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Oracle falls, but stocks mostly rise; US dollar and yields fall on Fed views
The major stock indices rose on Thursday. The Dow and S&P 500 posted?record highs, even though technology shares declined following Oracle's disappointing forecasts, and the dollar and U.S. Bond yields fell. The Nasdaq?ended down, while the Dow?and S&P 500?added to gains made the day before when the Federal?Reserve?cut rates, but gave a more dovish outlook than anticipated. Global stock indexes were also higher. Oracle, the cloud computing giant, reignited fears over astronomical tech valuations after it missed analysts' profit and sales estimates and announced a $15 billion artificial-intelligence overspend. Last week, its shares fell 10.8%. The S&P tech sector also declined. Nvidia, the AI leader, saw its shares fall 1.5%. SoftBank, a partner of Oracle in the U.S. Stargate project and a partner to Japan's Nikkei index, fell more than 7.5% overnight. Michael O'Rourke is the chief market strategist of JonesTrading, Stamford, Connecticut. He said: "Overall, I think the market is doing well, considering how Oracle is trading, and that the AI sector is weaker. But, I do believe investors are being a bit cautious." Investors focused on the global rate outlook after the Fed cut its benchmark funds rate by 25 basis points, as predicted, to 3.5%-3.75%, in a split decision of 9-3. Fed Chair Jerome Powell was balanced in a recent press conference. He said that he didn't "think that a rate hike is anyone's baseline case." Interest rate futures now have at least two rate reductions priced in for the next year. The Dow Jones Industrial Average increased?646.26 or 1.34% to 48,704.01; the S&P 500 grew 14.32 or 0.21% to 6,901.00, and the Nasdaq Composite dropped 60.30 or 0.25% to 23,593.86. DOLLAR HITS LOWS IN MULTI-MONTH The MSCI index of global stocks rose by 3.17 points or 0.31% to 1,014.91. The pan-European STOXX 600 rose by 0.55%. The U.S. Dollar fell, reaching multi-month lows versus the euro, Swiss Franc, and Sterling and extending the losses from the previous day. Swiss National Bank's decision not to raise interest rates supported the Swiss franc. The dollar fell 0.63% against the Swiss Franc to 0.795 after previously reaching its lowest level since November. The euro reached its highest level in October 3 with a 0.43% increase at $1.1744. The dollar index fell by 0.27%, measuring the greenback in relation to a basket of currencies, including the yen, the euro and others. U.S. Treasury Yields fell for the second consecutive session after the Fed's policy statement. The?Fed said Wednesday that it will start buying short-dated government securities on Friday. An initial round of around $40 billion Treasury bills is expected. This was earlier than investors had anticipated. The yield on the benchmark 10-year U.S. notes dropped 2.7 basis points, to 4.137% from 4.164% at late Wednesday. The yield ended a streak of four consecutive sessions of gains, the longest in five weeks. The yield on the 2-year note, which is usually in line with expectations of interest rates from the Fed, fell 3.9 basis points, to 3.526%. Investors shifted their focus towards the European Central Bank's meeting next week, as the benchmark Bund yield in euro zone hovered at a nine-month peak. The benchmark yield for the eurozone, Germany's 10-year bond, was down 1.5 basis points at 2.84%. On Wednesday, they reached 2.894%, their highest since mid-March. The difference between U.S. yields and German yields fell to 126.01, the lowest level since June 2023. Investors shifted their attention back to the Russia-Ukraine talks, which led to a lower oil price. U.S. crude dropped 86 cents and settled at $57.60 per barrel, while Brent declined 93 cents and settled at $61.28. Spot gold increased 1.07%, to $4273.09 per ounce.
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Coca-Cola's new chief Braun will be able to leverage his global experience, as the company shifts towards low-sugar beverages
Henrique Braun's appointment as Coca-Cola’s next CEO is a gamble on Henrique's experience from Latin America and China. The company will use this to expand the brand in new markets and appeal to consumers who are strapped for cash. They will also develop healthier products to meet changing tastes. The 57-year old?American who was raised Brazil is expected to take over in March. This comes as Coke, Sprite, and Fairlife Milk have been reshaping their offerings and changing the size of the packs. They also acquired companies to help them appeal to health-conscious consumers and low-income customers. Coke's stock is up 11% in the past year, while S&P 500 Consumer staples has only risen 2%. PepsiCo, the main rival of Coke, has seen its shares drop 2% this year. Analysts and investors are expecting Braun to maintain the stability of the beverage company with a market capitalization of $302 billion. Brian Mulberry said that this is an evolution, not a revolution. Zacks Investment Management owns shares in Coke. "I do not see any red-flag warnings that would require a radical shift." The pressure to maintain pricing will be a major challenge. Mulberry said that the best way to keep everyone happy would be to ensure costs don't spiral out of control and require price increases. James Quincey is the current CEO of the company. He took over the reins in 2017. Since then, the company has reversed its sales declines and the stock price has increased by more than 60%. Quincey took over a Coke that was largely trimmed down, having shed most of its bottling system. This allowed it to concentrate on marketing and new products. PepsiCo shares are up about 35% in value since Ramon Laguarta was appointed CEO in 2018. Analysts say Braun will also have to find a way to increase volumes and margins without sacrificing the low-sugar, 'functional' beverages such as probiotic sodas or electrolytes. Quincey is expected to continue his acquisition spree which included Fairlife, a high-protein dairy company, and Body Armor sports drinks. Morningstar analyst Dan Su said in a report that "after Quincey's successful addition of (more than) ten billion-dollar brands in his nine-year term, acquisitions will likely continue to be a focus for Braun." Coke is evaluating options, including the sale of British coffee chains Costa and Starbucks which it purchased in 2018 for more than $5 billion. This was reported in August. The move by the CEO, announced late Wednesday, is yet another change in CEOs within the consumer packaged goods sector as it struggles with a slowdown in demand, changing spending habits, and U.S. Tariffs. PepsiCo's rival, on the other hand, is reviewing its supply chain, and cutting costs, after being pressured by activist hedge fund Elliott Management. This could also impact Coke. Bruce Winder is a retail analyst and expert in the industry. He said that Pepsi's likely to lower its prices as a result of pressure from an activist shareholder, which would put pressure on Coke’s margins if Coke had to respond by making cuts.
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US EPA plans to delay enforcement of Biden vehicle pollution rules
A senior official at the U.S. Environmental Protection Agency has told us that they plan to delay enforcement of an old Biden regulation which required?significant reductions in air pollution caused by vehicles?. The EPA published a final rule in April 2024 that requires significant reductions of so-called "criteria pollution" emitted by passenger and commercial vehicles for the model years 2027-2032. The EPA, as part of a delayed plan, is considering keeping in place the 2026 standard for an additional two years. This will give them time to review the Biden era standards and the way they set?standards. Separately, the EPA has proposed revoking scientific findings that justified setting greenhouse-gas emission standards for vehicles?and engines. In September, the Alliance for Automotive Innovation (AAI), a trade association representing General Motors and Toyota Motor as well as Volkswagen, Ford Stellantis, Hyundai, and other companies, told the EPA that the criteria pollutant standard is "impossible to achieve without significant increases in EV markets share while adding hundreds of dollars in additional costs for?all internal-combustion engine vehicles." These regulations should be changed to create a "cost-effective" criteria emission standard. EPA Administrator, Lee Zeldin announced in March that the agency would reconsider its 2024 rules to reduce tailpipe emissions from passenger vehicles by almost 50% by 2032 compared to projected levels for 2027. According to the EPA, between 35% and 56% new vehicles sold in 2030-2032 will need to be electrically powered to meet compliance. Zeldin said to reporters that automakers had told the EPA the EPA's requirements were "causing adverse impacts." The 'Biden Rules' require a 50% cut in criterions pollutants such as nitrogen oxides by 2032 for light-duty vehicles, and a 58% reduction for medium-duty vehicles. EPA estimated last year that reduced emissions of pollutants contributing to the formation of smog and soot would result in an annualized benefit of $13 billion. The EPA is evaluating whether automakers can continue to use?electric?vehicles in order to meet standards, and if the agency should allow credit banking and trade. The Transportation Department announced last week that it would end credit trading as part of its significant rollback in fuel economy standards until 2031. Automakers want EPA also to implement revised GHG Standards as a backup in the event motor vehicle greenhouse gas regulations were retained or restored in any way. EPA also considers some changes in heavy-duty regulations, including warranty obligations and usefulness requirements.
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Silver reaches record highs after Fed rate cuts; gold reaches over one-month high
The dollar fell on Thursday after the U.S. Federal Reserve lowered its?quarter-point interest rate. Silver also surged, reaching a new record high. As of 01:42 pm, spot gold had risen 1.2% to $4,280.08 an ounce. ET (1842 GMT), achieving its highest level since the 21st of October. U.S. Gold Futures for February Delivery settled 2.1% higher, at $4.313 per ounce. Spot'silver' rose by nearly 4%, to $64.22 an ounce. It is hovering around the record high of $64.99 it reached earlier in the session. Edward Meir, Marex analyst, said that silver is pulling gold with it. It's also bringing platinum and palladium up. There's a lot going on right now. The U.S. Dollar has fallen to an 'eight-week low' against a basket rival currencies. This makes greenback-priced, gold more affordable for overseas buyers. Meir continued, "The Fed's inflation target of 2% is not yet achieved, so lowering interest rates in a high-inflation environment will still be unsatisfactory. This is very bullish for the gold price." Federal Reserve policymakers signaled that they would likely take a pause on further reductions while they monitor the labor market and inflation, which "remains elevated". Gold is more attractive to investors when interest rates are lower, since it's a?asset that doesn't yield. Donald Trump, the U.S. president, has been advocating for lower interest rates ever since he began his second term in January. His nominee for the Federal Reserve Chair is expected to continue this stance. Kevin Hassett, White House economic adviser, is viewed as a leading candidate for the role. Investors are now waiting for the U.S. Non-Farm Payrolls Report, which is set to be released December 16th, in order to get new clues about the Fed's future policy. The Indian pension regulator has allowed the investment of gold and silver ETFs in pension funds. Palladium rose by 1.1%, to $1,492.55, while platinum gained 2.5%, to $1697.61. (Reporting and editing by Alison Williams in Bengaluru, Vijay Kishore, Krishna Chandra Eluri and Alison Qureshi)
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Sources: Chinese zinc smelter cancels contract with Teck Alaska mine over tariffs
Two sources with knowledge of the matter said that Zhuzhou Smelter Group - one of China's biggest zinc smelters - broke a contract to supply Teck Resources’?Red Dog Mine in Alaska due to high tariffs caused by Washington and Beijing's trade war. Teck, a Vancouver-based company, supplies zinc concentrates from Red Dog, the world's biggest zinc mine, to clients around the globe, including Asia. At the height of their trade war, two of the world's largest economies have imposed tariffs in triple digits on each other's imported goods. After multiple rounds of talks, and a'meeting' between U.S. president Donald Trump and his Chinese equivalent, Xi Jinping in South Korea, both sides reached a 'trade truce' and lowered the tariffs. The first source said that the reciprocal double-digit tariffs make it difficult for Chinese smelters who import zinc concentrates from the United States. The first source said that as long as tariffs remain in place it is impossible to import zinc concentrates from the U.S., and added that this also applies to imports of lead concentra. The sources asked to remain anonymous as they were not authorized by the company to discuss sensitive commercial issues. Zhuzhou Smelter Group was unable to complete the contract with Teck due to the current tariffs, and they had to pay a fee to break up the deal, according to the first source, who declined to reveal the amount. Zhuzhou Smelter is a subsidiary owned by the China Minmetals state-run company. Teck also did not respond to our request for a comment. According to the first source, China's zinc smelter buys 30 percent of its concentrate from abroad. Customs data show that China imported only 2 kilograms (78,871 pounds) of zinc concentrate in the first 10 months of the year. This compares to 78,871 tonnes in the same period of 2024. Customs data shows that China's total imports of zinc concentrate from January to September jumped 37% on an annual basis. Zhuzhou Smelter is based in Hunan Province, eastern China. It has a zinc production capacity of 680,000 tons per annum. (Reporting from Amy Lv in Beijing and Lewis Jackson in Houston, with additional reporting by Tom Daly and Leslie Adler in London)
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Fitch: Current electricity prices are a problem for France’s EDF
Antonio Totaro, senior director at Fitch Ratings, said that the current low electricity prices will affect EDF's earnings as well as its ability to leverage debt. This is especially true if these prices continue to be so low while EDF prepares to build six nuclear reactors. After a spike during the energy crisis of 2022, when industries shuttered factories and reduced consumption, the average price for power in France is now about 30% lower than it was in January. Totaro stated that there shouldn't be any major changes in price either up or down. "For the time being, the electrification of the grid is only on paper. You'll need a contribution from demand to increase prices. We don't have that yet. He said that it will happen, but is taking longer than expected. Fitch Ratings predicted EDF's earnings, before interest, tax, depreciation, and amortization, at between 20 to 25 billion euros per year for the next several years, based on lower market prices. This is down from the 36,5 billion euros that the company reported in 2024. EDF must also organize a massive maintenance program for its existing nuclear fleet. This is expected to cost more than 100 billion euros in 2035. About 70% of France's electricity is generated by nuclear power. EDF didn't respond to our request for comment. Totaro stated that the return of EDF's nuclear fleet after the 2022 outages was a positive development. However, as they increase production, prices will decrease without any additional demand for the system. Reporting by Forrest C. Crellin, Editing by Alison Williams
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Silver records new record after Fed rate reduction; gold reaches over one-month high
The dollar fell on 'Thursday, as the U.S. Federal Reserve cut interest rates by a quarter point. Silver also surged and reached a new record high. As of 11:49 am, spot gold rose 1.2% to $4,275.39 an ounce. ET (16:49 GMT), it reached its highest level since the 21st of October. U.S. Gold futures for delivery in February gained 1.9%, reaching $4,303.90 an ounce. Spot silver rose 3.2% to $63.77 an ounce, nearing the session's record high of $63.93. Edward Meir, Marex analyst, said that silver is pulling up gold and also platinum and palladium. "There's a lot going on right now," he added. The U.S. Dollar has fallen?to a seven-week low versus a basket rival currencies. This makes greenback priced gold more affordable for overseas buyers. Meir continued, "Inflation hasn't yet reached the Fed's target of 2%, so when you lower rates in an environment where inflation is high, that's still not optimal, and gold will benefit." Federal Reserve policymakers signaled that they would likely take a pause on further reductions as they continue to monitor the labor market and inflation, which "remains elevated". Gold is more attractive when interest rates are lower, since it's a non-yielding investment. Donald Trump, the U.S. president, has been advocating for lower interest rates ever since he began his second term. His nominee to be the next Federal Reserve Chair is expected maintain this stance. White House economic advisor Kevin Hassett has been dubbed the 'leading candidate' for this position. Investors are now awaiting the release of the U.S. Non-Farm Payrolls Report, scheduled for?on 16th December. This report will provide fresh clues about the Fed's future policy. The Indian pension regulator has allowed the investment of gold and silver ETFs in pension funds. Palladium climbed 1.3% to 1,494.88. Platinum gained 2.5%. (Reporting and editing by Alison Williams, Vijay Kishore and Sarah Qureshi from Bengaluru)
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The stock market is mixed with Oracle adding AI worries; the dollar and US yields are down on Fed views
The major stock indexes mixed on Thursday. Technology-related shares fell after cloud computing giant Oracle warned about artificial intelligence profitability. Meanwhile, the dollar and U.S. Bond yields continued their declines from yesterday, when the Federal Reserve lowered interest rates, but provided a more dovish outlook than anticipated. Early on, the Nasdaq fell to its lowest level in a week. The Dow added to Wednesday's gains after the Fed rate reduction. Global stock indexes were also up. Oracle reignited fears over tech valuations when it missed analysts' profit and sales estimates, and announced a $15 billion AI expenditure. The S&P tech sector fell more than 1%, while its shares dropped 13.1%. Nvidia, the leader in Al shares, was down 3.4%. Broadcom's shares fell 4.4% and everyone is waiting for its quarterly results to be released after the closing bell. SoftBank, a partner of Oracle in the U.S. Stargate project and a partner to Japan's Nikkei index, slumped by more than 7.5%. Michael O'Rourke is the chief market strategist of JonesTrading, Stamford Connecticut. He said: "Overall the market is doing well, considering Oracle's trading and the fact that AI is weaker. But I think investors are being a bit cautious." Investors were instead still focused on the global interest rates outlook, after the Fed cut its benchmark funds rate by 25 basis points, as expected, to 3.5%-3.75%, in a split decision of 9-3. Fed Chair Jerome Powell was balanced in a recent press conference. He said that he didn't "think a rate hike is anyone’s base case." Interest rate futures now have at least two rate reductions priced in for the next year. The Dow Jones Industrial Average rose 481.38 or 1.00% to 48,539.65. The S&P 500 dropped 18.98 or 0.28% to 6,867.70. And the Nasdaq Composite declined 226.80 or 0.96% to 23,427.30. The MSCI index of global stocks rose by 0.47 points or 0.05% to 1,012.21. The pan-European STOXX 600 rose by 0.7%. The U.S. Dollar fell, reaching multi-month lows versus the euro, Swiss Franc, and Sterling and extending the losses from the previous day. The Swiss National Bank's decision not to raise interest rates supported the Swiss Franc. The dollar dropped 0.7% against the franc, to 0.7946 after previously touching its lowest level in November. After reaching its highest level since 3 October, the euro rose 0.4% to $1.1737. The dollar index (which measures the greenback in relation to a basket currencies) fell by 0.41%, reaching 98.18. U.S. Treasury Yields fell also for a second session straight in response to the Fed's policy statement. The Fed announced on Wednesday that it will start buying short-dated government debt on Friday. An initial round of around $40 billion worth of Treasury bills is expected. This was earlier than investors had anticipated. The yield of the benchmark 10-year Treasury bill in the United States fell 4.8 basis point to 4.116%, and was on course for its biggest two-day decline in two months. The yield ended a streak of four consecutive sessions of gains, the longest in five weeks. The yield on the 2-year note, which moves typically in line with expectations of interest rates for the Fed fell 4.8 basis point to 3.518%. The benchmark Bund yield in the euro zone hovered at a high of nine months as investors focused on next week's European Central Bank Meeting. The benchmark yield for the eurozone, Germany's 10-year bond, was down 1.5 basis points at 2.84%. On Wednesday, they reached 2.894%, their highest since mid-March. The difference between U.S. yields and German yields fell to 126.01, its lowest level since June 2023. Commodities: U.S. crude dropped 1.78%, to $57.42 per barrel. Brent, however, fell to $61.16 a barrel, down by 1.69% for the day. Gold spot rose by 0.55%, to $4.251.08 per ounce.
Copper prices rise with Fed rate cuts, but there are concerns about the outflow of US stocks
Copper prices rose Thursday after the U.S. Federal Reserve cut interest rates. Meanwhile, continued outflows from U.S. stocks of copper'supported concerns about a tighter supply elsewhere in the world.
By 1044 GMT, the benchmark three-month Copper on London Metal Exchange had risen 0.8% to $11,646 a metric ton.
The metal used in construction and power is up by 33% this year, after reaching a record high of $11,771 Monday, due to disruptions in mine supply and the outflow of copper?to the U.S.
David Wilson, a BNP Paribas analyst, said: "The only thing that has caused copper to rally is the perception of the market that tariffs will be announced on U.S. imports sometime next year and implemented in early 2027."
This keeps the CME-LME Arbitrage open and attracts the metals to CME stocks
The visible global exchange stock is up by over 40% on a year-over-year basis. Wilson stated, "This 'idea' that there is no copper is misleading. But this draw of units of copper into the U.S. creates a perception of tightness in the ex-U.S. tightness."
He added that the demand for copper in China, which is the world's largest metal consumer, will decline by a single-digit percentage point year-over-year during fourth quarter.
Fed rate cuts of 25 basis points on Wednesday were expected and 'pretty well priced in. The yuan hit a 14-month high versus the dollar following the Fed decision. This made dollar-priced materials more appealing to Chinese buyers.
Other LME metals saw aluminium rise 0.3% to $2.874.50 per ton, zinc gain 0.7% to $3,000, lead add 0.2% to $1.982.50 and tin climb 0.9% to $42,280. Nickel fell 0.6%, to $14,565. (Reporting and editing by Leroy Leo; Polina Devitt)
(source: Reuters)