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MORNING BID EUROPE - Relieved as German vote avoids extremes
Wayne Cole gives us a look at what the future holds for European and global markets. Markets are relieved that the CDU/CSU, a relatively mainstream conservative party in Germany won the election. DAX futures have now risen 1.4% following a slow start. The euro is up 0.5% at a new one-month high of $1.0528. This top has been surpassed by the previous $1.0514. Next target is $1.0534. The Conservative leader Friedrich Merz has yet to form a government coalition. It is unclear whether he needs one partner or more, and the latter will take longer. Analysts believe a simple coalition with the SPD is the best outcome. However, there are still a few horse-trading negotiations to be done. Ifo's German survey, due to be released later, could reveal a rise in support for Merz. German leadership is needed in light of the questions surrounding President Donald Trump's support of NATO and Ukraine. On March 6, European Union leaders will hold an extraordinary summit to discuss how to fund Europe's growing defence needs and provide additional support to Ukraine. It is likely that this will require more debt and some loosening of EU budget rules. Perhaps they should bring back War Bonds, sorry Defence Bonds, to attract patriotic retail investors. The threat of tariffs alone was enough to send the services PMI tumbling. It's only going to get worse, as reports suggest that the White House has been pressuring Mexico to increase its tariffs on Chinese imports. Fed policy makers will not welcome a jump in U.S. consumers' inflation expectations, which have reached their highest level since 1995. They have always reassured themselves that the expectations are "well-anchored". This week, there are nine Fed speakers. There is plenty of opportunity to issue verbal warnings before the PCE report on Friday. Wall Street futures are at least up in Asian trading, possibly on the hope that Nvidia will deliver results Wednesday which justify its astronomical valuation. Investors expect fourth-quarter revenue to be around $38.5 billion. First-quarter guidance is expected to be around $42.5 billion. Any caution regarding future AI capex will pose a risk. Market developments on Monday that may have a significant impact German Ifo business survey for February, EU final CPI figures - BoE Research Conference where Deputy Governors Dave Ramsden, Clare Lombardelli and Toni Gravelle of the Bank of Canada speak. BoE committee member Swati Dhingra speaks.
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Oil prices slip as Kurdistan export resumption looms
Oil prices in Asia fell on Monday, continuing losses from the previous week, as investors awaited clarification on the talks to end Russia's conflict with Ukraine. Brent futures fell 14 cents or 0.2% to $74.29 a barrel as of 0441 GMT. U.S. West Texas intermediate crude futures dropped 22 cents or 0.3% to $70.18 a barrel. Brent and WTI both dropped more than $2 last Friday, registering weekly declines of 0,4% and 0.5% respectively. The downward spiral of crude oil prices was caused by the U.S. President's pressure on Iraq to resume oil production from Kurdistan, which would improve global oil supply after two years of disruption, said Sugandha Sagandha, founder of New Delhi based research firm SS WealthStreet. An Iraqi official from the oil ministry said that once oil shipments resumed, Iraq would export 185,000 barrels of oil per day through the Iraq-Turkey oil pipeline. The Iraqi oil ministry announced that all procedures were completed for the resumed exports via the Iraq-Turkey pipe, which could resolve a dispute that had disrupted crude flow. On Monday, the fourth anniversary of Russia's war against Ukraine will be celebrated. All eyes are on the progress made in talks to bring an end to this conflict. Officials announced on Sunday that European Union leaders would meet on March 6 for an extraordinary summit to discuss additional support and European security assurances for Ukraine. The announcement comes after U.S. president Donald Trump began talks with Russia to end the war, but did not invite Ukraine or the European Union. A senior Russian diplomat has said that the Russian and U.S. Teams plan to meet next week to discuss improving their relations. The U.S., EU and other countries have imposed sanctions on Russian oil exports. This has curtailed its shipments as well as disrupted the seaborne oil supply flow. If a peace agreement is reached and the sanctions are lifted, global energy supplies will increase. Sachdeva stated that oil prices are influenced in the short-term by geopolitical events and U.S. announcements of policy. Hamas officials in the Middle East said that talks with Israel via mediators about further steps to a ceasefire deal are contingent on Palestinian prisoners being freed as agreed. Israel and Hamas both accuse each other of violating the ceasefire, but it continues to hold.
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Petrobras Considers Cancelling FPSO Tender
Petrobras is considering cancelling a tender to charter an FPSO from India's Shapoorji Pallonji Energy, two sources with knowledge of the matter told Reuters.The state-run firm believes the bid by the Indian shipbuilding firm was too high, at $1.5 million per day, and also complained the FPSO would not have enough of its parts built in Brazil, said the sources.A final decision on the matter is set to be taken soon, according to one of the people.Petrobras said the bidding process is "still ongoing," without making any further comments. Shapoorji Pallonji Energy did not immediately reply to a request for comment outside working hours.The Shapoorji vessel would have the capacity to produce up to 100,000 barrels of oil per day and 6 million cubic meters of gas. The process of contracting it has been ongoing since August 2023.Brazilian President Luiz Inacio Lula da Silva has made bolstering the country's shipbuilding sector a priority and as part of that Petrobras has been focusing on using more local ships for its operations and creating local jobs.(Reuters - Reporting by Rodrigo Viga Gaier; Writing by Fabio Teixeira; Editing by Gabriel Araujo and Susan Fenton)
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New Zealand Foreign Minister to Question Chinese Naval Activity in Beijing
New Zealand's foreign minister Winston Peters is scheduled to arrive in Beijing for a 3-day visit on Tuesday. Relations between the two nations are strained following the live firing exercise conducted by Chinese Navy ships in the Tasman Sea. Officials from New Zealand and Australia said China conducted live-fire drills in international waters between their two countries, with little warning and forcing commercial airline to divert flights. New Zealand Defence Force reported on Monday that the three ships were currently 280 nautical mile (519 km), east of Tasmania and outside Australia's exclusive economy zone. Christopher Luxon, the New Zealand prime minister, said that on Monday China would raise in Beijing the notice given by China that it was going to conduct a live firing drill. Luxon said that the flights were compliant with international laws. "We'd like to have a bit more notice, especially on a busy route." Peters' trip to China is part a larger tour that also includes stops in Saudi Arabia and the UAE, Mongolia, and South Korea. Peters will meet with Wang Yi, the Foreign Minister of China, in Beijing. Peters stated in a press release last week that he will discuss bilateral relations with Chinese officials, as well regional and global issues of interest to the two countries. "China is New Zealand's most complex and significant relationship, with important cultural, trade and people-to-people connections. Peters stated that the New Zealand government intends to keep a regular, high-level dialogue with China. Peters also expressed concern that the Cook Islands, a country independent in free association with New Zealand had signed a strategic partnership with China and other agreements without consulting New Zealand satisfactorily. Jason Young, Director at the New Zealand Contemporary China Research Centre, Victoria University, Wellington, stated that while there would be questions asked about challenging issues, such as the Cook Islands agreement and the activities of the People's Liberation Army Navy in the Tasman Sea, the discussion would also include future high-level trade and visits. (Reporting and editing by Christian Schmollinger; Lucy Craymer)
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London Copper prices fall as US tariffs loom
London copper prices eased Monday, as metal demand weakened after President Donald Trump's recent threat to increase tariffs. The price of three-month copper at the London Metal Exchange fell by 0.4%, to $9.523 per metric ton as of 0356 GMT. ANZ Research stated that the sector was also experiencing dislocations as it prepared for tariffs and restrictions on certain metals. Trump announced last week that he would announce new tariffs in the next month, or even sooner. He will add lumber and forest products, to his previously announced plans of imposing duties on imported automobiles, semiconductors, and pharmaceuticals. Other metals include LME aluminium, which fell 1.02% at $2,660.5; LME zinc, which shed 0.5% to $2.914.5; nickel, up 0.8% at $15,640; tin, down 0.4% at $33,540, and lead, up 0.1% at $2,011. The price of SHFE aluminium fell 1.03%, to 20,660 Chinese yuan per ton. SHFE copper dropped 0.1% to 77,250 Yuan. SHFE zinc dropped 0.2% at 24,045 Yuan. Nickel rose 0.5% to 125720 Yuan. Lead lost 0.09%, to 17,145 Yuan. Tin increased 0.2%, to 265,290 Yan. ($1 = 7,2498 Chinese Yuan) (Reporting and editing by Sumana Arora, Mrigank Dhaniwala).
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British Business – February 24,
These are the most popular stories in the British business pages. These stories have not been verified and we cannot vouch for the accuracy of these reports. The Times Axa IM Alts is the investment arm of French insurer Axa. They have submitted a planning request to build another skyscraper at the City of London. Bupa, a healthcare provider in the UK, will offer what it claims is the first genetic test that accurately predicts the risk of many common diseases. The Guardian The British Prime Minister Keir starmer announced a funding of 200 million pounds ($253.54million) to increase investment in the Grangemouth Oil Refinery. This refinery is closing with more than 400 job losses. The UK Home Office is accused of collecting information on "hundreds and thousands" of British citizens who were unaware of the situation, while performing financial checks on immigrants. The Telegraph Senior MPs will question BBC bosses about a controversial documentary that has been accused of providing a platform for Hamas propaganda. Sky News The Ontario Teachers Pension Plan is in negotiations to provide Quantexa with an undisclosed new amount of funding, which could be worth billions of dollars. ($1 = 0.7888 pounds) (Compiled from Bengaluru Newsroom)
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Oil dips on pending Kurdistan supply resumption
Oil prices fell in the early hours of Monday's trade, continuing losses from last weekend, as investors awaited clarification on talks to end Russia’s war against Ukraine. Brent futures dropped 20 cents or 0.3% to $74.23 a barrel at 0113 GMT. U.S. West Texas intermediate crude futures declined 28 cents or 0.4% to $70.12 a bar. The two contracts fell by more than 2 dollars on Friday and also posted weekly decreases. An Iraqi official from the oil ministry said that once oil shipments resumed, Iraq would export 185,000 barrels of oil per day through the Iraq-Turkey oil pipeline. Iraq's Oil Ministry said that all procedures were completed for the resumed exports via the Iraq-Turkey Pipeline, which could resolve a dispute of nearly two years that has caused crude flow disruptions. On Monday, the fourth anniversary of Russia's war against Ukraine will be celebrated. All eyes are on the progress made in talks to bring an end to this conflict. Officials announced on Sunday that European Union leaders would meet on March 6 for an extraordinary summit to discuss additional support and European security assurances for Ukraine. The announcement comes after U.S. president Donald Trump began talks with Russia to end the war, but did not invite Ukraine or the European Union. A senior Russian diplomat announced that Russian and U.S. teams will meet this week to talk about improving relations. The U.S., EU and other countries have imposed sanctions on Russian oil exports. This has curtailed its shipments as well as disrupted the seaborne oil supply flow. If a peace agreement is reached and the sanctions are lifted, global energy supplies will increase. Hamas officials in the Middle East said that talks with Israel via mediators about further steps to a ceasefire deal are contingent on Palestinian prisoners being freed as agreed. Israel and Hamas both accuse each other of violating the ceasefire, but it continues to hold.
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Ampol Australia falls on profits plunge and decade-low dividend
Ampol, an Australian fuel retailer, saw its shares fall by nearly 10% after the company reported a sharp decline in annual profits and declared its lowest dividend in over a decade. Ampol announced a final dividend per share of 5 Australian Cents, down from 120 Aucents a year ago. This is also below Visible Alpha’s consensus estimate, which was 7 Aucents. As of 0010 GMT the shares of the company had fallen 4.3%, while the benchmark index was down by 0.6%. Ampol reported a net profit of A$234.8 (149.5) million on a replacement-cost basis for the period ended December 31 compared to A$740.1 million one year earlier. Fuel retailer blamed the lower profit on a weak fuels business and infrastructure, as well as multiple outages in its Lytton Refinery in Queensland. Ampol's Fuels and Infrastructure business reported earnings before interest and tax (EBIT) at A$186.3m, a sharp drop from the A$736.5m reported a year earlier. CEO Matt Halliday stated that the 2024 financial period was one of global refining and commodities markets. This affected both our Lytton Refinery and Trading and Shipping Operations. Ampol announced that it would be reducing costs by A$50 millions as part of a program to reduce capital expenditures in fiscal year 2025. The company had previously announced this plan in October. In January, the company reported that its realized Lytton refinery margin was US$6.31 a barrel. Ampol relies heavily on the retail sales of its products in its stores, along with fuel sales. Brad Smoling is the managing director of Smoling Stockbrocking. He said that sustained high interest rates have greatly reduced discretionary income and disposable income. Ampol's current headwinds will be very difficult to navigate if we add the global refining challenges to the balance sheet.
The rise in iron ore is halted after four days due to increased duties on Chinese steel
Dalian iron-ore futures prices ended a four day winning streak on Sunday as increased levies against Chinese steel dampened prospects for demand. However, decreasing portside stocks in China limited the decline.
As of 0250 GMT, the most traded May iron ore contract at China's Dalian Commodity Exchange was trading 0.89% lower. It was trading at 831.5 Yuan ($114.87), per metric ton.
The benchmark March Iron Ore at the Singapore Exchange was 0.22% less expensive, coming in at $108.25 per ton.
According to a document from the trade ministry, Vietnam will impose an anti-dumping temporary levy up to 27,83% on certain steel products imported from China.
This move follows the announcement by U.S. president Donald Trump of 25% tariffs for all steel imports in early this month. South Korea followed suit, and imposed tariffs provisionally on Chinese steel sheets last week.
Mysteel, a Chinese consultancy, said that "production among Chinese blast-furnace steel producers has continued to decline as more mills have begun regular maintenance work."
Mysteel data revealed that the capacity utilisation rate in the surveyed blast furnace steel mills decreased for a second consecutive week. The daily hot metal production fell by 0.21% from one week to another, reaching 2.28 million on February 20.
Iron ore demand is usually gauged by the hot metal production.
Hexun Futures, a Chinese consultancy, said that despite the weather in Australia, iron ore exports worldwide have decreased slightly. Port inventories will also be falling, they added.
SteelHome's weekly data showed that portside iron ore stocks in China dropped 1.15%, to 145.8 millions metric tons on February 21.
Coking coal and coke, which are used to make steel, also fell on the DCE. The declines were 1.77% and 2.466% respectively.
The majority of steel benchmarks traded on the Shanghai Futures Exchange suffered losses. Rebar fell 0.8%, hot rolled coil dropped 1.3%, and stainless steel declined 0.49%. Wire rod rose 0.76%.
(source: Reuters)