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MORNING BID AMERICAS - Outer SpaceX
What is important in the U.S. and international markets today by Mike Dolan Editor-at-Large of Finance and Markets After all the 'doubts and hand-wringing the S&P 500 & Dow Jones have returned to record highs. They surged on Tuesday amid the falling oil prices & bumper earnings season. SpaceX's shares dropped despite exceeding?revenue estimates in its first quarterly earnings report. Below, I'll delve deeper into that. Check out my midweek column where I discuss the possibility of an AI "jobsmageddon", and more. Listen to the Morning Bid podcast where we talk about yesterday's outstanding earnings reports. Subscribe to the Morning Bid daily podcast and hear our journalists discuss all of the latest news in finance and markets seven days a weeks. Outer SpaceX The market's reaction to SpaceX’s first earnings release was not positive, despite the company’s strong top-line numbers. Discussions centered on the company's rising AI capex, and its cash burn. There was also concern over whether the sale of early investors and insider shares would put pressure on the stock when the post-IPO locking periods expired. AMD's stock also fell overnight following its own forecast beating update. Palantir's shares soared by nearly 30% earlier in the day after it announced its impressive quarter results. Dow-stalwart Caterpillar, meanwhile, also saw its share price rise. The reporting season was a remarkable success, with the indexes gaining overnight. The strong Wall Street performance yesterday may have been due in part to Brent crude which fell another 5% on Wednesday to below $80 a barrel. Prices rose above this level again on Wednesday, after Yemen's Iran aligned Houthi rebels claimed to have attacked a Saudi tanker in Red Sea. Washington officials also said that the mediation between the U.S., Iran and other countries on the reopening of the Strait of Hormuz may?bear fruits this week. Tehran denies direct talks are taking place with the U.S., but it has said that talks with Oman about transit through the Strait of Hormuz were ongoing. Qatari officials have said that go-betweens made progress in the efforts to end the war. The strait has also been busier in recent weeks. The oil price decline has also cooled the yields on Treasury bonds, even though Kansas City Fed Chief Jeffrey Schmid stated Tuesday that tightening policy would be needed to bring inflation back to the 2% target. In the wake of this week's major labor market reports, we have learned that hiring has increased but job openings decreased in June. Today's schedule includes the private sector payrolls for June. The bond market must also consider the latest quarterly details of refunding, which are due to be released later today. This will allow them to determine how the higher borrowing totals?are spread along the yield curve. Recently, the U.S. financial situation took a new blow. On Tuesday, there were reports that the U.S. had already paid up to $100 billion in rebates for tariffs imposed by the Supreme Court earlier this year. Treasury Secretary Scott Bessent stated that he will do "whatever is necessary" to help Japan defend the yen on the currency markets. He also urged the Fed to increase the size of the repo facility used in the joint intervention last week. The yen seems to be stabilising at higher levels for the time being. Chart of the Day Chipmaker AMD's shares fell 7% before Thursday's bell, despite beating quarterly revenue estimates overnight. High valuations means that?the bar is high to impress Wall Street. The stock is up 140% this year, as the AI frenzy 'catapulted chip shares higher around the world. AMD's $850 billion market capitalization means its price-to-forward-earnings valuation is now an eye-watering 43 times - far higher than the 25 times for the U.S. chip sector overall and more than twice Nvidia's multiple. Watch today's events * U.S. ADP July payrolls (8.15 am EDT), ISM Non-Manufacturing PMI for July (10.30 am EDT). * U.S. Corporate Earnings: Eli Lilly (Sandisk), Western Digital, Disney and Uber Mary Daly, President of the San Francisco Fed and Fed Governor Lisa Cook both speak Want to receive Morning Bid every morning in your email? Subscribe to the newsletter by clicking here. Follow us on LinkedIn, X and ROI. The opinions expressed here are the author's. These opinions do not represent those of News. News is bound by the Trust Principles to maintain integrity, independence and freedom from bias. (By Mike Dolan).
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Glencore says that exposure is not material, and takes a provision against Radiant World
Gary Nagle, the CEO of Glencore, said that the company had?taken an provision relating to Radiant World. However, he added that Glencore's exposure towards the iron ore trading firm was not significant. We have some existing contracts that still need to be completed. Nagle said on a conference call that they are assessing how to deal with them in a legal manner. However, we have stopped doing any new business. Bloomberg reported that last week, fellow trading houses Vitol and Cargill had stopped doing business Radiant World because they were concerned about the validity of invoices sent to their banks. Radiant World stated that the claims made were unsubstantiated and inaccurate. Nagle refused to reveal the amount of the provision, or when and why Glencore ceased doing new business with Radiant World. The CEO said: "We want everything to be done legally, due to the increased scrutiny surrounding this counterpart." Nagle said that Radiant World, Sapphire Minmetals and another 'company' reported to have been scrutinized over invoices should be considered as being part of the same group. Nagle, when asked to comment on Glencore's exposure to Sapphire, said that the two firms "share similar shareholdings and have similar management." Radiant World declined to comment. Sapphire didn't immediately respond to a comment request. Reporting by Tom Daly, Clara Denina. Solomon Cefai contributed additional reporting from Singapore. Editing by Louise Heavens, Mark Potter and Mark Potter
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Gold reaches a one-month high as US-Iran hopes for peace ease inflation concerns
As investors awaited the Federal Reserve's next policy move, gold rose more than 2% to a?month high on Wednesday as hopes for a?U.S. Iran peace deal tempered inflation fears. By 0836 GMT, spot gold had risen 2.2% to $4164.13 an ounce, its highest since July 7. U.S. Gold Futures rose by 1.7% to $4223.60. U.S. president Donald Trump stated that his administration had "very positive discussions" with Iran on Tuesday during the all-day talks, which fueled expectations of an impending end to the five-month conflict. There are signs that a Gulf ceasefire agreement is in the works, and Treasury yields will be lowered as inflation fears ease. This makes non-yielding investments like gold more appealing. The U.S. Dollar remained under pressure. This made metals priced in greenbacks more appealing to holders of other currencies. Yields on the benchmark 10-year U.S. Treasury notes fell to an all-time low. In a high-interest rate environment, gold tends to lose appeal despite its role as an inflation hedge. It yields no return. According to the CME FedWatch Tool, traders are now pricing in 59% of a rate hike for September, down from 67% just a day ago. According to Jeff Schmid, the president of the Federal Reserve Bank of Kansas City, monetary policy tightening will be needed in order to bring "too-high" inflation down to 2%. Concerns about the Fed’s credibility will likely ease as the central bank increases interest rates in the coming months. Hamad Hussain is a climate and commodities analyst at Capital Economics. He said that this would lead to gold prices dropping and settling under $4,000 per ounce by the end of the year. The ADP employment report is due at 1215 GMT and the July nonfarm pay reports are scheduled for Friday. Spot silver rose 3.3% to $61.49 per ounce, the highest level since July 7. Platinum rose by 1.1% to reach $1,753.84 after reaching its highest level in mid-June. Palladium also gained 1.6%, to $1375.15 after reaching a two-month high. (Reporting from Bengaluru by Pablo Sinha; Editing by Rashmi aich)
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Investors on edge over Mideast peace talks as stocks get AI boost
The world stock markets edged up on Wednesday, as Wall Street reached record highs thanks to robust earnings and renewed interest in technology shares. Meanwhile, hopes of progress regarding the opening of the Strait of Hormuz drove down oil prices and bond yields. Investors awaited signs of progress in the U.S. Iran negotiations. The pan-European STOXX 600 Index was up by 0.1% last. U.S. president Donald Trump said that his administration had "very positive discussions" with Iran, during the all-day talks. This has fueled hopes for an end to the five-month conflict. The drugmaker Novo Nordisk fell 4.2% following disappointing sales of the Wegovy weight loss pill. This overshadowed an impressive second-quarter profit beat. HSBC's shares dropped nearly 3% a week after the results, as investors digested analyst reactions to the numbers. The Nikkei 225 index rose 3.7%, its highest level since July 23. South Korea's stock market closed 3.8% higher. The broadest MSCI index of world stocks rose by 0.4%. Even though the mood was positive, AMD's premarket shares fell by?7% after falling 8.8% after hours. The company's results exceeded analysts' expectations but failed to live up to investors' high expectations. SpaceX, a company that makes satellites and AI products, was down 10% on premarket trade on concerns heavy capital spending is eating up its cash flow. The rising borrowing costs in the AI sector have been a constant concern for all AI shares. Chris Weston is the head of research for broker Pepperstone. He said: "SpaceX has continued to perform well in terms of operations, but its ambitious investment plan means that additional capital will be needed over the medium- to long-term." Nasdaq 'futures' were flat while S&P500 futures gained 0.3% after the benchmark index reached all-time highs Tuesday. OIL SLIDES BOOST BONDS The lower oil prices boosted the mood after Qatar announced that mediators had made progress in their efforts to end U.S.-Iran War, although details were still lacking. Brent crude has risen over 50 cents or 0.7% to $79.95 per barrel. This is a far cry from its peak in July of $102 while U.S. Crude rose 14 cents at $75.90 after reports that a Saudi Arabian ship was attacked in the Red Sea. John Oh, energy economist at CBA, observed ship tracking data and said that the Strait of Hormuz was proving to be more resilient than initially thought. Flows were perhaps 40%-45% of what they had been pre-war last week. He wrote that the Brent oil futures dropped into the 70s because of this. The drop in oil prices has provided some relief to inflation fears, and the 10-year Treasury yields are now at 4,606%. This is down from last weeks high of 4.747%. James Rossiter is the head of global economy at TD Securities. He said that the Federal Reserve will closely monitor next week's inflation data and Friday's job report. Rossiter stated that if the Fed changed from a steady rate cycle to one of?tightening, "markets will respond strongly". The markets also reduced the probability of an increase in Fed rates to September from 67% to 57%. Jeff Schmid, President of the Fed Bank Kansas City, spoke on Tuesday and called for tighter policies to bring inflation to its 2% target. The euro was essentially flat at $1.1540 - just below the recent high of $1.1559, which is a six-week old record. The dollar remained steady at 157.75yen, despite the threat of "intervention" still hanging over the markets. U.S. Treasury secretary Scott Bessent stated that he was confident Bank of Japan Governor Kazuo Ueda "would do what is best" to help Japan's economic situation, and the markets took this as an encouragement to increase interest rates. Last week, Japan and the United States made a rare joint intervention to buy yen and promised further action in the future if needed to support the currency. The drop in yields on commodity markets helped gold that does not pay interest to rise 2.2%, reaching $4,166 per ounce. Reporting by Nell Mackenzie & Wayne Cole. (Editing by Shri Navaratnam Amanda Cooper Mark Potter and Mark Potter.
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Why have Indian stock traders been spooked by the new closing price system?
India's benchmark Nifty has seen a sharp swing in price following the introduction of a new formula for calculating closing prices?for stocks that have derivatives contracts. The BSE Sensex and the volatility of Wednesday's session triggered a rare, third-straight session divergence. This led to heavy losses among traders. HDFC Bank, ICICI Bank, and Reliance Industries account for more than?27%. The Sensex is composed of 30 stocks that are all also included in the Nifty 50. WHAT IS THE NEW METHOD TO DETERMINE CLOSING PRICE? India introduced on Monday the Closing Auction Session, a separate window of 20 minutes that starts at 3:15 pm IST following regular trading in eligible stocks. Exchanges will collect orders to buy and sell during this time. The order entry window closes randomly between 3:28 and 3:30 p.m. After 3:30 pm IST and the matching of trades, the price at which maximum volume is possible can be determined. The new system replaces a previous method in which the closing price was based on an average of the trades that were executed during the last 30 minutes of continuous trading. Stocks without futures or options contracts will continue to be calculated using the old system. Why has the new method caused divergences between the NIFTY and SENSEX index? The National Stock Exchange of India stated that?the two exchanges maintain separate orderbooks, which means individual stocks prices can vary between exchanges. This leads to a divergence of index?closing level. Dealers have the ability to view bid and offer price in regular trading. However, the new system does not allow this visibility during the last 20 minutes. Divergence may also be due to the different weightings of stocks between the two indices. The NSE has a much higher institutional cash market volume than the BSE. Why was CAS introduced? The new process brings India closer in line with global markets and provides a transparent and fair closing price. It also improves the efficiency of executing large orders. What happened on Tuesday? Options premiums were affected by the sharp rise in the Nifty50 at the close of Tuesday, which coincided with the expiration of the weekly derivatives contracts. Traders who lost money on the move said that the 20-minute auction was not a good indicator of where the Nifty50 would end up. When will?THE DIFFERENCES IN INDEX? CLOSE PRICES end? Participants in the market expect that as more traders and institutional participants participate, the gap will narrow. Kotak Mutual Fund stated in a letter to investors that they expect pricing inefficiencies to ease as the new system is adjusted. It said that while the first days of the market may be characterized by temporary price dislocations and valuation volatility, the behaviour should normalize as participants adjust to the new framework. Reports on Wednesday stated that the regulator would not be able to review the system right away and expected issues to be resolved'soon. WINNERS & LOSSES Arbitrage funds that hold positions on both the cash and futures market were among the most benefited by the sudden jump in prices. A clear arbitrage opportunity was created as cash market prices soared and futures prices lagged. Retail traders were also caught by surprise and suffered losses. Vivek M. Reporting; Jayshree Upadhyay, Nivedita Bhattacharjee and Nivedita Bhattacharjee.
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South Korean shares close at a record high for a week on AI frenzy and cheaper oil
South 'Korean stocks closed at a record high for a week on Wednesday, as heavyweight chipmakers rallied in response to strong U.S. earnings. They also showed evidence of massive AI capital expenditure. Meanwhile, lowering oil prices eased inflation concerns. The benchmark KOSPI closed 3.8% higher, at 6,598.26. This was its highest closing since July 27. The junior Kosdaq rose 2.4%, reaching a new closing high of three weeks. Chip stocks rose by a record amount overnight, thanks to strong earnings from AI companies. SpaceX also boosted chip stocks with its massive expenditures. The Philadelphia Semiconductor Index jumped?6.6%. Samsung Electronics, a South Korean memory chip maker, and SK Hynix, a South Korean memory semiconductor manufacturer both gained 2,9% and 6,7% respectively. These two companies account for more than half of KOSPI. The sharp volatility in the market in recent weeks has been tempered by the tame trading of leveraged ETFs that are tied to chipmakers. The KOSPI lost almost 40% over the course of five weeks, ending in late July. However, it is still up by 57% for the year. The unwinding of single-stock leveraged exchange traded funds over the past few weeks has eased some technical pressure and allowed 'fundamentals' to gain greater influence,? said James Ooi. Market strategist at Tiger Brokers. While the KOSPI valuation has become more appealing following the sharp correction that began in May,... The selling pressure is easing but the deleveraging of memory stocks continues and could continue to keep volatility high." Hyundai Motors and Kia Corp, its sister company, both rose by 3.1% and 2.6% respectively. POSCO Holdings, a steelmaker, rose 1.3%. Samsung BioLogics, a drug maker climbed 1%. The won has appreciated for the third day in a row, reaching as high as 1,420.8 U.S. dollars on the settlement platform onshore. The currency is up almost 1% in the last three sessions. The minutes of the Bank of Korea meeting in July showed that policymakers felt the need for?further tightening?, though the timing and rate of future rate increases will depend on the incoming data. The markets are pricing in an almost 70% chance of a hike of 25 basis points ahead of the next meeting of central bank policy scheduled later this month. According to data from the exchange, foreigners bought shares worth 1.446.3 billion won ($1.02 million) on Wednesday after selling 9.862 trillion won during July. On the money and debt market, September futures on three-year Treasury bonds rose 0.24 points?to 103.57. The benchmark 10-year yield dropped by 10.1 basis point to 4.148%, while the most liquid Korean three-year treasury bonds yield fell by 7.7 points to 3.665%.
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Rio Tinto's executive claims that the price of iron ore will rise in the next decade due to the depletion of mines.
Rio Tinto's executive stated on Wednesday that the supply pressure resulting from the depletion?of?iron ore mining operations built earlier in this century, such as those found in Australia, will?underpin iron ore prices and the market over the next decade. Rio expects that it will invest over $13 billion in new mines, plants and equipment in the Pilbara Region from 2025-2027. It estimates that 800 million tons of additional production is needed globally within the next decade. Just 300 millions tonnes have been committed. Matthew Holcz said at a luncheon event held by the Melbourne Mining Club that "it feels like every year, the demise is being greatly exaggerated". "While I believe the demand story is fairly well understood, I truly think it was on the supply-side, so disruptions have been understated," he said. He pointed to the annual cyclones which strike Western Australia's Pilbara Coast from November to March. Holcz said, "I believe the rate of depletion has been greatly underestimated." "If we take a look at the years when the industry boomed - 2005, 2010, and 2015 - a lot of these?assets? are now 15, 20, or more than 20 years old, and the size of the iron ore sector... has grown." Holcz stated that the investment in new supply today is a fraction of what it was at the beginning of last decade. "Marginal costs have increased a lot... we believe there is good price support at the levels we've enjoyed in recent years." China's iron ore demand will remain stable until 2030, then decline slightly. However, the Global South, and in particular India, is expected to boost demand. Rio estimates that India could become a net importer of iron ore around 2035. LEVERAGE CHANGE Holcz stated that tensions between buyers and suppliers always existed, but Rio was focused on "win-win opportunities" and long-term ties. In remarks made on the sidelines, he said: "The balance between supply and demand has changed." "You have a market that is much more balanced, and that has certainly shifted some leverage." Holcz, in referring to union issues in the Pilbara where workers will strike this weekend at BHP’s Port Hedland operation, favored a “direct relationship” with workers, which he claimed?has historically resulted in better outcomes. The future capital expenditure decisions will be based on the competition, industrial relations, and taxation elsewhere. Australia has fallen behind in these areas. Holcz said that Rio Tinto has no significant exposure to the iron ore trader Radiant World. Bloomberg News reported last week that trading houses Vitol and?Cargill had stopped dealing with Radiant World because they were concerned about the validity of invoices sent to their banks. Radiant World denies this. Holcz stated that "from a Rio Tinto point of view, there's no exposure here about which we're worried." (Reporting and editing by Clarence Fernandez in Melbourne, Melanie Burton reported from Melbourne)
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Copper prices are weighing on demand, slowing the copper rally
Copper prices rose on Wednesday, but remained below the highs of yesterday. This was due to a combination of waning inventories and improving risk sentiment. Benchmark 'three-month copper' on the London Metal Exchange was up by 0.18% to $14,091.5 per metric ton at 0700 GMT. The Shanghai Futures Exchange's most traded copper contract rose by 0.96%, to 107.340 yuan (15,908.82 dollars) per ton. Prices reached a two-month peak on Tuesday and surpassed the psychological $14,000 per tonne for the first since early June. Red metal prices have been boosted by a decline in inventories, as more material has been brought into the U.S. to avoid potential tariffs on refined copper. The total copper stock in LME registered warehouses Since the end of May, prices have dropped by almost 40%. Daniel Hynes is a senior commodity strategist with ANZ. He said that the US imported over 200,000 tons copper in July, which was the largest monthly influx since 2014. The LME spread from cash to three-months reflected the supply pressure on physical materials The red metal was supported by an improved macroeconomic outlook and a better?risk sentiment from cooling fears about escalation in the Middle East. The red metal also benefited from a better macroeconomic outlook, and a better risk sentiment due to easing fears of escalation within the Middle East. Analysts from Chinese broker Everbright Futures stated in a report that high copper prices were beginning to impact demand. They questioned the strength of the seasonal demand for the second half of the year. Yangshan Copper Premium According to SMM, an indicator of physical demand in China's largest consumer, the price per ton dropped to $110 on Tuesday. Aluminium gained?0.23% on the LME, while zinc gained 0.94%. Lead added a?0.37%. Nickel lost 0.42%. Tin gained 0.9%. Aluminium gained 0.25% among SHFE metals. Zinc rose 1.88%. Lead rose 2.77%. Nickel lost 0.79%. Tin rose 1.56%.
Gold reaches a one-month high as US-Iran hopes for peace ease inflation concerns
On Wednesday, gold rose by more than 2% to a new one-month-high as investors looked forward to key U.S. employment data and hoped that a U.S. Iran peace deal would ease inflation fears.
By 1113 GMT, spot gold had risen 2.3% to $4168.34 an ounce, its highest since July 7. U.S. Gold Futures increased 1.8% to $4227.40.
Donald Trump, the U.S. president, said that his administration had "very positive discussions" with Iran on Tuesday during an all-day negotiation. This has fueled expectations for a quick end to this five-month conflict.
There are more signs that a Gulf ceasefire agreement is in the works, and this means Treasury yields will be moving lower on account of inflation concerns, making non-yielding investments like gold even more attractive," Jamie Dutta said, a market expert at trading platform Nemo.money.
The U.S. Dollar remained under pressure. This made metals priced in greenbacks more appealing to holders of other currencies. Yields on the benchmark 10-year U.S. Treasury notes fell to an all-time low.
In a high-interest rate environment, gold tends to lose appeal despite its role as an inflation hedge. It yields no return.
According to the CME FedWatch Tool, traders now price in a 57% chance of a rate hike for September, down from 67% one day earlier.
Jeff Schmid, President of the Federal Reserve Bank of Kansas City, said that monetary policy needs to be tightened to bring "too-high" inflation to 2%.
Concerns about the Fed’s credibility are likely to ease over the next few months as the central bank increases interest rates. This would lead to gold prices dropping and settling under $4,000 per ounce by the end of this?year," said Hamad Hussain a climate and commodities economist with Capital Economics.
The ADP Employment Report is due at 1215 GMT, and the non-farm payroll report for July will be released on Friday.
Spot silver rose 3.3% to $61.50 an ounce, its highest level since July 7.
Palladium was up 1.5% at $1,373.35, following a two-month high. Platinum rose 1% to $1752.20. (Reporting and editing by Rashmi aich and Joyjeet Das in Bengaluru)
(source: Reuters)