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Dollar firms after Fed lowers rates and copper falls
The copper price fell on Thursday, as traders took profits after the U.S. Federal Reserve cut rates. Meanwhile, the dollar strengthened after Fed Chairman Jerome Powell said that there would be no further aggressive easing. The benchmark three-month price of copper at the London Metal Exchange fell 0.4% to $9,960.50 a tonne as of 0940 GMT after hitting a low for a week on Wednesday, $9,925. Powell, in his press conference, reacted against the idea of larger cuts. Dollar index rose by 0.1%, to 96.98, on the back of Mr. Trump's remarks. However, it is still down 10.6% for this year. The dollar index is still down around 10.6% this year. Dan Smith, managing Director at Commodity Market Analytics said that the rate decision made on Wednesday was a key driver behind copper's drop. He also pointed out a technical charting pattern called a "triple-top". Smith stated that there has been a significant amount of resistance in the copper market around $10,160. Smith said that the price has turned three times at this point in recent months, which indicates the current momentum will be to the downside. The rest of the base-metals complex was mostly in the red. Aluminium fell as much as 0.6%, to $2,665.50 per ton. This is a new low for the week. It was also down 0.2% at 0940 GMT. The cash aluminum contract premium is added to the contract for three months On Thursday, the price of a ton had dropped to $4 from $16 on Tuesday. Lead was unchanged at $2,012 a ton. Nickel and tin also fell. (Reporting and editing by Rashmi, Harikrishnan Nair, Ed Osmond and Harikrishnan Nair; Additional reporting and editing by Amy Lv & Lewis Jackson)
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Central bank of UAE says that the UAE economy will grow by 4.9% in 2025 due to higher oil production.
Central bank of the United Arab Emirates said that the economy will grow by 4.9% in 2025 compared to an earlier forecast. This is due to increased oil production and growth in non-hydrocarbon sectors. In a quarterly report, the bank stated that it expects hydrocarbon production to increase in accordance with OPEC+ quotas by 5.8% by 2025 and 6.5% by next year. The report stated that "this real adjustment in hydrocarbon production is expected to offset the negative impact on government revenue of the decline in crude oil prices, creating a ripple effect for non-hydrocarbon sector." The UAE is a major oil exporter and has intensified plans to diversify their economy. In the first quarter, the non-hydrocarbons sector accounted for 77.1% total GDP. The central bank projects that the non-hydrocarbon GNP will grow by 4.5% and 4.8% respectively in 2025, and 2026. This growth is likely to be boosted indirectly by the higher hydrocarbon growth through increased investment, government expenditure and confidence. The UAE economy grew by 3.9% in the first three months of the year, led by a non-hydrocarbon expansion of 5.3%. This was driven by manufacturing, financial services and construction sectors. Reporting by Rachna uppal; editing by Andrew Cawthorne
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Stocks and the dollar rise after Fed cuts, but now focus is on BoE
The dollar and stocks both rose on Thursday, after the U.S. Federal Reserve cut its interest rates for the first time this year. Meanwhile, French politics kept the markets in France jittery. And the pound remained steady ahead of the Bank of England's rate announcement. The Fed's steady-as-she-goes-message from what had been a politically charged meeting lifted both the pan-European STOXX 600 and Wall Street futures 0.5%, despite an initially mixed reaction from U.S. traders on Wednesday. Asia also rallied over night. Chinese stocks reached a decade-high as local chipmakers rejoiced at reports that U.S. giant Nvidia was banned in China. South Korea, Taiwan, and Japan's Nikkei ended all more than 1% higher. The dollar's rise to nearly 0.2% on the currency market may also have been a relief for firms that export to countries other than the United States after a recent plunge to its lowest level in three-and-a-half years. The Fed's "dot plot", which is closely monitored, had indicated that two additional rate reductions would be made over the remaining two meetings of this year but only one in 2026. Fed Chair Jerome Powell also moderated expectations by saying that the central bank didn't need to act quickly, though analysts admit this could change. Richard Cochinos, RBC Capital Markets, said: "We look beyond the volatility of one or two days to find underlying trends." In this case, we expect a weaker U.S. Dollar," Cochinos said. He pointed to the expectation of U.S. interest rates falling to 3% in 2013. The euro was largely unchanged at $1.1825, and the sterling was at $1.36. It is widely expected that the BoE will keep UK interest rates at 4% in the future. The main focus will be whether the British central banks slows down the pace of its 100 billion pounds a year reduction in government bond holdings in response to the recent volatility on UK bond markets. The BoE poll conducted in August showed that economists expected the Monetary Policy Committee (MPC) to reduce the pace of monetary policy to 67.5 billion pounds (92.2 billion dollars). This is a larger drop than the 72 billion pounds predicted by the BoE poll. In response to a 25 basis point rate reduction announced by its central bank earlier, the Norwegian crown softened just a little. The Norwegian crown was close to its three-year high against the dollar, and was at a two-month high when compared with the euro. New Zealand's Dollar fell after the data showed that the economy of the country shrank much more than expected. FRENCH FOCUS After the release of August's weaker than expected labour market data, the Australian dollar fell 0.4%. The bond markets are still on the rise, with the yield of the benchmark 10-year Treasury note dropping to 4.06%, and the two-year rate, which is rising with traders' expectation of higher Fed Funds rates, at 3.53 %. The benchmark yield for the Euro Zone, Germany's 10-year bond, fell by 0.5 basis points, to 2.67%. However, attention was again focused on France, as its bond yields moved above Italy's. Brent crude oil fell 0.2% to $67.87 a barrel. Gold, a safe haven, rose 0.2% to $3,665 an ounce.
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Russia announces changes to its budget aimed at decreasing oil revenue dependence
The Russian Finance Ministry announced on Thursday a new measure that it claimed was designed to shield the state budget against oil price fluctuations as well as Western sanctions targeted at Russian energy exports. The government is lowering the price cutoff for oil that oil revenues are deposited into the fiscal reserves fund. This will ensure the fund has enough money to replenish it. At a public meeting, Finance Minister Anton Siluanov stated that "to make our finances more robust, we propose a reduction of dependence on different constraints, whether they are price-related or volume related, in the budget’s reliance on revenues from oil and gas". Siluanov's new measure, which he sought to reinstate the budget rule, after it had been abandoned following the beginning of the conflict in Ukraine, is a victory. However, Russian media claimed that he wanted a larger reduction. The budget is more vulnerable to a drop in oil prices if the rule isn't in place. Siluanov stated that the price cutoff would be reduced by $1 per year, bringing it down to $55 a barrel in 2030. Currently, the cut-off price for barrels is $60. The draft budget will be presented to the parliament on 29 September. Currently, the fiscal reserve fund has approximately 4 trillion roubles (48.25 billion dollars) available. The government plans to use 447 billion roubles (5.39 billion dollars) of the fund to cover a part of the deficit expected to exceed 1.7% GDP. Siluanov stated that the new measures will allow the state budget to reduce the share of revenues from energy to around 22% in the first eight month of 2025, down from 25%. ($1 = 82,9000 roubles). (Reporting and editing by Andrew Osborn. Darya Corsunskaya.
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Octopus Energy, UK spins off Kraken Technology arm
Octopus Energy announced on Thursday that it will spin off its technology arm Kraken Technologies and name Tim Wan the newly-separated company's Chief Financial Officer. Britain's largest electricity provider is focusing on its core business. Kraken, a company that provides energy software to major energy companies such as EDF, National Grid US, and Tokyo Gas has reached $500 million in annual revenue committed through licensing agreements. Separation will allow Kraken to expand and invest as required, while also reassuring Kraken's customers about potential conflicts of interests from being owned by another company. Kraken is a global success business that has been operating independently for a while. Completing our journey towards full independence is the next strategic and inevitable step, said Kraken CEO Amir Orad in a press release. Wan, the incoming CFO, was finance chief of the U.S. listed software platform Asana between 2017 and 2024. He oversaw the market listing. Octopus Energy has not provided specifics about Kraken's spin-off. Sky News A report from July stated that the technology group's value could reach up to 10 billion pounds ($13.63billion) if it were separated. The spin-off is expected to also boost Australian electricity and Gas retailer Origin Energy Octopus is owned by, who owns approximately 23%. Origin did not respond immediately to a comment request.
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Anglo American Australia cuts a'small number of' jobs in Brisbane
Anglo American announced on Thursday that it has cut a "small" number of jobs in its Brisbane office and coal mines in the area as part of its efforts to streamline its operations, adapt to falling coal prices and increasing costs. The Queensland company has not specified the number of job cuts. This comes just a day after BHP, its larger counterpart, cut 750 jobs in a coal mine in that same region. BHP cited low coal prices as well as high royalties from the state government for its poor returns. Ben Mansour is vice president of people and corporate affairs at Anglo American Australia. He said that the majority of the reductions were voluntary. ABC News in Australia reported that 200 Anglo American jobs were at risk, citing Isaac Regional Council. Local government did not respond immediately to the request for comment. According to its website, Anglo American has five coal mines located in Queensland's Bowen Basin that produce steelmaking coal. It sold 33% of one of its Australian coal mines that produces steelmaking coal for $1.1 billion last year to focus on its core copper assets. Last week, the company announced a merger proposal with Canada's Teck Resources. This will be second largest mining deal in history.
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Shanghai copper falls to a new low after Fed rate cut
Shanghai copper futures dropped to their lowest level in over a week Thursday, as traders booked profits after an anticipated 25-basis point interest rate reduction by the U.S. Federal Reserve and due to a higher supply from China's top consumer. The U.S. Central Bank also announced that additional rate cuts will be made in October and December. The red metal, used in construction and power generation, was affected by traders closing long positions in order to cash out profits on bets about the rate reduction. The Shanghai Futures Exchange's most traded copper contract fell below the psychologically important level of 80,000 Yuan ($11256.51) for a metric ton. It was down by 1.36%, to 79.620 yuan per ton. Early in the session, the contract reached its lowest level since September 10, at 79.500 yuan. The benchmark three-month copper price on the London Metal Exchange fell 0.43% to $9,953.5 per ton at 0815 GMT, after hitting its lowest level in a week at $9925 on Wednesday. "Prices are close to their moving average of 20 days and could fall to a previous support range between 79,000 yuan to 79,500 yuan," Xiao Jing said, lead analyst for broker SDIC Futures. The inventory data will be released on Friday. ANZ analysts also said that the higher metals production in China weighed down on sentiment in a recent note. China's refined output of copper in August increased 15% on an annual basis, reaching a near-record high level. Aluminium, nickel, tin, zinc, and lead all saw a decline of 0.91%. Nickel fell by 0.89%. Tin dropped by 1.46%. Zinc lost 1.1%. Other LME metals saw a decline of 0.26%. Nickel slipped 0.88%. Lead fell 0.1%. Tin dropped 0.63%. Zinc declined 0.73%. $1 = 7.1070 Chinese Yuan (Reporting and editing by Amy Lv, Lewis Jackson and Harikrishnan Nair).
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Australia's largest takeover deals have fallen apart
After months of disagreements over terms and valuation, a consortium led by Abu Dhabi National Oil Company withdrew on Wednesday its $18.7billion offer to purchase Australian gas producer Santos. The third failed bid by Santos in the last seven years highlights the difficulties in Australia in completing large transactions. Disagreements over valuations, shareholder approval thresholds, and regulatory risks have consistently derailed mega-deals. This is a list containing some of the largest failed mergers and purchases involving Australian companies in the last three years. ADNOC-SANTOS A consortium led Abu Dhabi's ADNOC has withdrawn its bid of $18,7 billion for Australia's Santos after commercial terms were not agreed. XRG (ADNOC's overseas division) pulled the offer, saying that "a number of factors when taken together have impacted the Consortium’s assessment of the Consortium’s indicative offer." Santos claimed that the consortium refused a fair risk sharing, which included taking responsibility for securing approvals from regulatory bodies and committing itself to gas supply and development in domestic markets. In June, the XRG consortium offered $5.76 per share. At that time, it was A$8.89. Santos' last price was A$6.74. BHP-ANGLO AMERICAN BHP Group of Australia, the largest mining company in the world, has withdrawn from its $49 billion offer to buy rival Anglo American by May 2024, after being rejected three times. Anglo's collapse was due to the structure of BHP’s deal. It required Anglo to separate its South African iron ore and platinum businesses. BHP's bid values Anglo shares at 29,34 pounds. Anglo American's last trading price was 25.18 pounds. WOODSIDE-SANTOS Early 2024, Australia's Woodside Energy (Australia) and its smaller rival Santos (Santos) ended their talks to form a global oil and natural gas giant worth up to A$80 billion. Sources claim that the talks failed because the two companies couldn't agree on the valuation level. BROOKFIELD ORIGIN ENERGY The joint bid of $10.6 billion by Canadian investment firm Brookfield and MidOcean Energy to take over Origin Energy in Australia failed in 2023 after only 69% shareholders voted for the deal. This was below the 75% threshold. Brookfield was offering A$9.53 per share. Origin's last price was A$12.41. ALBEMARLE LIONTOWN RESOURCES Albemarle, a U.S. miner, backed out of a buyout offer for Australian lithium developer Liontown Resources worth A$6.6 billion (4.39 billion dollars) in 2023 due to "growing complexity" surrounding the transaction. Albemarle offered A$3 per share. Liontown's last share price was 91 Australian cents. KKR RAMSAY HEALTHCARE After talks stalled, a group led by the private equity firm KKR & Co retracted a bid of nearly $13 billion for Australian hospital operator Ramsay Health Care. Ramsay claimed that the KKR Group had cited the weak performance of the company when deciding to not sweeten the offer. According to sources, KKR was unable to access the accounts of Ramsay Sante's European division to perform due diligence. KKR offered A$88 per share. Ramsay's last trade was at A$32.95.
Dollar gains after Fed Chair's remarks as gold falls further from records
Gold fell further from its previous session record, as the dollar rose after the U.S. Federal Reserve took a more measured approach to future easing in response to a widely anticipated 25 basis point interest rate reduction.
As of 0801 GMT, spot gold was down by 0.1% to $3,657.21 an ounce. Prices reached a record-high of $3,707,40 on Wednesday before falling 0.8%. U.S. Gold Futures for December Delivery fell 0.7% to $3691.0.
The Fed cut rates by 25 basis point on Wednesday, and said it would continue to lower borrowing costs throughout the remainder of this year.
Fed Chair Jerome Powell described the action as risk-management in response to a weakening labour market. He said that the Fed was in a situation where it is "meeting by meeting" in regards to interest rate outlook.
Peter Fertig, an analyst at Quantitative Commodity Analysis, said that there was a "bit of disappointment" in the gold market, as the market had expected the Fed to reduce the opportunity costs for gold holdings (more than they did).
Gold became more expensive for holders of other currencies due to the 0.2% increase in the dollar. On Wednesday, it fell to its lowest level in more than three-and-a half years.
In a low-interest rate environment, non-yielding gold bullion is a good investment. It's a safe haven during times of geopolitical or economic uncertainty.
According to CME Group’s FedWatch tool, traders are pricing in a 90 percent chance that the Fed will cut rates again by 25 bp at its next meeting in October.
ANZ said that it expects gold will outperform the early stages of the easing cycle. The bank said that the demand for safe haven assets in a geopolitical environment of uncertainty is likely to increase investor demand.
The SPDR Gold Trust is the largest gold-backed ETF in the world. Its holdings dropped 0.44% on Wednesday to 975.66 tons from 979.95 on Tuesday.
The price of spot silver increased by 0.1%, to $41.70 an ounce. Platinum rose 2%, to $1,389.57, and palladium remained unchanged at $1,154.0/oz. (Reporting by Ishaan Arora in Bengaluru; Editing by Jan Harvey)
(source: Reuters)