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Investors assess U.S. China trade deal as Fed lowers rates and gold gains
Gold prices increased by nearly 2% Thursday. This was due to a Federal Reserve rate cut and lingering uncertainties over the outcome of the trade agreement between China & the U.S. As of 11:26 am, spot gold was up by 1.7% to $3,995.59 an ounce. ET (1525 GMT), after rising nearly 2% in the earlier session. U.S. Gold Futures GCcv1 delivered in December rose by 0.2% to $4,009.20 an ounce. U.S. president Donald Trump announced on Thursday that he would lower tariffs against China from 57% to 47% in exchange for Beijing returning U.S. purchases of soybeans and rare earths and cracking down the illicit fentanyl traffic. The markets have backed off any optimism about the end of the trade wars as details of the U.S. China deal were revealed. Fears that the truce could be temporary led to a fall in equity markets. The U.S. Federal Reserve cut interest rates in line with expectations on Wednesday. However, it indicated that this may be the last reduction of the year, as the government shutdown is threatening the availability key economic data. In a low interest rate environment, safe-haven assets like gold become more appealing as they are non-yielding. Gold tends to do well during times of geopolitical or economic uncertainty. Wells Fargo Investment Institute has raised its gold target for 2026 to $4,500-$4,700/oz from $3,900-4,100/oz previously, citing uncertainty in geopolitical policy and trade. Analysts said that they expect the question marks to continue to drive private and public demand, and higher prices. Other than that, silver spot rose 2.6%, to $48,80 an ounce. Platinum gained 0.7%, to $1596.75, and palladium increased 2.8%, to $1439.52. (Reporting from Noel John in Bengaluru and Pablo Sinha; editing by Shalesh Kuber).
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India's NTPC reports a quarterly profit increase on lower expenses
NTPC, India's largest power producer, reported a higher adjusted profit for its second quarter on Thursday. This was due to lower expenses as a result of a decrease in fuel prices. The company's profit for the three-month period ended September 30 increased 19.4% compared to a year ago, reaching 56.24 billion rupies ($639.9m). Fuel cost is the total amount of expenses incurred by NTPC in acquiring and consuming the fuels needed for electricity production. This accounts for nearly 60%. Fuel costs fell nearly 5%, resulting in a 1.6% drop in the total expenditures of the state-owned company. India's power generation recovered in the second half of the year after a subdued first quarter ending in June. According to Elara Capital analysts, a low base and an increase in economic activity helped spur demand. Due to grid restrictions however, NTPC’s thermal power segment’s plant load factor (which is a percentage energy used by the power plants corresponding to their installed capacity) fell to 66.01%, from 72.28% during the period of July-September. Since Sept. 2024 the company has added 7450 Megawatts (MW), bringing its total installed power to 83893MW. India is planning to increase its coal-power capacity by 46 percent by 2035. It also plans to expand its renewable power capacity. NTPC's revenue from operations rose marginally by 0.2%, to 447.86 trillion rupees. ($1 = 87.8950 Indian rupees) (Reporting by Anuran Sadhu in Bengaluru; Editing by Harikrishnan Nair and Krishna Chandra Eluri)
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Saudi Arabia's budget deficit reaches $23 billion by Q3
Saudi Arabia's third-quarter budget deficit increased by 160%, as revenues dropped and spending rose. The finance ministry announced this on Thursday. Oil revenues dropped 0.1%, to 150.8 billion riyals. The unwinding of OPEC production cuts weighed on prices. Meanwhile, the Kingdom's Vision 2030 plan for diversification was implemented. In the first quarter of this year, revenues for the world's largest oil exporter fell by 13% compared to last year. 119.1 billion dollars came from industries other than oil. The public spending increased by 6% on an annual basis to 358.4 billion Riyals. The IMF's latest World Economic Outlook raised its forecast of Saudi Arabia’s GDP growth to 4% in 2025 from the 3% projected in April. The IMF revised the growth in 2026 to 4% due to an earlier than expected unwinding in Saudi Arabia's oil production cuts. The OPEC+ group increased crude oil production in October after the Organization of Petroleum Exporting Countries (OPEC), Russia, and other allies decided to accelerate the unwinding of some cuts earlier than originally planned. Saudi Arabia's deficit budget shrank by 41.1% to 34.534 billion Riyals in the second quarter. According to the Ministry, the public debt of the kingdom stood at 1,47 trillion riyals by the end the third quarter.
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Ghana orders the first major audits of mining companies in 10 years
Ghana, Africa’s top gold producer has launched the most aggressive audit of its mining industry in 10 years, targeting top miner to recover revenue lost and tighten up oversight, as a letter from government shows. West African governments are increasing their scrutiny on mining companies to ensure compliance with regulations, and protect revenue from the soaring prices of commodities. On October 20, the spot gold price reached a new record of $4,380 per troy ounce. The audit will include major gold producers including Newmont, AngloGold Ashanti Gold Fields, Perseus Asante Gold, China's Zijin, and China's AngloGold Ashanti. According to a government letter sent by the Minerals Commission to the Ghana Chamber of Mines on October 13, the audit will be conducted by independent consultants and forensic accountants. The Minerals Commission is the industry regulator and will be deploying teams to conduct a nationwide physical and financial audit between November 1, 2018 and June 20, 2026. These teams will examine production volumes, mineral flow, tax and royalties payments, and environmental compliance. By October 31, miners must submit all permits, stockpiles, shipping manifests, 10 years worth of production records, 3 years financial records and 10 years worth of production logs. The letter stated that company-specific reports must be submitted within 30 days after each site visit. The Minerals Commission refused to comment. The Mines Ministry did not respond immediately to a comment request. TRUE REVENUE RESOURSE POTENTIAL The world's second largest cocoa producer will generate 17.7 billion Ghanaian Cedis ($1.68billion) by 2024. This is due to a 25.1% increase in gold production, which helped stabilize the economy following its worst crisis for a generation. Ghana, which exports bauxite and diamonds, as well as manganese and diamonds, expects its gold production to increase to 5.1 millions ounces from 4.8. The letter from the commission details a phased auditory starting with Gold Fields Damang mine in November and Perseus, Canada-based Xtra-Gold Kibi unit by late June 2026. An executive from one of the companies, who asked not to be identified, said that individual companies received letters detailing the schedule. AngloGold Ashanti did not respond immediately to comments from Asante Gold. Gold Fields, Newmont. Perseus. Xtra-Gold. Zijin. Chamber of Mines did not respond immediately either. Ghana audited the mining sector last in 2015, with external investigators' help, but some companies disputed the findings. A source familiar with this process said. Said Boakye is an economist at the Accra based Institute for Fiscal Studies and a research fellow. He said that special audits should not be performed periodically but every year. It's the only method to develop a sound tax policy, and unlock the true revenue potential of the sector. The government has implemented sweeping reforms in order to increase returns. The country's mines ministry said that the country would shorten the licence terms and implement direct revenue sharing with host communities. This is the most ambitious overhaul of mining laws in almost 20 years.
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Letter shows truckmakers asking EU to relax emissions targets
A letter obtained by revealed that European truck manufacturers, including Traton Scania, Volvo, and Daimler Truck, have asked the European Union to relax its CO2 emission rules for this sector. Industry is being pressed to reduce its emissions that are warming the planet. Electric trucks are still a small part of the market because they cost more than diesel versions and buyers worry about charging infrastructure. In a letter dated October 13, the companies demanded changes to the EU credit system, which rewards manufacturers who achieve emissions below the EU targets as well as a linear trajectory from target year to target year. They want to be credited for just beating headline targets. Christian Levin of Scania and Traton said that the letter was a "cry for help". "We don't argue that the targets are incorrect... but it will be very, difficult," said Levin. He is also chair of the European Automobile Manufacturers' Association's (ACEA's) board for commercial vehicles. Daimler Truck's spokesperson said that the industry has invested heavily in electrification, but faces "draconian penalties" for not meeting targets. This is despite factors beyond their control such as battery manufacturing and charging infrastructure. Levin said that the best solution would be to eliminate the stupid fines imposed on the industry and instead force everyone to work together through incentives or penalties. According to EU law, truckmakers are required to reduce emissions of new trucks by 15 percent by 2025. This will rise to 90 percent by 2040 compared to the levels in 2019. The majority of truckmakers are on course to reach the 2025 target - mostly by improving their diesel lineup, rather than selling electric trucks. Environmentalists warn that lowering the targets will slow Europe's move to electrification, and could open the door for Chinese producers. Transport & Environment, a campaign group, said that the proposed changes would reduce EU sales of zero emission trucks by 27% by 2030. The European Commission didn't immediately respond to our request for comment. In a letter addressed to EU leaders, Ursula von der Leyen, the President of the European Commission, promised to "concrete" measures that would help heavy-duty vehicle producers reach their goals. Brussels has already considered lowering its CO2 emission target for cars by 2035, in response to pressure from the industry and EU member states.
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Investors assess U.S. China trade deal as Fed lowers rates and gold gains
Gold prices increased by nearly 2% Thursday. This was due to a Federal Reserve rate cut and lingering uncertainties over the outcome a trade agreement between China and the U.S. As of 9:43 a.m., spot gold was up by 1% to $3,970.36 an ounce. ET (1343 GMT) after a nearly 2% rise earlier in the day. U.S. Gold Futures GCcv1 were unchanged at $3.992.40 an ounce for December delivery. U.S. president Donald Trump announced on Thursday that he would lower tariffs against China from 57% to 47% if Beijing resumed U.S. purchases of soybeans and rare earths and cracked down on the illicit fentanyl traffic. The markets have backed off any optimism about the end of the trade wars as details of the U.S. China deal were revealed. Fears that the truce could be temporary led to a fall in equity markets. The U.S. Federal Reserve cut interest rates in line with expectations on Wednesday. However, it indicated that this may be the last reduction of the year, as the government shutdown is threatening the availability key economic data. In a low interest rate environment, safe-haven assets like gold become more appealing as they are non-yielding. Gold tends to do well during times of geopolitical or economic uncertainty. Wells Fargo Investment Institute has raised its gold target for 2026 to $4,500-$4,700/oz from $3,900-4,100/oz previously, citing uncertainty in geopolitical policy and trade. Analysts said that they expect the question marks to continue to drive private and public demand, and higher prices. Other than that, silver spot rose by 1.7%, to $48.34 an ounce. Platinum gained 0.9%, to $1.598.55; and palladium increased 1%, to $1.415.52. (Reporting from Noel John in Bengaluru and Pablo Sinha; editing by Shailesh Kuber)
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Nigeria imposes a 15% import duty to support local refiners
According to a memo from the president seen on Thursday, Nigeria has approved an import duty of 15% on petrol and diesel. The government is trying to protect its multi-billion dollar investments in domestic refinery by limiting an influx cheaper fuel. The government stated that the measure was part of broader reforms to boost non-oil revenue in advance of tax changes planned for 2026. The measure follows the removal of fuel subsides and foreign exchange controls last year. The memo said that "this reform will accelerate Nigeria’s path to fuel self-sufficiency. It will protect consumers and investors, and stabilize downstream petroleum markets." Bola Tinubu, President of the Republic of Nigeria, signed off on new import duties on October 21, 2018. Nigeria, Africa's largest oil producer, has been trying to reduce its dependence on imported fuel for a long time. The Dangote refinery, which produces 650,000 barrels of oil per day, was inaugurated last year. This gave the ambition a big boost. The memo said that the refinery, Africa's biggest, was built for $20 billion and faced competition from imported goods priced below the cost recovery. The current pump price is around 928 Naira ($0.6322) a litre. The officials estimate that the duty may increase prices by 99 naira. Fuel shortages have been experienced in Nigeria due to supply issues. $1 = 1,467,8100 Naira (Reporting and editing by Chijioke Ohuocha, Joe Bavier; Additional reporting by Camillus in Abuja)
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Copper backs off Fed caution amid concerns about Chinese demand
The Federal Reserve's cautious comments on U.S. rate cuts and concerns about Chinese demand led to a decline in copper prices on Thursday, compared with the record highs of the previous day. The price of three-month copper at the London Metal Exchange fell 1.8% in open-outcry official trading to $10,978 a metric ton, after reaching a record high on Wednesday, $11,200, due to supply concerns. Robert Montefusco, a broker at Sucden Financial, said: "Copper prices are down today due to the lackluster physical demand and the Fed's dovish sentiment on a rate cut in December. Fed Chair Jerome Powell shocked the markets on Wednesday, casting doubt on the prospects for an interest rate reduction at the next central bank meeting in December. He said that such a move "was not a foregone decision". This helped push the dollar index up to its highest level in three weeks, making commodities priced using the U.S. dollars more expensive for buyers who use other currencies. The Shanghai Futures Exchange's most traded copper contract fell 0.1% to 87.960 yuan (12,348.73 dollars) per ton. The physical demand for metals in China, the top consumer of metals, has been weakening as prices rise. Spot copper prices are higher than SHFE prices. Flipping to a 55-yuan discount per ton of coal on Thursday, from a premium 90-yuan on 15 October. A poll found that major miners have reported lower output of copper in the first nine month of the year. This has led analysts to raise their price predictions for next year. Dan Smith, managing Director at Commodity Market Analytics said that the market is bullish but some miners may be holding it back because they want to sell ahead to lock in high prices. I'd imagine that copper producers are doing a lot of hedging, which prevents prices from rising. These are good numbers for many copper producers." Other metals include LME aluminium, which fell 1.4% to $2.845.50 per ton in official activity, nickel, which dropped 1% to $16,215; zinc, which slipped 1.9% to $3,000; lead, a 0.1% drop to $2.024; and tin, a 0.6% decline to $35,960. Click here for top metals stories ($1 = 7.1230 Chinese yuan). (Reporting and additional reporting by Lucas Liew, Editing by Shareysh Kuber, Shreysh Biswas, and Shareysh Kuber)
Instant View-Hefty Trump Tariffs Surprise Markets, Stocks Slide
U.S. president Donald Trump escalated the trade war by announcing on Wednesday that he would impose tariffs in return for duties imposed by other countries on U.S. products.
Trump told an audience in the White House Rose Garden that "it's our declaration" of independence. "We will set a minimum base tariff of 10%."
China's rate would be 34% while Japan and the European Union would pay 20% and 24% respectively.
S&P futures fell 3%, indicating that investors are expecting a big loss when Wall Street opens Thursday. Treasury yields and other stock markets fell as well, while the Chinese yuan hit a new low.
COMMENTS:
NIGEL GREEN is the CEO of DEVERE GROUP in Dubai, UAE
"This is what you do when you claim to be supercharging the global economic engine, but sabotage it. The global trade is experiencing a historic day.
Tariffs are simply taxes and the American consumer will be hit hard. Businesses freeze plans, stop hiring and invest when they don't know how the trade will be next quarter. This ripple effect reaches consumers. The recession begins with this chilling effect.
"The dollar is no longer the dominant currency. The credibility of the United States is at stake. Investors are nervous about the dollar, which is the world's reserve currency. "Trust is earned and lost easily."
SCOTT WREN SENIOR GLOBAL MARKET STRATEGIST WELLS FARGGO INVESTMENT INSITUTE, ST. LOUIS MISSOURI
"There aren't many surprises in this case. I'm a bit surprised that the amount is a bit less than we had anticipated.
We've always wanted to invest in the U.S. compared to other countries, and that won't change. We are overweighting midcaps and we like large caps. Our outlook on this pullback is positive, but not overly so. We're trying to get some exposure here. We are not trying to conceal. We don't wish to be defensive. We want to use stock price pullbacks as an opportunity to buy stocks to play what we perceive as a better second-half."
OLGA YANGOL MANAGING DIRECTOR HEAD OF EMERGING MARKETS RESEARCH & STRATEGY AMERICAS CREDIT AGRICOLE CIB - AMERICAS NEW YORK
"I don't believe that the baseline tariff number should surprise the market. We must cycle through each country and their impact.
It seems, on the surface at least, that Brazil has a fairly good deal. With Mexico, it's not entirely clear. What will matter most is whether or not those USMCA exemptions are actually extended. We are underweighting MXN. Our overall directional outlook on the dollar against (emerging market) is neutral or slightly defensive.
OLGA BITEL - GLOBAL STRATEGIST - WILLIAM BLAIR & CO., CHICAGO
"Now, the question is: Is U.S. exceptionalism about to change? If so, to where will this leadership migrate?" Many countries have the capability and will to respond.
"I don’t think that we are in for a time of clarity or stability, but rather I see this opening salvo, and I expect a lot of back-and-forth." The question is whether the U.S. can implement these tariffs given the different rates for different products coming from different countries.
ERIC M. CLARK CHIEF INVESTMENT OFFICER ALPHA BRANDS PORTFOLIO MANAGER SAN DIEGO CALIFORNIA
These tariffs will certainly push consumers in China or other countries to buy more of their products, whether they are Chinese-made or not. It is a dangerous game, because consumers who are forced to switch products will usually get used to them and never look back.
"We are pushing nationalism further in these local market. Trump has chosen to be isolationist because of the tone in which he talks about other leaders and countries, and the nationalism he will bring. The S&P 500 companies generate more than 40% their revenues outside of the U.S. This increases the risk of a recession in the United States.
"I expect this chaos to be created to create panic. The uncertainty will drive yields lower at a time when demand is high for our debt, which allows us to refinance $4 trillion to 5 trillion dollars at better rates. Over the next few months, the tariff agreements start to be retracted and the stock market begins to rise.
JEANETTE GERRATTY CHIEF ECONOMIST, ROBERTSON STEPHENS MENLO PARK CA.
"The tariffs were so extensive and larger than expected." Earlier, people were discussing whether clarity could boost the market. Now that you've got clarity, no one is happy with what they see.
"It's not speculation that this will cause the economy to slow down and prices to rise. It will actually happen."
MICHAEL MULLANEY IS DIRECTOR OF GLOBAL MARKET RESEARCH AT BOSTON PARTNERS IN BOSTON
We have clarity now. When you dig deeper into the numbers you will find that the clarity isn't as good as the 10% baseline might have you believe.
It means that the S&P 500's earnings per share are likely to continue declining for 2025, and possibly spilling into 2026.
SARAH KETTERER, CEO, CAUSEWAY CAPITAL MANAGEMENT, LOS ANGELES
This is just a salvo. It's not the final list. There will be several rounds of negotiation.
"Market weakness should allow you to invest in global equity markets. European spending is going to be huge and pivotal. It will also be very stimulating, especially if combined with increased bank lending. It's certainly not "Happy Days", but global equity markets, and especially European stocks that have trailed U.S. stock prices for 17 years, will be able to perform better. We believe that some of the gap will be closed."
BYRON ANDERSON HEAD OF FIXED RESULTS, LAFFER-TENGLER INVESTMENTS SCOTTSDALE, ARIZONA
"Reciprocal Tariffs will ultimately deflationary, as our trading partners will begin to eliminate tariffs. If we do get some moderation, the market is not in a good position. We should also see the unwinding of the flight of safety. This means that treasury rates are rising and high yield credit spreads will be easing. Expect volatility as certain countries continue to defend their status quo."
JOHN HARDY CHIEF MACRO STRATEGIST SAXO BANK COPENHAGEN
It makes sense to watch the market's reaction.
The Japanese yen will be a safe haven, as well as repatriation into Japan and falling U.S. interest rates. Treasuries, particularly at the low end of the yield-curve, can be considered a safe haven. I believe that these two trades would be the most important. Even longer-term Treasuries may do well.
"If Republicans continue to hammer on about tax reductions, I wonder whether (longer-term Treasuries are a good investment). For now, the direction seems clear. "Gold, especially short-dated U.S. Treasury bonds, is the best option for storing things. There's also a wildcard for long-term investments."
JASON BRITTON, CHIEF INVESTMENT OFFICER, REFLECTION ASSET MANAGEMENT, CHARLESTON, SOUTH CAROLINA
"I consider this a net positive. These tariff levels are a good starting point for future negotiations. Mexico and Canada remain exempted from any further tariffs. I believe the market will calm down and start to analyze the details, and realize that it is at best a mixed bag."
"I am looking at the large technology companies who are sitting on huge piles of money. I am a buyer of weakness if they are going to be squeezed by this retreat. "It's the market that's overreacting and I'm happy to take full advantage."
PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK
"The tariffs seem a bit high." Even though Powell said that tariffs will only cause temporary inflation, the Federal Reserve is now faced with a difficult decision. The effects of inflation could worsen and we could head towards recession.
The markets are in a condition of oversold conditions. I believe the markets will rally. (Compiled by Global Finance & Markets Breaking News; Editing by Lincoln Feast.
(source: Reuters)