan from Singapore. Editing by Kevin Buckland and Lincoln Feast.
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Asian shares finish November with a strong performance, helped by Fed cuts
Asian shares will end a difficult November on a more stable footing as renewed hopes of a U.S. interest rate cut have helped calm valuation fears and Treasuries are rallying for the fourth consecutive month. The U.S. market, which was closed for Thanksgiving overnight, is due to have a shorter session on Friday. This means that activity will be more muted across all major asset classes than usual. The majority of European stocks were higher while currencies were more calm. In Asia, European stock futures rose by 0.1% while FTSE Futures rose by 0.2%. Wall Street futures, however, were affected by the data outage that occurred at CME Group, which affected trading in currencies, futures, and Treasuries. The MSCI broadest Asia-Pacific share index outside Japan fell 0.3% on Friday but still rose 2.7% over the course of the week. This was the first increase in four weeks. It was down 3% for the month. Nikkei, the Japanese stock market index, was not moved much and was heading for a rise of 3,2% per week. It was down 4.3% for the month. South Korean shares fell by 1.5% following the central bank's announcement that it would end the current easing cycle. The index has still gained 1.9% this week. The global equity markets were unusually volatile in November, as fears about the sky-high valuations of tech stocks shook markets. Meanwhile, a U.S. shutdown ended after 43 days. Bitcoin, the risk-barometer, fell 16% in November. Federal Reserve officials are cautious due to the lack of data from the shutdown, but Fed Governor Christopher Waller, and New York Fed president John Williams, have expressed support for a cut in rates next month. This has helped stabilize the sentiment. CME FedWatch shows that Fed funds futures indicate an 85% probability of a rate reduction next month. This is a dramatic change from the 30% chance a week ago. Vincenzo Vedda is the chief investment officer of DWS. He said: "I think we are not quite there yet, if you compare valuations to past bubbles, for instance." "We think that the inflation is generally under control... In general, we expect a decent growth in the coming 12 months... You have a benign climate for risky assets. The Hang Seng Index in Hong Kong fell 0.2%, while the blue chips index in China rose 0.2%. BOJ HIKE IS IN VIEW The data showed that Tokyo's core consumer prices rose by 2.8% from November of last year, which was above the forecasted 2.7% increase. This is just one of a number of data points that has kept the bets on a Bank of Japan rate hike alive. Markets are now pricing in a rate hike as early as next month. As the yen fell and political pressures faded, more BOJ board members have signalled a rate hike. The yen was unchanged at 156.37 to the dollar after rebounding from a 10-month-low of 157.9, which was hit last week. Investors await the Japanese authorities' intervention after weeks of verbal browbeating to stop the currency's steady decline. The dollar's performance on the currency market was stable against its major counterparts, but it was expected to suffer a loss of 0.7% per week, the largest since July. Markets bet on the end of policy easing cycles for both countries. The Aussie is up by 1.1% this week and the Kiwi 1.8%. The minutes of the European Central Bank meeting show that policymakers were also not in a hurry to lower rates. The prospect of Fed policy easing in December boosted the rise in Treasuries. The CME outage affected Treasury futures, but the prices of these contracts were still set to rise for a 4th straight month. The U.S. continued to push for a peace plan in the Ukraine conflict, despite the fact that oil prices were up on Friday. The spot gold price rose 0.6%, to $4,182 an ounce. This brings the monthly gain up to 4.5%. However, they are still a long way from the record high $4,381.
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Orban will meet Putin to discuss energy and Ukraine peace efforts
Hungarian Prime Minster Viktor Orban announced that he will meet Russian President Vladimir Putin on Friday in Moscow to discuss crude oil and gas supplies to Hungary as well as peace efforts in Ukraine. Orban maintained close ties with Moscow despite war in Ukraine. Hungary remains heavily dependent on Russian energy despite European Union attempts to reduce dependence. Orban announced his plans to meet Putin via a Facebook video. He added, "I'm going (to Moscow), to make sure that Hungary's supply of energy is secure for the winter and in 2019." Orban replied, "We cannot avoid it." When asked whether peace efforts in Ukraine will also be on his agenda, Orban responded, "We are unable to avoid that." After Orban made a strong case for relief during an amicable meeting with Donald Trump, the United States granted Hungary an exemption to sanctions in order to use Russian gas and oil. Hungary and the United States also signed a nuclear cooperation pact. The agreement calls for Hungary to purchase U.S. nuclear technology and fuel to store spent fuel in a Russian nuclear plant called Paks I. Rosatom, the Russian nuclear company, is currently building an extension of this plant. This project, originally planned to be completed in 2014, has been significantly delayed. Orban said that he wanted to revive plans of a "peace meeting" between Trump and Putin in Budapest on Ukraine. This plan was put aside this year. Orban, in contrast to many NATO and European Union leaders has maintained cordial relations with Russia whilst questioning the logic behind Western military aid to Kyiv. In a Friday statement, the foreign ministry of Hungary said that Hungary imported more than 7 billion cubic metres of natural gas and 8.5 million tonnes crude oil from Russia in 2018. (Reporting and editing by Clarence Fernandez; Krisztina than)
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The end of a torrid month is tepid for the morning bid in Europe
Ankur Banerjee gives us a look at what the future holds for European and global markets Investors are experiencing a CME Group outage that affects currencies, commodities, and equity futures. This is a welcome addition to what had been a rather tepid trading session. CME Group platforms are very popular with currency traders, even though they can trade on other platforms. The newsroom has been flooded with conflicting comments. Either it's a "nightmare", or everyone should "calm down". If the outage extends into European hours expect more people to be concerned, especially those who are trying to balance their monthly books. Investors are letting go of their worries about an AI bubble. They're more excited by the prospect of a Federal Reserve interest rate reduction next month. The stock market has been generally positive this week, although it is still on track for a decline for the month. Meanwhile, the U.S. Dollar is heading for its worst weekly performance in four months because markets are convinced that a rate reduction is imminent. Investors are unlikely to make major bets on Friday as the U.S. market will be closed on Thanksgiving Day and only have a brief trading session. (An outage could also help). For now, the markets are focused on what Fed will do next. The economic calendar also includes inflation data from France and Germany. Traders are interested to see where prices are heading. CME FedWatch shows that traders have priced an 85% probability of a December cut, compared to 39% one week ago. The dovish tone of some policymakers has shifted the market pricing. Who is to say that it won't be changed if the hawks show up? The following are key developments that may influence the markets on Friday. Data on Germany's imports and exports for October and November, and data on France and Germany's inflation.
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CME Trading halted because of cooling issues at data centres
CME Group, the exchange operator, announced on Friday that it had halted currency, stock futures, and commodity trading due to an issue with cooling in data centres. This has frozen major market benchmarks. CME issued a statement saying that markets were currently suspended due to an issue with cooling at CyrusOne's data centres. Support is working on a solution to the problem in the short term. Clients will be informed of Pre-Open information as soon as it becomes available. CyrusOne has not responded to a comment request immediately. CME's notice stated that the EBS foreign exchange platform was also shut down due to a problem. CME informed traders just before 0300 GMT that the trading of futures and options on Globex was halted. It's a nightmare, said a trader who refused to be identified as he wasn't authorised to talk to the media. CME derivatives serve as benchmarks for markets ranging from commodities to stocks. According to LSEG, prices for the S&P 500, Nasdaq100, and currency pairs on EBS were not updated following 0344 GMT. Tony Sycamore, IG's markets analyst, said: "It has been a slow day in Asia following the Thanksgiving holiday. This hasn't really helped. (Reporting from Ankur Banerjee in Singapore, Florence Tan, and Rae Wee; Editing by Christian Schmollinger & Shri Navaratnam).
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Markets bet on US rate cuts as gold sets for fourth monthly gain
The gold price rose on Friday, and was poised to reach a fourth consecutive monthly increase. This optimism stemmed from investor expectations that the U.S. Federal Reserve will cut interest rates by December. Gold spot rose 0.8%, to $4,189.61 an ounce, by 0303 GMT. It was at its highest level since November 14 and set for a weekly gain of 3%. Bullion will rise by 3.9% this month. U.S. Gold Futures for December Delivery were up 0.5% to $4,221.30 an ounce. Trading conditions look a little thin in terms of liquidity, which is exacerbating certain market movements. Many of the gold price moves are due to people pre-positioning themselves in anticipation of lower interest rates, said KCM Trade's Chief Market Analyst Tim Waterer. According to CME's FedWatch, U.S. rate-futures are pricing in a 87% chance that rates will be cut in December. This compares with 85% the day before and 50% the week prior. The comments made by Fed Governor Christopher Waller and San Francisco Federal Reserve Bank president Mary Daly this week have raised expectations of a rate reduction next month. Kevin Hassett has said the same thing as Donald Trump. He is a front-runner to succeed Jerome Powell in his role as Fed chair. However, their stance contrasted with that of several regional Fed presidents who advocated a pause, until inflation showed a more compelling move towards the U.S. Central Bank's 2% goal. Gold that does not yield a return tends to do well in environments with low interest rates. The U.S. Dollar was heading for its worst weekly performance since late July. Gold priced in dollars is more appealing to buyers of other currencies when the greenback is weaker. Investors believe that Hassett's appointment as Fed chief could put pressure on the dollar. Silver spot rose by 1.4%, to $54.18 an ounce, and platinum grew 1.7%, to $1,634.82, both of which were up 7.4% on the week. Palladium fell 0.6% to $1.428.62, but it was still set for a weekly gain of 4%. (Reporting by Ishaan Arora; Editing by Subhranshu Sahu)
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Copper prices set to rise on US rate cuts optimism
The price of copper is expected to rise on Friday, as the Federal Reserve's rate-cutting expectations are bolstered by soft economic data in the United States. As of 0330 GMT the most traded copper contract at the Shanghai Futures Exchange rose 0.41% to 87,430 Yuan ($12356.37) per kilogram, a gain of 1.66% for the week. The benchmark three-month copper price on the London Metal Exchange increased 0.50%, to $10,994 per ton. It is expected to finish the week with a 1.99% gain. London's contract was met with resistance at $11,000 per ton. This shows that there are no major triggers for breaking this level. Weak retail sales in September and low consumer confidence have led to expectations that the Fed may cut rates next week. The U.S. Dollar weakened slightly this week but recovered slightly on Saturday. The dollar's weakness makes commodities priced in greenbacks cheaper for investors who hold other currencies. This supports metal prices. Analysts and traders have said that the move by China to stop 2 million tons planned of copper smelting is largely symbolic at this time. The relentless growth of capacity has intensified the competition for limited concentrates, driving treatment costs to record low levels. Analysts said that the market impact will depend on whether or not Beijing takes more drastic measures, like forced production cuts or forced reductions. Lead gained 0.89% among other SHFE base-metals, while nickel grew by 0.21%, tin climbed 0.42%, and zinc fell 0.33%. Aluminium was not much changed. Aluminium rose by 0.42% on the LME, while zinc gained 0.65%. Lead moved up 0.10%, nickel 0.18%, and tin 0.58%. Friday, November 28, DATA/EVENTS - (GMT) 0745 France GDP Final Q3 0745 France Prelim CPI (EU Norm), YY NSA Nov0745 France Prelim CPI (EU Norm), MM, YY NSA Oct0855 Germany Unemployment Rate, Chg. SA Nov1100 France Unemp Class A SA Oct1300 Germany Prelim CPI, HICP Nov
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Iron ore gains for the third week in a row on Infrastructure Demand
The iron ore futures price was little changed on the Friday but is headed to a third weekly gain in a row on recent infrastructure demand. As of 0301 GMT, the most-traded contract for January iron ore on China's Dalian Commodity Exchange was trading 0.06% higher. It was 796 yuan (US$112.48) per metric ton. This week, the contract has risen by 1.14%. The benchmark December Iron Ore at the Singapore Exchange fell 0.56% to $106.1 per ton. Galaxy Futures, a Chinese broker, says that recent infrastructure demand is increasing, resulting in a continued improvement in apparent steel demand. Prices are expected to follow fundamentals on the short-term. Data from Chinese consultancy Mysteel shows that inventories of five major carbon steel products held in Chinese steel mills fell for the seventh consecutive week by 2.5%, to 3.9 millions tons on Thursday, the lowest level since late January. Steelhome data shows that the total stockpiles in China of iron ore dropped by 0.42% on a week-to-week basis to around 139 millions tons as of November 28. According to Chinese broker Everbright Futures, on the supply side, the top two producers, Australia and Brazil, both saw a decline in shipments, while the total number of ships at port fell by 8 months. Iron ore futures have been softening recently due to concerns over China's real estate sector. However, losses were capped when Bloomberg reported that policymakers could introduce new support measures. Coking coal and coke, which are both steelmaking ingredients, have also lost ground. They fell by 0.84% and 2.244% respectively. Galaxy said in the same report that increased coal supply, as well as continued stock accumulation in coal mines, has led to an acceleration in recent coking coal prices. The benchmarks for steel on the Shanghai Futures Exchange are mostly in positive territory. Rebar gained 0.42%. Hot-rolled coils grew 0.18%. Wire rod increased 0.18%. Stainless steel fell 0.44%. ($1 = 7.0769 Chinese yuan). (Reporting and editing by Rashmi Liew)
Document shows that Chile's Codelco aims to increase copper production by 1.39 million tonnes in 2025.
According to a government order that has not been published, Codelco is aiming for 1.391 metric tons this year.
Documents show that the firm is also investing $4.727 billion in 2025, consisting of $3.972 plus Value Added tax. If the copper production target is met, it would be an increase over last year's 1,328 million tons. It will also maintain the momentum of the company as they look to revive output which has been affected by delays in projects, accidents, and declining ore grade.
The document stated that Codelco used a copper cost estimate of $4.30 a pound to calculate its budget. It also assumed a cash price of $1.98 a pound. The company expects to generate operating revenues of $22.23 billion, resulting in a net profit before tax of $3.105.
The investment amount for 2025 is slightly higher than $4.6 billion that the company invested in the year 2024. The investment focuses primarily on key mines that need to be overhauled to handle lower grade ore.
Codelco's 2025 production target would be the second year in a row that it has increased its output. In 2024, the company managed to reverse its production slump of 25 years after a mad rush at the end year took it over the 2023 figure. Insiders at the company and employees said that the strategies, such as delaying maintenance and reducing the downtime, are hard to maintain, because the company is still struggling with lower ore grade and delays in major project to revamp its main mines.
Codelco has reported an EBITDA consolidated of $4.022billion from January to September of 2024. It will announce its final financial results at the end March.
(source: Reuters)