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The MORNING BID brings Europe-Fed to the forefront for now
Rae Wee gives us a look at what the European and global markets will be like tomorrow. Investors are choosing to ignore the simmering U.S. China trade tensions for now and instead take comfort from Federal Reserve Chairman Jerome Powell’s remarks that hint at future rate cuts. The global stock market was once again optimistic on Wednesday. European futures pointed to a sharply increased opening, following a volatile session yesterday due largely to the trade whiplash. Powell may be to blame for the market's reprieve. His comments on Tuesday reaffirmed expectations of more easing in the coming year and a possible end to the Fed’s balance sheet reduction. The dollar fell and gold extended its record run, with futures indicating that rate cuts of approximately 48 basis points will be implemented by December. The recent bouts of volatility in the market are a reminder that investor sentiment is still fragile. In their ongoing trade spat, China and the U.S. continue to fire volleys. The latest is Trump's threat to cut off some trade relations with Beijing in relation to cooking oils. Investors assume that the two sides are going to continue to push each other, but not to fight. U.S. trade representative Jamieson Greer said on Tuesday that it was up to China whether or not the increased tariffs would kick in by November 1, but admitted it could be difficult for Beijing find a way out. Politics is also an important issue around the globe. Local media reported that the Japanese parliamentary schedule committee couldn't agree on holding the vote to choose the next premier on October 21. This prolongs the uncertainty surrounding Sanae Takaichi, who is seeking to become Japan's first woman prime minister. In France, the focus will be on the next steps for the government after French Prime Minister Sebastien lecornu announced that he would suspend a historic pension reform until the election in 2027. Earnings from Morgan Stanley and Bank of America are due in the afternoon on Wall Street. After their peers announced a set of solid results on Tuesday, expectations are high. The top U.S. banks predicted that business would continue to grow as equity markets surged in the last quarter, and the economy and consumers spending held steady despite the sweeping tariffs. The following are key developments that may influence the markets on Wednesday. French political developments Bank of America and Morgan Stanley Earnings Fed's Miran Bostic and Schmid talk Release of Fed's Beige Book
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Oil prices drop as the market focuses on excess supply and US-China trade tensions
The oil prices continued to fall on Wednesday as investors considered the International Energy Agency warnings of a surplus supply in 2026, and the U.S./China trade tensions which could reduce demand. Brent crude futures dropped 21 cents or 0.3% to $62.18 a bar by 0425 GMT. U.S. West Texas Intermediate Futures dropped 16 cents or 0.3% to $58.54 a bar. The previous trading session saw both contracts close at lows of five months. The International Energy Agency (IEA) said that the global oil market may face a surplus of up to 4 million barrels a day next year, a larger glut than its earlier predictions, as OPEC+ and its rivals increase production and demand remains sluggish. The market is focused on the excess supply amid mixed signals of demand. Emril Jamil is a senior oil analysts at LSEG. He said that ebbing geopolitical risk and escalating tensions in trade are adding to the pressure on prices. In the last week, the trade dispute between China and the United States, two of the largest oil consumers in the world, has re-emerged. Both countries have imposed additional port fees for ships transporting cargo between them. This will increase trading costs, disrupt freight flow and likely lower economic output. The focus will be on the recent escalation of trade tensions between China and the US, and the risks that this poses to the global economic system," said Tony Sycamore. Tensions have increased between the two world's largest economies after China announced last week a major expansion in rare earth export controls. U.S. president Donald Trump has threatened to increase tariffs on Chinese products to 100%, and tighten export restrictions of software from November 1. Yang An, an analyst at Haitong Futures, said that the current oil price is largely determined by the level of global oversupply as reflected in the changes in inventories. The weekly inventory report will give traders a good idea of the demand in the United States. A preliminary poll indicated that U.S. crude stockpiles were likely to have increased last week while gasoline and distillate stocks are likely to have decreased. Six analysts surveyed by estimated that on average crude inventories increased by around 200,000 barrels during the week ending October 10. The American Petroleum Institute's weekly industry report is due at 4:30 pm EDT (2030 GMT), and the U.S. Energy Information Administration will release its data at 10:30 am EDT (1430 GMT), on Thursday. The delay is due to Monday's Columbus Day/Indigenous Peoples' Day. Sam Li reported from Beijing, and Jeslyn Leh in Singapore. Sonali Paul and Christian Schmollinger edited the report.
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Gold reaches record highs on Fed rate-cut betting, US-China Trade woes
Gold reached a new high on Wednesday just below the $4,200 per ounce mark, boosted by expectations for further U.S. interest rate cuts. Meanwhile, renewed U.S. China trade concerns also increased demand for safe havens. As of 0252 GMT the spot gold price was up 0.8% to $4,173.56 an ounce after reaching a session high of 4,186.68. U.S. Gold Futures for December Delivery gained 0.7%, to $4192.90. The U.S. president Donald Trump announced on Tuesday that his administration would produce a list of "Democrat programs" on Friday, which will be closed due to the federal government shutdown. Matt Simpson, senior analyst at StoneX, said that the U.S. shutdown and Jerome Powell's dovish remarks have been two of the most recent reasons why gold prices are on an upward trend. Federal Reserve Chair Jerome Powell stated that the U.S. labor market was subdued. However, the economy may be "on a slightly firmer trajectory than anticipated." Powell said that interest rate decisions will be taken "meeting by meeting", balancing the labour market's weakness and persistent inflation above the target. Investors have priced in the near certainty of a Fed rate cut of 25 basis points in October and December. Bullion is more likely to perform well when interest rates are low and there is political and economic uncertainty. Gold has risen 59% in value year-to date, mainly due to geopolitical and financial uncertainties, central bank purchases, the de-dollarisation of currencies and strong exchange-traded funds. Simpson added that "this rally has become a momentum trading, where traders pile into the market to chase away prices." Trump stated that Washington would consider cutting off some trade relations with China, such as in the area of cooking oil. On Tuesday, both countries started imposing port fees tit for tat. The International Monetary Fund increased its global growth forecast for 2025, citing better than expected tariff and financial conditions. However, it warned that renewed U.S. China trade tensions may curb growth. Silver increased 0.3% to $51.60 after hitting a record of $53.60 Tuesday. This was due to the gold rally and tightening of supply on the spot market. Palladium and platinum both rose by 0.2%, to $1,528.50. (Reporting and editing by Sherry Phillips, Subhranshu Sahu and Ishaan Aroo in Bengaluru).
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Shanghai copper declines amid escalating US-China trade standoff
Shanghai copper fell on Tuesday, as tensions escalated between the two largest economies in the world, China and the United States, threatening to increase demand for the metal. As of 0315 GMT, the most active copper contract traded on Shanghai Futures Exchange fell 0.91%, trading at $8,933.60 per metric ton. Donald Trump, the U.S. president, threatened to cut off some trade relations with China on Tuesday in relation to cooking oils as a form of retaliation for China not "purposely" buying U.S. soy beans. Trump's threat was the latest escalation of trade tensions ahead of a high-stakes summit between Trump and his Chinese equivalent Xi Jinping in South Korea later this month. China imposed an export control on rare earths, to which the U.S. reacted with a threat of a 100% tariff, impacting the copper, used in construction and power, that is important for the macro-economy. Both sides sent conciliation signals. Beijing has stressed that the export control on rare earths does not represent a complete export ban. However, it is still open to talks. Scott Bessent of the U.S. Treasury Department said that talks between leaders in South Korea were still proceeding according to schedule. Shanghai coppe prices have dropped after the red metal reached a 16-month high on SHFE in early October, when mine disruptions such as the Grasberg closure triggered concerns about supply. Investors are profiting from the rally triggered when Grasberg was suspended for the time being, but risks are high as China and the U.S. trade barbs over export controls and tariffs," said a Shanghai copper trader, who requested anonymity because they were not authorized to speak to media. Benchmark three-month Copper, on the other hand rose 0.47%, to $10,628 per ton. London's future rose amid renewed U.S. interest rate cuts hopes, as Jerome Powell, the U.S. Federal Reserve chairperson spoke on Tuesday and signaled that economic conditions were unchanged from a few weeks ago when policymakers cut rates. They also projected two further reductions this year. Nickel and lead were little changed. Zinc also declined by 0.86%. The LME's other metals saw a gain of 0.27% in aluminium, 0.26% in nickel, 0.24% in lead, and 0.8% for tin. Zinc, however, posted a loss of 0.37%. Reporting by Dylan Duan, Lewis Jackson. $1 = 7.1261 Chinese Yuan Renminbi
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Eversource Expects $75m Charge Due to Offshore Wind Sale Settlement
Utility firm Eversource Energy said on Tuesday it expects a $75 million or 20 cents per share after-tax charge in the third quarter due to an increased liability for the two wind projects sold to Global Infrastructure Partners (GIP).In 2024, Eversource sold its stake in the South Fork and Revolution Wind projects to GIP, receiving adjusted gross proceeds of $745 million, down from $1.12 billion due to reduced capital spending and delayed commercial operations of Revolution Wind.The company added it increased its expected payments to GIP by about $285 million, following revised construction cost estimates including higher insurance expenses, tariff impacts, turbine vessel damage and costs tied to a temporary stop-work order issued by the Bureau of Ocean Energy Management in August.However, the company also said it expects to offset part of the impact with an estimated $210 million federal tax benefit linked to tax losses on its offshore wind investments.The company also said it is narrowing its full-year adjusted profit forecast to between $4.72 and $4.80 per share from a previous forecast of $4.67 to $4.82 per share.(Reuters)
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BHP's Slattery: Australia must reduce red tape and power costs to compete
Geraldine Slattery is the head of BHP Australia. She said that Australia must increase access to low-cost power and speed up environmental approvals if it wants to compete with other nations for mining investment capital. The comments of the world's largest listed miner highlight the rising competition for capital, with nations such as the United States who are ramping up their mining-friendly policies to spur the development of an alternate supply chain to the dominant producer China. Slattery explained what she believes Australia needs "to compete on the global market". Slattery, in remarks for a conference held in Western Australia, said: "This is no small matter. It's the linchpin that will make the resources sector and many other sectors, more productive." BHP CEO Mike Henry told the Financial Times this week that the company is considering reopening older mines in Arizona due to the U.S. Administration's "breathtaking shift" in building up the mining sector. Australia has reached the final stages of negotiations for reforming its environmental laws. Local media reported that new legislation will be introduced in the final two weeks of this year's parliament session. Slattery has been tipped as the top candidate for BHP's CEO position. He has worked at BHP for over 30 years and led its petroleum division. Henry was expected to leave BHP by the middle next year, after a six-year typical tenure. "Australia's growth in labour productivity is at its lowest level for sixty years." This isn't a random economic statistic. This trend poses challenges not only in attracting future investments, but also in maintaining the higher standard of living enabled by productivity," she said. BHP has allocated more than A$840 (555.16) million for its Olympic Dam Copper operations in South Australia. The miner is preparing to make a decision on investment by mid-2027, to double the output of the state. Slattery also listed Australia's need to reduce taxes in order to compete with other developed countries, improve workforce development, and embrace automation and AI, which, she said, was key to addressing productivity challenges.
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Iron ore prices rangebound due to Sino-US trade issues, but firm demand in the near term offsets this.
Iron ore futures ranged on Wednesday as worries about the worsening Sino US trade dispute and China's low inflation data, its largest consumer, offset optimism regarding remaining strong near-term demand. Donald Trump, the U.S. president, said that Washington is considering ending some trade relations with China. The U.S., China and other countries began to charge additional port fees for ocean shipping companies on Tuesday. This is another sign of the tensions that exist between the two world's largest economies. These tensions could impact the market sentiment and put pressure on commodity prices. As of 0303 GMT on Wednesday, the most-traded contract for January iron ore on China's Dalian Commodity Exchange dropped 0.32%, to 785.5 Yuan ($110.22), per metric ton. This was after Tuesday's record lows, which were more than a month old. As of 0253 GMT, the benchmark November iron ore traded on Singapore Exchange was $0.36% higher. Official data released on Wednesday showed that China's Consumer Price Index (CPI), which measures consumer prices, fell 0.3% on an annual basis in September, compared to a 0.2% drop in a survey. This was due to the fact that domestic weakness continued and trade tensions increased, while consumer confidence also suffered. Analysts at Everbright Futures said in a report that "the strong ore demand continued to support prices", halting any potential downside. The data released by the China Iron and Steel Association, a state-backed organization, showed that the daily crude steel production among members steelmakers increased by 7.5% compared to the same 10-day period in September. Coke and coking coal, which are used to make steel, both rose by 1.62% and 0.7 percent, respectively. The benchmarks for steel on the Shanghai Futures Exchange are mixed. The Shanghai Futures Exchange saw a mixed performance in steel benchmarks.
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Asia shares recover as dollar eases, Fed reduces bets and reclaims spotlight
The Asian stock market staged a modest rebound on Wednesday. This was helped by the dovish remarks of Federal Reserve chair Jerome Powell, and positive bank earnings in Wall Street. However, simmering U.S. - China trade tensions kept risk appetite at bay. Powell said that the possibility of further rate reductions was still open on Tuesday, and that the long-term effort of the central banks to reduce the size of their holdings could be nearing its end. Some viewed his comments as dovish. They lifted the markets slightly, and reinforced expectations for more easing in this year. By December, roughly 48 basis point worth of cuts will be priced into the market. Tom Kenny is a senior international economist with ANZ. He said that the Fed could announce its intention to end quantitative tightening at the upcoming FOMC meeting in October. We expect the Fed will cut 25bp in both October and December FOMC Meetings. The market was also supported by the strong earnings of U.S. banks and the upward revision to the IMF's global growth forecast for 2025. This came after the market had fallen on signs of renewed tension in U.S. China trade relations. The Nikkei gained 0.8%, after falling 2.6% the previous session. Nasdaq and S&P futures both rose by about 0.1%. Even so, the sentiment was fragile. On Tuesday, U.S. president Donald Trump said that Washington would consider terminating certain trade ties with China. This included in relation to cooking oils. Both the U.S.A. and China have begun charging extra port fees to ocean shipping companies that transport everything from holiday toys, to crude oil. The markets have been thrown into turmoil in recent sessions due to a rapid escalation of the U.S./China trade war. Trump announced an additional 100% duty on Chinese goods as retaliation against Beijing's dramatic expansion of export controls on rare Earths. It does indicate that a lasting ceasefire is unlikely to be achieved easily. It's a reminder to the market that they are shooting these arrows, and then walking them back," said Tony Sycamore. U.S. trade representative Jamieson Greer said separately on Tuesday that the timing of additional tariffs of 100% on China's exports to America depends on whether they kick in November 1, or earlier, but acknowledged that Beijing might find it difficult to find a way out. POLITICAL UNCERTAINTY Sebastien Lecornu, the French Prime Minister, promised to delay a historic pension reform until 2027, a measure that would provide some relief for investors. EUROSTOXX50 futures gained 0.8% in Asia. FTSE and DAX Futures also rose by roughly 0.3%. Juan Perez is the director of trading for Monex USA. He said: "I believe that anything that can bring relief to the squabbles within the French Parliament is an absolute victory." The euro last traded at $1.1611 despite being largely insulated from France's political turmoil. The Fed's cut bets weighed on the currency market as the dollar fell 0.25% to 151.42 yen and 0.06% to 0.8009 Swiss Franc. The fragile risk sentiment also supported the safe-haven yen as well as the Swissie. Spot gold, meanwhile, continued its record-breaking run, and last rose 0.9% to $4,179.80 per ounce. This was helped by the geopolitical, economic, and expectations of a U.S. interest rate cut. Brent crude futures fell 0.1% to $62.33 per barrel while U.S. crude dipped 0.07% to $58.66.
Andy Home: Bearish funds turn away from volatile copper and towards aluminium
Fund managers have been hit hard by the price volatility that has resulted from U.S. tariffs on imports of copper.
Since February when U.S. president Donald Trump ordered a probe into copper imports, the copper market has been dominated by the premium that the CME U.S. price commands over the London Metal Exchange (LME)'s international price.
The trade has been volatile and the price gap between the US and Europe has undermined the traditional investment role of Doctor Copper as a proxy to the state in global manufacturing.
Many fund managers simply gave up. Investor positioning and open interest in the CME Copper contract has dropped dramatically over the past couple of months.
Others have turned to aluminium in order to express their negative views of the global trade situation.
HEADLINE TURBULENCE
Money managers were evenly divided between long and shorter bets when they began the year. Fund positioning on CME copper contracts amounted 134,000 contracts.
According to the latest Commitments of Traders Report, the total participation has decreased to 82,000 contracts. Investors are now net long at 24,780 contracts.
Trading on the CME copper contract dropped 35% year-over-year in the period January-April, while the market open interest reached a new low of one year at the end last month.
It's not surprising that copper is still in the news, given the fact that the investigation under Section 232 into U.S. Imports has been ongoing for a long time.
The constant stream of headlines about the copper tariff as well as the wider tariff standoff with China have turned the trading of metals into a wild ride. This is especially true for the CME contract.
Many investors have reduced exposure to risk, either voluntarily or involuntarily.
Funds that expected copper prices to drop due to trade tariffs impacting global growth were particularly hard-hit. Money manager short positions are at their lowest level since November 2022.
Bulls are also not raging. Since the middle of April, the collective investment's long position has flattened.
ALUMINIUM UNDER THE HAMMER
No indications exist that money from the CME is now on the London copper markets. Fund positioning for LME copper has also been reduced due to a decline in both bullish and bearish bets.
Money managers who want to convey a negative macro-picture have instead focused their attention on aluminium.
The CME aluminium contract does not reflect the LME international product but is instead a U.S.-cleared customs price.
The CME's U.S. Midwest Physical Premium Contract is the only place where the trade in tariffs can be done.
This has prompted funds to increase their short positions in LME aluminum to the highest level since July last year. Investors have also slashed their bets for higher aluminium prices. This has resulted in a net fund position that is now neutral, having been super-bullish just a few months ago.
Divergent Fortunes
Recent price differences between copper and aluminium can be explained by the rotation of funds from copper to aluminum.
LME's three-month copper is now back to its previous $9,500/metric ton price after a 17% increase from the lows of April 7.
LME aluminium, on the other hand, has recovered a modest 6% from April's sell-off. The price of three-month metal has fallen by 4% since the beginning of the year, and is now trading at around $2450. It is the second weakest performer in the LME base metals, after zinc.
Bears may still have a rough time with aluminium. LME warehouse inventories are steadily decreasing, time-spreads were contracted in the last month and the benchmark cash to three-months period flirted with a backwardation.
However, fund managers still feel that it's a lot safer than trying to ride a copper roller coaster.
These are the opinions of a columnist who writes for.
(source: Reuters)