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Thames Water in the UK says that fines should be delayed to avoid state intervention
When questioned on Tuesday by lawmakers, the bosses of Britain’s Thames Water claimed that the company needs relief from fines in order to avoid nationalisation. Thames Water has been fighting against financial collapse for the past year. The water sector is under fire for allegedly polluting Britain’s rivers and seas, while at the same time increasing bills. Thames Water has been trying to reach a deal with the financial investor KKR in order to raise new equity and avoid being subject to the Special Administration Regime of government. However, due to its poor performance it will likely face large fines. CEO Chris Weston stated that it would not be able to achieve equity without regulators agreeing to deferred or reduced fines. Weston stated that "Discussing the concept of a turn-around regime with the regulator that could provide some relief from the usual regulatory environment while a business recovers its operation is absolutely imperative for Thames, otherwise we won't be invested in." There is no sense in punishing someone continuously if it will only exacerbate the problem. Steve Buck, the company's CFO, said that he had calculated the potential of 900 million pounds ($1,19 billion) in penalties for the period 2025-2030. Weston stated that if Thames Water fails to raise new equity, the debt investors can proceed with a swap of debt for equity which would put them in control. If this fails, Thames Water may enter SAR. This is a temporary form of nationalisation. Chairman Adrian Montague stated that a SAR would make life difficult for everyone. The government will have to finance the programme because no other funding is available.
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As the trade deal sugar rush fades, stocks edge up and dollar falls.
The dollar and global stock markets lost momentum on Tuesday as investors' concerns over the impact of the trade standoff between the United States, China and other countries on the global economy grew. The two biggest economies in the world have agreed to a 90-day truce in their trade dispute. They will lower tariffs on both sides and remove other restrictions while they work out a permanent agreement. The agreement reignited investors' appetite for stocks and commodities. Wall Street rallied 3.3% on Monday. On Tuesday, the enthusiasm for the stock market had diminished. European stocks were up by 0.2% at midday, thanks to positive corporate results, such as those of the German pharma company Bayer and the Danish wind turbine manufacturer Vestas. Both companies saw their shares jump by 10%. Futures for the S&P 500, Nasdaq and Dow fell between 0.2-0.3%. This shows the caution in the U.S. asset market. It's the pause which refreshes you and makes you feel good. You hope there will be more. This does prove that the current administration is not immune from market volatility. Chris Beauchamp, chief market strategist at IG, said that the market has reached a breaking point. After the Geneva talks, both the U.S. and China announced that they would reduce tariffs on Chinese imports from 145% to 30%. The ratings agency Fitch estimates that the U.S. tariff rate has dropped to 13.1% from 22.8% before the agreement, but is still above the 2.3% at the end 2024. The U.S. Government went further on Tuesday and announced that it would cut the "de minimis tariff" on Chinese shipments up to an amount of $800. This latest concession by the United States was not met with much reaction from the broader market. Amazon shares fell 0.4% on premarket trading after Monday's 8% gain. FAREWELL "CRAZY US EXCEPTIONALISM"? Trump's unpredictable attitude towards the economy, international diplomacy and trade has sparked concern over the outlook for U.S. economic growth. These factors, along with the lack of progress made in negotiating trade deals, have driven investors away from U.S. assets, resulting in a move to safe-haven assets like gold, Japanese yen, and Swiss franc. Economists and fund managers have stated that the 90-day break is welcomed, but it hasn't changed the larger picture. Christopher Hodge said that the tariffs would still be higher after all was said and done and this will have a negative impact on U.S. economic growth. On Monday, the dollar rose against a basket currency by more than it had in any day since April 22, 2007. On Tuesday, the dollar's gains had waned and most major currencies were stronger. The dollar fell 0.3% to 148.04 and the yen rose, causing the euro to rise 0.18%. Meanwhile, the pound increased 0.2%, reaching $1.3206. "You're still getting the sense that people are generally saying that we'll be putting money back into the U.S. for the time being, but that we won't go back to the crazy 'U.S. "We've got to become more circumspect," IG's Beauchamp stated. Investors will now focus on the U.S. inflation figures on Tuesday. Trade relations between the United States and China have changed, leading traders to lower their expectations of Federal Reserve rate reductions. They believe that policymakers will be more flexible if inflation risks decrease. The traders are now pricing in a 56 basis point reduction this year. This is down from the forecasts of over 100 basis points at the height of tariff anxiety in mid-April. The benchmark 10-year Treasury yield is flat at 4.455%. Oil prices rose 0.8% on Tuesday to $65.48 per barrel. They had risen by 1.2% on Monday, reaching a new two-week high. Gold rose 0.6% to $3.254 per ounce after falling 2% on Sunday as investors abandoned some safe havens.
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Sinopec China launches HK$7.75 Billion exchangeable bond, shows term sheet
Sinopec, a Chinese oil company, is seeking to raise HK$7.75billion ($994.42m) via an exchangeable bond. This was revealed in a termsheet seen by us on Tuesday. The term sheet stated that the bond will have a zero to 0.99% coupon and be issued by an affiliate of Sinopec Group. The term sheet stated that the bonds would be exchangeable for shares of Sinopec's Hong Kong-listed subsidiary. The bond's exchange price is HK$6, which is 47.1% higher than Sinopec Hong Kong's closing price of HK$4.08 for Tuesday. Sinopec failed to respond to a request for comments sent by fax outside normal business hours. According to the terms sheet, the company, the world's largest refinery group by capacity plans to use the proceeds of the transaction to reduce debt. Goldman Sachs is the only bookrunner. Sinopec reported in April that its first-quarter profits fell by 27.6% from a year ago, as a result of lower oil prices. Its refining operations also struggled with falling fuel sales and thin profit margins. Reporting by Scott Murdoch, with additional reporting from Ella Cao. Editing by Louise Heavens (with Andrew Heavens & David Evans).
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Russian seaborne diesel exports fell in April, data shows
According to LSEG and market sources, the number of Russian diesel and gasoil seaborne exports decreased in April due to refineries performing seasonal maintenance. The industry also held back supplies for the expected increase in domestic demand over the summer months. Calculations based on LSEG data and other market sources showed that the total diesel and gasoil exported from Russian ports dropped to about 3.3 millions metric tons in March, a 10% drop. Shipping data shows that in April, the two main importers of Russian gasoil and diesel were Turkey and Brazil. Last month, diesel and gasoil exported from Russian ports reached 1.12 million tonnes, an increase of 6% over March. However, loadings to Brazil dropped by a third, from 1.0 to 0.66 millions tons. Shipping data revealed that Russia's April exports of diesel and gasoil to African countries dropped by 20% compared to the previous month, totaling about 0.75 millions tons. The top importers were Libya, Senegal Tunisia, and Ghana. The traders said that cargoes are piling up near the cypriot port of Limassol due to increased ship-to-ship transfer to avoid tougher Western sanctions on fuel loaded into Russian ports. Data showed that in April, more than 0,42 million tonnes of diesel remained there awaiting discharge or orders to other destinations. The destination of vessels carrying about 150,000 tonnes of diesel loaded in Russian ports is marked "for orders", which means that their discharge points have not been declared or are not known. (Reporting and editing by Barbara Lewis; Reporting by In Moscow)
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Copper up on the temporary US-China Trade truce
The price of copper rose on Tuesday, after the United States announced it would reduce some tariffs for imports from China. China's inventories had dropped dramatically, but gains were limited by caution on the market. As of 0940 GMT, the benchmark copper price on London Metal Exchange had increased by 0.3% to $9,544 per metric tonne. The United States announced on Monday that it would cut the "de minimis tariff" on low-value products imported from China. This will further de-escalate a trade conflict between the two world's largest economies. The order follows the announcement by Beijing and Washington of a temporary truce after weekend talks. Both sides agreed to remove most of the tariffs placed on each other's products since early April. Ewa Mnthey, commodities analyst at ING, said that despite the optimism there are still reasons to be cautious. The U.S. China talks are just getting started. Manthey said that tariffs are still significant and could affect raw material consumption. A continued dollar rally may also be a barrier to metal prices. The dollar has maintained its gains and is still near the highs of one month. The dollar's strength makes metals more expensive for holders of other currencies. Citi stated in a report that copper prices could "remain resilient" in the next few weeks between $9,000 and $10,000 due to a tightening in China's copper indicators, until demand-related tariff shocks materialise. The Shanghai Futures Exchange (SHFE), which monitors copper stocks in warehouses, Last week, the weight of coal was 80,705 tonnes, down 70% from the end February. Stocks in COMEX owned warehouses The highest level since 2018. The United States is seeing a rise in metal imports due to a Washington investigation that could result in new copper tariffs. Aluminium fell by 0.2% at $2,474 per ton. Zinc fell by 0.5% to 2,667. Lead gained 0.8%, to $1,992.5. Nickel fell by 0.1%, to $15,620. Tin fell 0.1%, to $32,550. The market will be watching the U.S. Inflation data on Tuesday to get clues about Federal Reserve's monetary policies.
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Vucic, Serbian President, says he still wants to be a part of the EU despite his visit to Moscow
Aleksandar Vucic, the president of Serbia, said that his country is committed to joining the European Union. He also wants to accelerate its application for membership. Vucic visited Russia for a celebration of the 80th Anniversary of World War II Victory on May 8-9. There, he also met with Vladimir Putin, the leader of Russia and Chinese President Xi Jinping. Vucic, who met Antonio Costa, President of the European Council on Tuesday, said that Belgrade wanted to accelerate its European Integration and open more negotiations with the bloc. "The atmosphere in the EU is not great, as I was convinced by my trip to Moscow. But... "I believe that Europe will be able to understand merit-based progress," said he. Russia has been Serbia's main natural gas supplier and historical Orthodox Christian allie. Gazprom, as well as Gazpromneft, are also the owners of Serbian oil company NIS. Moscow supports Belgrade's opposition to Kosovo, the former southern province of Serbia. Vucic, who was plagued by months of anticorruption protests by students, promised that the government will work to introduce the reforms necessary for joining the EU. Serbia must eliminate corruption, reform its judiciary and media laws, mend its ties with Kosovo, and align its policies with the EU, including imposing sanction against Russia for its invasion of Ukraine. Costa, through an interpreter, said: "An important element of our foreign and security policies is the condemnation of Russia’s brutal invasion in Ukraine and the support of Ukraine to achieve a just and sustainable peace." Officials from the European Union have repeatedly asked presidents of countries aspiring to become members, including Vucic to avoid Moscow's World War Two Victory Celebrations. Costa said that he was "glad to hear" the EU membership is Serbia's top priority. Costa said he was "glad to hear" that EU membership remains Serbia's top priority. Serbia, Montenegro and North Macedonia have all been granted the status of EU candidate countries, but Kosovo is still lagging behind. (Reporting and editing by Ros Russell; Aleksandar Vasovic)
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Gold gains some ground as the dollar weakens and trade optimism fades
Gold prices rose Tuesday, as the dollar slipped lower and initial optimism about a trade truce with China faded. Investors were also looking forward to the U.S. data on inflation due later that day. As of 0639 GMT, spot gold was up 0.6% to $3,254.39 per ounce. U.S. Gold Futures rose 1% to $3,258.70. After a steep rise in the prior session, the dollar index fell 0.2%. Gold becomes cheaper for holders of other currencies when the dollar weakens. "The uncertainty surrounding the trade tariffs remains in the marketplace...the stock market is taking some time to rest after a massive rally, and we are now seeing a slight decline of the US dollar," said Carlo Alberto De Casa. The U.S. announced on Monday that it would reduce tariffs by 30% on Chinese imports and the Chinese tariffs will drop to 10% on U.S. Imports from 125%. This led to a rise in global stocks. Last month, the U.S. imposed tariffs of equal value on China. This triggered a trade conflict. Traders are now awaiting the U.S. Consumer Price Index for new signals on the Federal Reserve’s monetary policy path. Markets expect a Fed rate cut of 55 basis points this year, beginning in September. Tim Waterer, Chief Market Analyst at KCM Trade, said that if the US Dollar loses momentum due to a negative inflation report then gold could make gains. In a low interest rate environment, gold, which is traditionally considered to be a safe haven during periods of economic and political uncertainty, thrives. According to Wang Tao, technical analyst, on the technical front spot gold could retest the support level of $3,206 an ounce. A break below this mark would open the door for $3,135. The price of palladium rose 0.6% to $950.95. Platinum was up 1.2% at $987.85. (Reporting and editing by Janane Vekatraman in Bengaluru)
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GAIL (India's) quarterly profit drops more than expected due to lower gas margins and cost pressures
Gas distributor GAIL India posted a larger-than-expected drop in quarterly profits on Tuesday. This was mainly due to lower gas marketing margins, and higher costs. GAIL, India’s largest natural gas distributor based on market share, reported a net profit after taxes of 20.49 billion Rupees ($240.1 millions) for the three-month period ended March 31, a decline of 5.9%. According to data compiled and analyzed by LSEG, analysts had predicted that profit would fall on average 3.1%, to 21.13 billion Rupees. Gas marketing, which accounts for the majority of revenue generated by the company through wholesale trading and distribution of natural gas, saw a 11% increase in revenue to 316.03 trillion rupees. Analysts noted lower trading margins in the third quarter, as GAIL switched from short-term sales to long-term contracts with city gas distribution companies. They added that LPG margins were also lower due to the reduced availability of feedstock regulated by government. The company's overall costs increased 11.4% as a result of rising costs in the liquefied hydrocarbon and liquefied petrol gas businesses. GAIL's revenue from its natural-gas transmission segment, where it holds 70% of the market in the country fell by 2.6%. The company's operating revenue increased by 10.4%, to 357.07 billion Rupees. GAIL shares fell by 1.8% following the results. (Reporting and editing by Sherry Phillips in Bengaluru, Janane Venkatraman, and Yagnoseni das in Bengaluru)
Shanghai copper prices rangebound as caution tempers US/China trade optimism
The copper price ranged on Tuesday. The most traded contract on the Shanghai Futures Exchange - SHFE - was slightly lower as lingering caution tempered the relief of a U.S. - China tariff truce aimed to ease trade tensions.
As of 0700 GMT, the SHFE contract had risen 0.1% to 78,090 Yuan ($10,859.86). The London Metal Exchange's benchmark copper was up 0.5% to $9,567 per metric tonne, despite the trade agreement signed between Beijing and Washington.
Industrial metals rose on Monday after the joint U.S. and China statement promising to reduce tit for tat tariffs over 90 days, as well as work towards ending their trade conflict.
U.S. president Donald Trump has increased tariffs on Chinese imports to 145%. This is in addition to the tariffs he imposed during his first term and those levied by Biden's administration.
Other London metals include aluminium, which fell by 0.1% on Tuesday to $2478 per ton, zinc, up 0.5% at $2692, lead, up nearly 1% at $1994 and Nickel, down 0.2% at $15 605. Tin fell 0.7% to $22,360.
SHFE nickel dropped 1.5% to 123.860 Yuan. Aluminium gained 1.3% at 20,005 Yuan per ton. Zinc was flat at 22.235 yuan. Lead gained 0.3%, to 16.970 yuan. Tin rose 0.2%, to 262,070 Yuan.
(source: Reuters)