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Investors mix up the major Gulf markets as they look for earnings; FAB boosts Abu Dhabi
The major Gulf stock markets were mixed early on Wednesday as investors awaited the release of earnings reports. However, Abu Dhabi's index rose on the back of First Abu Dhabi Bank's results. First Abu Dhabi Bank, the largest lender in the United Arab Emirates, saw its index rise by 4.6%. FAB, on track for its best day in late July, reported a 21 percent increase in the third-quarter's net profit at 5.39 billion dirhams (1.47 billion dollars), which was above analysts’ average estimates of 4.54 billion. Abu Dhabi Islamic Bank, whose trading had been suspended before its earnings announcement, was the last to gain 4%. Saudi Arabia's benchmark stock index rose 0.1%, thanks to a 1.5% increase in the oil giant Saudi Aramco. The oil price, a major factor in the Gulf's financial market, rose by 2% on Wednesday. This was boosted by supply risk due to sanctions and by hopes for a U.S. China trade agreement. Etihad Etisalat, a telecoms company, rose 3.4% after it reported a higher third-quarter profit. Sahara International Petrochemical Company, however, fell 4.6% to become the worst performer on the index as it posted quarterly losses. Sipchem reported a net loss 468.7 millions riyals (124.97millions), compared with a profit 103.2 million of riyals the previous year. The International Monetary Fund (IMF), which last week raised its growth forecast for 2025 for the Middle East & North Africa, said that the risks in the region remain to the downside despite recent improvements in geopolitical conflicts. Dubai's main stock index was flat with Emirates NBD up 0.7% as the largest lender prepares to announce its quarterly earnings. The Qatari Index eased by 0.1% during choppy trading, mainly due to a fall of 0.4% in Qatar Islamic Bank. This shariah compliant lender will soon announce its nine-month results.
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Minister says JSW Poland will not receive energy fund contributions back
The Polish finance minister announced on Wednesday that the state-controlled coal firm JSW could not get back the 1.6 billion Zlotys (412 million dollars) it had paid into a fund set up to offset rising energy prices. At 0840 GMT, the company's stock was down 4.6%. Poland's government requested a contribution by JSW in order to fund a mechanism that would freeze energy prices. JSW asked for a refund. Contribution that it paid between 2023 and 2024 citing its financial difficulties. Europe's biggest producer of feedstock for the steel industry, which is affected by the falling price of coking coal as well as high wages, faces liquidity problems and must restructure. At the moment, it is not possible. "With coal prices falling, JSW is facing serious liquidity issues," said Andrzej Domaski, Finance Minister, on public radio Wednesday. I would like to know what steps will be taken in the area of cost. Last week, Donald Tusk, the Prime Minister of Poland, said that the country's defense industry could be involved in restructuring JSW. Shares of the company rose after Poland's Energy Minister proposed that it be included in a law draft which would allow its miners to take part in a voluntary leave program, allowing them to save money. $1 = 3.6365 Zlotys (Reporting and editing by Thomas Derpinghaus; Pawel Florkiewicz, Marek Strzelecki).
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Sources say that the new Japanese PM is planning a large-scale economic stimulus in order to combat inflation.
Sanae Takaichi, the new Japanese Prime Minister, is working on an economic stimulus package which is expected to be larger than last year's $92billion to help families combat inflation. Government sources familiar with this plan told Reuters that it is being prepared to surpass last year's $92billion. Takaichi has taken her first major economic initiative after taking office Tuesday. The package, which totals more than 13.9 trillion dollars (92.19 billion yen), reflects a commitment to "responsible fiscal policy". Sources declined to identify themselves because it was a private matter. They said that the plan will be built on three main pillars - measures to combat inflation, investments in industries of growth, and national safety. After the report was released, the Nikkei slid lower and then turned higher. The yen had made gains in the morning but pared them and was barely changed. Investors closely monitor Takaichi’s spending plans, as Japan is among the most indebted countries on earth. The Takaichi government plans to quickly abolish the provisional gas tax rate as part of its core measures for reducing inflation. The program also aims at expanding local government grants with an emphasis on small and medium-sized businesses that cannot benefit from the existing tax incentives to increase wages. As the government concentrates on economic development, it will include investments in sectors of growth such as artificial Intelligence and semiconductors. Sources said that the exact size of the package was still being finalised. The announcement could come as soon as next month. Satsuki Katayama said that it was too soon to discuss the size of the extra budget. However, the amount should be sufficient to cover the necessary measures. In order to fund these measures, the government has begun drafting the supplementary budget that will cover the current fiscal year up until March. It is hoped it will be passed during the next extraordinary session of parliament. If the additional spending exceeds expectations, it may be necessary for the government to issue bonds to cover deficits, which raises questions about how best to balance economic growth and fiscal discipline. Shigeto Nakai, Oxford Economics' head of Japan Economics, said that the plan is "consistent with Takaichi’s policy list (during the campaign for the ruling party’s leadership race)." Nagai said that it's no different than previous administrations who used the extra tax revenue generated by higher inflation to fund large supplementary budgets for vulnerable households rather than aiming for a primary surplus. Takaichi became Japan's first woman prime minister Tuesday. The vote in parliament pushed down the yen, and yields of bonds on the expectation that Takaichi would delay any further interest rate increases by the Bank of Japan. Takaichi, a longtime supporter of the "Abenomics", or stimulus policies, of Shinzo Abe, the late prime minister, has called for increased spending and tax reductions. He also pledged to assert government control over central bank. The central bank is currently weighing further interest rate increases and its next policy meeting will be held on October 29-30. She said that monetary policy was part of an economic policy for which the BOJ had final responsibility. ($1 = 150,7800 yen) Reporting by Takaya Yaguchi; Additional reporting and writing by Makiko Yozaki and Rae Wee. Editing by Kim Coghill.
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Gold gains ground amid uncertainty and rate outlook
The gold price slightly recovered on Wednesday after the sharpest drop since 2020 the previous session. Investors bought on the dip amid economic uncertainty and the expectation of U.S. interest rate cuts. As of 0803 GMT, spot gold was up by 0.3% to $4,134.37 an ounce. U.S. Gold Futures for December Delivery climbed almost 1% to $4147.10 an ounce. Bullion, which reached multiple records this year, fell to $4,003.39 in the early session. This extended losses following a 5.3% drop on Tuesday, when it marked its biggest daily decline since August 2020. StoneX analyst Rhona o'Connell stated that "that correction was needed as the market had been well and true overbought trading off its momentum." "We're still in an uncertain era, which will likely lead to a new buying interest if there are any significant dips." Investors await the U.S. Consumer Price Index report (CPI), due Friday. This could provide insight into the Federal Reserve’s rate-cutting trajectory. The Fed is expected to lower its interest rate next week by 25 basis points and then again in December. However, opinions are divided about the future outlook of rates. A planned summit between U.S. president Donald Trump and his Russian equivalent Vladimir Putin has been put on hold, and uncertainty remains over a potential meeting between Trump & Chinese President Xi Jinping. Gold has risen 57% this year, a good sign for a currency that tends to do well in low interest rate environments. Bullion will have its best annual performance since 1979 due to geopolitical instability and economic uncertainty, U.S. interest rate expectations and robust ETF flows. Silver spot edged up 0.2% to $48,84 an ounce after Tuesday's 7.1% decline. Palladium rose 0.7% to $1 417.68, while platinum fell 1.4% to $ 1,529.52.
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Shanghai copper falls on weak China demand and strong dollar
Shanghai copper fell on Wednesday as traders lost confidence due to a weak Chinese demand, high prices, and a strong US dollar. The Shanghai Futures Exchange's most active copper contract closed the daytime trade down by 0.13% to 85,420 yuan (11,992.14) a metric tonne. The two sessions of gains were halted by this session, which was supported by strong industrial output in China and new attempts to ease Sino U.S. Trade tensions. The benchmark contract for three-months copper on the London Metal Exchange rose 0.41%, to $10.667 per ton at 0700 GMT. The red metal's demand is muted by the low acceptance of high prices from downstream buyers. It's a good thing the copper price was lowered a bit as this could encourage some real consumption by downstream buyers. "They were not buying anything before," said a Shanghai copper trader, who requested anonymity because he was not authorized to speak to media. In recent days, the stronger dollar has put pressure on copper prices. The metal's losses were narrowed by a slight retreat on Tuesday. The greenback price of commodities increases when the dollar is stronger. Traders are closely monitoring the developments in the China-U.S. Trade Conflict ahead of a meeting planned between U.S. president Donald Trump and his Chinese equivalent Xi Jinping, next week. Copper prices are still held at a minimum by the supply shortage caused by mine disruptions. Any decline is therefore limited. Aluminium, zinc, tin, and nickel all saw a slight decline. Lead was also little changed. Aluminium gained 0.58%. Zinc added 0.52%. Lead was up 0.38%. Nickel was up 0.20%. Tin saw a gain of 0.37%. $1 = 7.1230 Chinese Yuan (Reporting and editing by Sherry Jackson and Subhranshu Saghu).
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Iron ore prices rise on the back of bets that US-China tensions will ease
Iron ore prices rose on Wednesday as traders bet that trade tensions between the U.S. and China would ease and Beijing would unveil more stimulus measures for economic growth. This outweighed worries about a rising ore supply, and a decreasing steel demand. After U.S. president Donald Trump stated on Monday that he expects to reach a fair deal with Chinese president Xi Jinping, hopes grew of a deescalation in the trade spat. Trump said that he will visit China in early 2019, at Beijing's request. The daytime trading price of the most traded January iron ore contract at China's Dalian Commodity Exchange was 0.65% higher, closing at 774 Yuan ($108.66 per metric ton). By 0653 GMT, the benchmark November iron ore traded on Singapore Exchange was up 0.47% at $104,05 per ton. Analyst Zhuo Guiqiu at Jinrui Futures said that the rise was driven by a macroeconomic factor, as the expected ease of U.S. China trade tensions sparked a risk-on attitude. Investors also bet on more China stimulus after a series of disappointing data. The Communist Party's four-day meeting behind closed doors that began Monday will culminate in an outline of the next five-year strategy. The price increases were tempered by the expectation of a growing supply in the remainder of the year and the seasonal slowdown of steel demand. Vale, the largest iron ore miner in the world, produced 94.4 millions metric tons (the equivalent of steelmaking material) during the third quarter. This is a 3.8% increase on an annual basis and the highest production since the final three months of 2018 Rio Tinto (RIO.L) has also stocked up 2 million tonnes of high-grade ore in Guinea at its Simandou Project for a shipment scheduled to take place mid-November. Coking coal, coke and other steelmaking components rose by 1.43% and 1.06 %, respectively. The benchmarks for steel on the Shanghai Futures Exchange have gained ground. Rebar gained 0.59%; hot-rolled coil gained 0.81%; wire rod gained 0.09%; and stainless steel gained 0.366%. $1 = 7.1230 Chinese Yuan (Reporting and editing by Amy Lv, Colleen Howe)
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Malaysia is seeking foreign partners to develop the rare earth sector. State media reports
Malaysia welcomes foreign companies to form joint ventures to develop rare Earths in the nation, according to state media on Wednesday. The report was based on the Trade Minister. According to estimates by the government, Malaysia has 16.1 million tons of rare earths, but does not have the technology to mine or process them. Malaysia wants to build midstream processing capability in a market dominated by China. China tightened export restrictions earlier this month. Exclusively, earlier this month, it was reported that the government is in talks with China about rare earths processing. The Malaysian sovereign fund Khazanah Nasional will partner with a Chinese company to build a Malaysian refinery. Anwar Ibrahim, Prime Minister of Malaysia, announced in his budget speech for 2026 to the parliament on 10 October that 10 million ringgit (2.37 million dollars) would be allocated by the government to continue mapping rare earth resources. Khazanah will also look to develop downstream activities through international collaborations. Bernama, the state news agency, reported that Tengku Aziz Tengku Tengku Tengku Tengku Tengku Tengku Tengku Tengku Tengku Tengku Tengkul Tengku Tengku Tengku Tengku Tengku Tengku Tengku Tengku Tengku Tengkku Tengku Tengku Tengku Tengku Tengku Tengku Tengku Tengku Tengku Tenzafrul Teng He was quoted saying, "We would like to invite more Malaysians to invest in Malaysia, both in terms the supply chain and in terms economic interests. This means having equity and shares in this venture." Tengku Zafrul said that Malaysia's ban against companies exporting rare earths will force them to establish operations within the country. He said that the ministry of trade had not yet received any proposals for the establishment of new processing plants in the country. Tengku Zafrul said that the government would not stop Lynas Rare Earths of Australia, which operates a processing facility in Malaysia's central Pahang state, from exporting its products to any market of their choice.
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Sources say that the new Japanese PM is planning a large-scale economic stimulus in order to combat inflation.
Sanae Takaichi, the new Japanese Prime Minister, is working on an economic stimulus package which is expected to be larger than last year's $92billion to help families combat inflation. Government sources familiar with this plan told Reuters that it is being prepared to surpass last year's $92billion. Takaichi, who advocates big fiscal expenditures, took office Tuesday. This is her first major economic initiative. It reflects her commitment to "responsible fiscal policy". Sources declined to identify themselves because it was a private matter. They said that the plan will be built on three main pillars - measures to combat inflation, investments in industries of growth, and national safety. The Nikkei 225 index of Japan's shares reversed its losses on Wednesday after the report. Meanwhile, the yen was barely changed from the morning. Investors closely monitor her spending plans, as Japan is among the most indebted countries. The Takaichi government plans to quickly abolish the provisional gas tax rate as part of its core measures for inflation relief. The program also aims at expanding local government grants with an emphasis on small and medium-sized businesses that cannot benefit from the existing tax incentives to increase wages. As the government concentrates on economic development, it will include investments in sectors of growth such as artificial Intelligence and semiconductors. Sources said that the exact size of the package was still being finalised. The announcement could come as soon as next month. In order to fund these measures, the government has begun drafting the supplementary budget that will cover the current fiscal year up until March. It is hoped it will be passed during the next extraordinary session of parliament. If the additional spending exceeds expectations, it may be necessary for the government to issue bonds to cover deficits, which raises questions about how best to balance economic growth and fiscal discipline. Shigeto Nakai, Oxford Economics' head of Japan Economics, said that the plan is "consistent with Takaichi’s policy list (during the campaign for the ruling party’s leadership race)." Nagai said that it's no different than previous administrations who used the extra tax revenue generated by higher inflation to fund large supplementary budgets for vulnerable households rather than aiming to achieve a primary surplus. Takaichi became Japan's first woman prime minister Tuesday. The parliament vote pushed down the yen, and bond yields as investors hoped Takaichi would delay any further interest rate increases by the Bank of Japan. Takaichi, a longtime supporter of the "Abenomics", or stimulus policies of Shinzo Abe, has called for increased spending and tax reductions. He also pledged to assert government control over the central banks, which are weighing further interest rate increases and will be holding their next policy meeting October 29-30. She said that monetary policy is a part of an economic policy broader than the one for which the government has final responsibility. A news conference was held on Tuesday. The BOJ decided the specifics of the monetary policy.
Gold prices rise on bargain-hunting and a weaker dollar
Gold prices rose Wednesday due to a weaker US dollar, bargain hunting and a rebound from a steep loss the day before. Investors are now focusing on the delayed Friday release of U.S. September inflation data.
As of 0521 GMT, spot gold was up by 0.5% to $4,145.35 an ounce. Bullion dropped more than 5% Tuesday, its steepest decline since August 2020.
U.S. Gold Futures for December Delivery climbed 1.2%, to $4.159.60 an ounce.
Gold is now cheaper for holders of other currencies due to the dollar index's 0.1% decline.
The Federal Reserve will use the September U.S. Consumer Price Report, which is expected to be released on Friday, as a guideline for its interest rate reduction path. Due to the U.S. shutdown, this report is delayed.
Matt Simpson, senior analyst at StoneX, said that the "simmering" tensions in trade between the U.S.
This is a simple technical repositioning of a market which clearly needed a pullback following an extended move over $4,000. I believe we have seen the worst day-to-day fluctuations as dips are still likely to be purchased."
U.S. president Donald Trump said he expects to reach a fair deal with Chinese president Xi Jinping next week when they meet in South Korea. He also played down the risk of a conflict over Taiwan.
The Mint newspaper in India reported that New Delhi and Washington were close to completing a long-stalled agreement to reduce U.S. import tariffs from 50% to 15% or 16%.
The gold price has risen by 56% in the past year. It reached a record high of $4,381.21 yesterday, thanks to geopolitical, economic, and central bank uncertainty, as well as rate-cut betting and sustained central bank purchases.
According to a survey of economists, the Fed will cut its key interest rate next week by 25 basis points and again in December. However, opinions are still divided about where rates will end up by next year.
Silver spot edged up 0.5% to $49.95 an ounce. Platinum fell 1.1% to 1,534.20, and palladium rose 1.4% to $1427.13. (Reporting and editing by Subhranshu sahu, Ronojoy Mazumdar and Brijesh patel in Bengaluru)
(source: Reuters)