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European shares continue to fall as the focus is on the looming US shutdown
European shares eased Tuesday, with energy stocks leading the losses due to the drop in oil. Investors also weighed the impact of a U.S. shutdown which could delay the release the closely watched monthly jobs data. By 0856 GMT the pan-European STOXX 600 had dropped 0.2%, to 554.5 points. However, it was still on track for its third consecutive monthly and quarterly gains. The stock is expected to rise by nearly 1% in September, compared with its 0.7% increase in August. Investors expect a rise in OPEC+ supplies later this week. TotalEnergies in France and BP in the UK both fell by more than 1%. Chemicals and automobiles were also among the sector laggards. JD Vance, the U.S. vice president, said on Monday that a shutdown of government was imminent as budget negotiations with Democrats had stalled. This could delay the release later this week of crucial jobs data. Daniela Sabin Hathorn is a senior market analyst with Capital.com. She attributed Tuesday's decline in European markets to "spillover" sentiment from the global market. Hathorn said, "Everything is so focused on the data and Federal Reserve easing. That could throw a little spanner into the works." There are also growing expectations that Federal Reserve will cut interest rates at its meeting in October. The first cut of the year, in September, saw European stocks rise by 0.7%. The UK economy expanded by 0.3% during the second quarter. French preliminary inflation was 1.1% in September. German inflation rose as expected in four states. The Eurozone inflation data will be released on Wednesday. ASOS, a British fashion retailer, warned that its annual revenues would be below market expectations because of weak consumer demand. Hornbach's shares fell by 4.6% following the German DIY store operator's disappointing second-quarter adjusted earnings.
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Bloomberg News reports that China has banned all BHP iron ore shipments as the pricing dispute intensifies.
Bloomberg News, citing sources familiar with the situation, reported that China's iron ore purchaser has instructed major steelmakers to temporarily stop purchasing any seaborne iron ore freights denominated in dollars from BHP. China is the largest consumer of iron ore in the world, and purchases about 75% global seaborne ore. BHP is also the largest publicly listed mining company. China Mineral Resources Group, a state-owned buyer of iron ore, was created in 2022 to help Beijing increase its iron ore pricing power. BHP reported last month that it had recorded its lowest annual profit in five years due to a slowdown in demand from China, which impacted iron ore prices. It also indicated a reduction in capital and exploration expenditure. Bloomberg reported earlier this month that CMRG had urged steel mills in the country to suspend their purchases of BHP Jimblebar Blend Fines, after discussions on long-term agreements failed. Bloomberg reported on Tuesday that CMRG's latest directive was an extension of earlier curbs. BHP Group has not responded to a comment request. CMRG didn't respond immediately to a request for comments sent via email. Reporting by Preetika Parshuraman from Bengaluru, and Kanjyik Gosh from Barcelona. Jan Harvey and Mark Potter edited the story.
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As the threat of a US shutdown grows, caution sets in
On Tuesday, caution prevailed on the world's markets. The dollar and equity prices fell and gold hit another record high amid concerns that a U.S. shutdown could delay important jobs data. The dollar is broadly weaker. European stocks are lower in early trading and U.S. stock futures have fallen a day after U.S. vice president JD Vance stated that the government appears "headed for a shutdown", after President Donald Trump's budget negotiations with Democratic opponents had made little progress. A shutdown of the government would delay Friday's important employment figures, and put the spotlight on the Labor Department JOLTS report for August job openings that is due on Tuesday. This could also affect the Federal Reserve's outlook, as they cut rates earlier in the month. SHUTDOWN CAN LEAVE FED WITHOUT KEY DATA James Rossiter is the head of global macro-strategy at TD Securities, London. "The Fed is worried that there could be a long shutdown if the government shuts down. If we don't receive Friday's CPI or the jobs report, what will happen?" He was referring to U.S. data on inflation. The pan-European STOXX 600 closed at a loss of 0.2% while Japan's Nikkei fell by 0.25%. MSCI's broadest Asia-Pacific share index outside Japan rose by almost 0.5%. It is expected to gain over 5% in the month of April. China's blue chip CSI300 Index rose also almost 0.5%. This is the longest streak of gains since October 2017 and it marks its fifth consecutive month. The world stock market could see a sharp decline if a prolonged government shutdown threatens to dampen the U.S. economy. U.S. shares are expected to finish September with a gain of more than 3%, while European stocks have gained nearly 1% in this month. The Australian dollar gained after the central banks held rates at their current levels, as was widely expected. Oil prices dropped over 1% due to expectations of increased production from OPEC+. Meanwhile, China's manufacturing activity declined for a sixth consecutive month in September. Another record high for gold U.S. shut down worries contributed to gold's spectacular rally. Gold has reached a record high price of $3,820 an ounce. It is up over 12% this month and on course to be its largest monthly percentage gain since Nov 2009. A U.S. shutdown without a deal would start on Wednesday, the day that new U.S. duties are due to be imposed on heavy trucks and patented drugs, among other things. On Monday night, the White House announced that new tariffs would be applied to furniture and cabinets on October 14. The dollar is now on the defensive. The U.S. dollar was down 0.4% to 147.95yen. The euro was up by 0.1% at $1.1742, and the Swiss franc was also slightly stronger against the dollar. The dollar index is expected to finish September with little change. ING currency analysts wrote in a report that the yen would likely outperform other currencies as a hedge against a U.S. shutdown. The U.S. JOLTS Report is one of several indicators that will be released ahead of Friday's September employment report, which is considered crucial to the Fed in determining the timing of rate reductions. The Fed's meeting on October 29 could be thrown into confusion by a prolonged government shutdown. Analysts expect JOLTS will show that job openings remained stable at around 7.18 million in august. China's purchasing manager's index increased to 49.8 from 49.4 at the end of August. This is below 50, which separates growth from contraction. The report suggested that producers were waiting for more stimulus to boost the domestic demand as well as clarification on a U.S. Trade Deal. The Reserve Bank of Australia also left its cash rate at 3.60% after recent data indicated that inflation could be higher than expected in the third quarter, and the economic outlook was uncertain. The data that inflation was rising in four important German states did not have a significant impact on the market. The oil price remained weak due to the anticipated increase in production by OPEC+, and the resumption from Iraq's Kurdistan Region of oil exports. Brent crude oil fell 1.25%, to $67.11 a barrel. U.S. crude dropped 1.25 %, to $62.66.
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Sources say that India's private coal-power firms want China to relax its equipment restrictions.
Industry and government sources claim that India's private power producers are urging the government to allow the importation of equipment from China. They say the domestic resources available in the country are not enough and expensive, and the country is looking to increase its coal-based generation. India's Ministry of Power, as part of its "Make in India", mandated that homemade equipment be used in 2021. The initiative was designed to boost local manufacturing. This programme was also launched at a time of high diplomatic tensions between China and India. According to a letter that was reviewed by, the Association of Power Producers (which represents private coal-based developers) wrote to the Central Electricity Authority, on June 3, asking for an exemption from "Make in India". Sources said that while the association didn't mention China by name in its letter they believed buying coal-powered equipment from Beijing would be the only option available to Indian companies. The association added that if allowed to import coal power equipment from China, project costs could be cut by half. Sources said that the electricity authority is reviewing the request of the association. The power ministry and the electricity authority did not respond to comments. India plans to increase its coal power by 97 gigawatts. Sources said that 48-50 GW of existing capacity was already built with Chinese equipment as these plants were constructed before 2021. In its letter, the Association of Power Producers stated that domestic vendors were unable to provide timelines for the completion of projects before 2030 at competitive rates. It also noted that local suppliers of power equipment had not built new plants of specific capacities in the last decade. The association stated that easing restrictions will help complete stalled project, expand existing facilities, and support new greenfield development where Indian power equipment manufactures lack "proven designs." According to the data of the power ministry, about 22 GW, or almost 10% of current coal-fired power generation capacity, is on hold, or unlikely to begin generating electricity, due to financial strain. Sources said that the financial strain highlights how lower equipment imports can lower project costs, and support private energy producers who are looking to expand.
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Von der Leyen: EU will have new climate goals by COP30 summit
The European Union is going to set emission-cutting goals for 2035-2040, just in time for COP30 in November. This comes after the European Commission President said that the EU missed a U.N. date for approving the goals earlier this month. China and other major economies have met the U.N. deadline. Ursula von der Leyen, a member of the EU delegation in Brussels, said via video message: "We will set NDC goals for 2035 and 2020 before COP30 in Belem." The U.N. calls countries' climate goals "nationally defined contributions". SHIFTING TACTICS FOR CONSENSUS Von der Leyen, who was trying to get EU member states to take a stand on the issue, acknowledged that pragmatism was needed given the differences between the countries. The way we achieve these goals will be different. The world is changing. The global competition is fierce, and it's not always fair. "We need more flexibility and more pragmatism. But by staying on course, we give stability to workers, clarity to businesses, as well as certainty to investors," said Ms. Shen. Von der Leyen stated that Europe will stand behind its climate goals and that Brussels is cutting red tape for businesses to assist with the green transformation. They are also investing in power grids, so consumers can benefit from cheaper renewable energy. As U.S. president Donald Trump sought to shift the focus away from climate change, Europe prioritized defence spending and some EU member states urged the Commission to slow its green agenda. The COP30 talks on climate change in Belem will test the willingness of major economies to continue their efforts. Some are not confident that the EU will meet its goals on time. France, Germany, and Poland are among the countries that have asked governments to debate climate goals during a summit scheduled for late October. The member states will have only a few short weeks to complete and approve their targets before the COP30. I don't even know if we'll be on time for Belem. A senior Polish official stated that it depends on a number of factors at this time. Reporting by Kate Abnett. (Editing by Barbara Lewis, Mark Potter and Kate Abnett)
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Sources say that Danantara Indonesia’s $3 billion ‘Patriot’ bonds issue has been oversubscribed
Two sources familiar with the matter on Tuesday said that the sovereign wealth fund Danantara Indonesia has received more commitments for its "Patriot Bond" offering than the 50 trillion rupiah (3 billion dollars) target. The bonds were sold to companies in five- and seven-year tranches at a rate of 2%. This is lower than the 10-year government bond yield, which is around 6%. They will help finance Indonesia's energy programs, including waste-to-energy. One source said that the launch of the bond was originally scheduled for October 1, but it will be delayed. She did not give any details but stated that the delay is not due to lack of interest. One source said that it had been oversubscribed. Second source: The offering was oversubscribed by 51 trillion rupiah or 1 trillion higher than the target. Companies committed to purchase within the range 500 billion to 3 trillion. According to another source familiar with the bond offering, the launch is scheduled for October 15. Danantara didn't immediately respond to an inquiry for comment. Pandu Sjahrir, chief investment officer at Danantara and the chief of the fund, said in an August interview that the Patriot Bonds were well received by leading Indonesian companies. Pandu said that some of Indonesia's wealthiest people, such as Prajogo Pagestu who runs the Barito Pacific Group, Garibaldi Thohir of AlamTri Group and Franky Wdjaja from Sinar Mas Group had expressed an interest in purchasing the bonds. ($1 = 16,685,0000 rupiah). Reporting by Stefanno Sulaiman, Gayatri Suryo and Muralikumar Aantharaman. Editing by Muralikumar Aantharaman.
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Tamboran, an Australian company, will buy Falcon Oil & Gas from Falcon Oil & Gas at a price of $172 million
The two companies announced on Tuesday that Australian natural gas producer Tamboran Resources had signed an agreement with Irish oil and gas company Falcon Oil & Gas to purchase it in a deal worth C$239,000,000 ($171.81,000,000) in cash plus stock. The agreement aims to strengthen Tamboran’s position in the Beetaloo Basin in Australia’s Northern Territory. This area is known for its immense natural gas potential. It also reflects the growing interest in untapped resources in this region, and exploration activities are expected to increase in the next few years. Through the deal, the firm would consolidate their presence in the area by creating a business of 2.9 million acres in the basin. Tamboran has agreed to buy all Falcon subsidiaries in exchange for 6.5 million shares listed on the U.S. stock market and a cash payment amounting to $23.7 million. The deal values Falcon subsidiaries at a implied offer price per share of C$0.2154, which is a 19.7% increase over Falcon's previous close. Falcon CEO Philip O'Quigley stated that Falcon shareholders would benefit from increased exposure to the critical pilot development in the Beetaloo currently underway. Both boards have unanimously approved the merger, which should close in the first half of 2026. This is subject to shareholder approval and regulatory approval. On completion of the deal, Tamboran would hold 73.2% and Falcon shareholders around 26.8%.
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Shanghai tin reaches near six-month peak on Indonesian supply concerns
Shanghai tin reached a six-month high Tuesday as supply concerns grew following reports about a crackdown against illegal mining in Indonesia, a key producer. The Indonesian president Prabowo Subito ordered the closing of 1,000 illegal tin mining operations on the island Sumatra where tin-mined goods were being smuggled on small boats and ferryboats, according to state media Antara. Fears of a lower supply in the second largest tin-producing country in the world fueled the rises of the soldering material. Shanghai Futures Exchange's most active tin contract ended the dayday trading at 274,990 Yuan ($38.609.18) for metric tons. The contract gained 0.93% in the last month and 3.56% over the third quarter. It reached 283,000 yuan per ton earlier in the day. This was the highest level since April 3. As of 0737 GMT, the benchmark three-month tin price on the London Metal Exchange had fallen by 0.59% to $35,280 per ton. This was down from $35,510 a day earlier, its highest level since April 4. The contract was positioned for a quarterly increase of 4.64% and a monthly rise of 0.75 %. The market's activity is usually slowed down by China's National Day, which takes place from October 1-8. Analysts at Chinese broker Jinrui Futures reported that orders from consumer electronics makers and home appliance manufacturers declined, which kept demand for tin low. Copper, meanwhile, continued to gain and surpassed tin as the top performer in SHFE base metals for this month. Copper rose 1.42%, to 83350 yuan per ton. Its price has risen 5.11% in the last month, and 4.26% over the past three quarters. Metal prices were supported by the disruptions in supply at Freeports' Grasberg mine in Indonesia and China's plans to stabilize growth in the nonferrous industry. Zinc fell 2.6%, while lead dropped 3.18 percent. Nickel fell by 0.38% while aluminium remained stable. Copper, among other LME metals fell 0.35%. Aluminium was down 0.37%. Zinc dropped 0.66%. Nickel declined 0.54%. Lead fell 0.25%. $1 = 7.122 Chinese Yuan (Reporting and editing by Dylan Duan, Lewis Jackson)
JSW Poland posts a second-quarter loss due to weak coal prices and high costs
JSW, the state-owned coal miner in Poland, reported a loss for the second quarter of 724.1 million Zlotys ($198.99 millions) compared to the loss of 6 billion Zlotys for the same period last year.
Analysts polled by JSW had predicted a loss of 658 million zlotys, but the actual loss was 1.36 billion zlotys.
Why it's important
JSW, Europe's largest producer and exporter of hard coking coal, used in the production of steel, is struggling to keep up with the rising costs of energy and coal. It reported a loss of 7.24 billion zlotys for 2024, after reducing the value of the assets.
By the Numbers
JSW's revenues for the second quarter decreased 17% on an annual basis to 2,28 billion zlotys. Total coal sales increased 15% over the past year, reaching 3 million tonnes. Production of coal also grew 16.4%, to 3,34 million tonnes.
KEY QUOTES
Ryszard Janta, President of the JSW Management Board said that "the market has not been in favour of us in recent months".
He added that "uncertainty" was mainly due to the growing protectionist sentiment, deterioration of the European and world steel industries, increasing Chinese steel exports, which led to a flood of low-cost imports into Europe, as well as a threefold increase of Indonesian coke. ($1 = $3.6388 zlotys). Reporting by Adrianna Maciag and Marta Maciag. Editing by Helen Reid.
(source: Reuters)