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MORNING BID EUROPE-Peace talks stutter
Ankur Banerjee gives us a look at what the future holds for European and global markets The markets are stuck in a cycle of hope and disappointment as talks to end war in the Middle East continue to be deadlocked. Donald Trump, the U.S. president, said that a ceasefire agreement with Iran is "on life support", after Tehran rejected an American proposal to end this conflict. Investors bet that both sides would not escalate their attacks. The lack of progress between Washington and Tehran in the negotiations has begun to weigh on some corners of the stock market. Investors are bracing for higher interest rates in order to combat inflationary pressure due to high?energy costs. Markets in Europe have priced two 25-basis-point hikes by the ECB over the 'three meetings up to September' and see a 75% probability of a third at year-end. Meanwhile, traders have fully priced any rate cuts from the Federal Reserve this year. The U.S. Dollar is now the safe-haven currency of choice, but gains are limited as investors continue to hope for a resolution in the next few days. Investors will be analyzing the U.S. data to determine the impact of war on prices. After an initial report that showed a rise, the final German inflation data is due for April. The data could help to highlight just how vulnerable Europe is, given its dependence on energy. Futures indicate a lower opening as the dour sentiment moves to Europe. The pan-European STOXX600 is still trading at a level that's 4% below its pre-war peak and lags behind global peers who have recovered on artificial intelligence driven optimism. The following are the key developments that may influence Tuesday's markets: * Germany: April inflation data, May ZEW survey * U.S. Inflation Report
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Gold prices steady as markets assess Mideast tensions in advance of US inflation data
The gold price remained largely unchanged on Tuesday as markets assessed the latest developments in 'the Middle East conflict' and interest rate expectations before key U.S. Inflation data. Gold spot fell by 0.1% to $4,728.79 an ounce at 0418 GMT after reaching a session high of three weeks earlier. U.S. Gold futures for delivery in June gained 0.2%, to $4.737.60. U.S. President Donald Trump stated that a ceasefire agreement with Iran is "on life support". Tehran refused to accept the U.S. proposal and remained firm on its demands, which he called "garbage". Ilya Spivak is the head of global macro for Tastylive. He said, "We have already seen expectations shift for many central banks in a more hawkish direction. For the Federal Reserve this has meant that all 'rate cuts' for this year are off. We're looking at the CPI numbers to see if they give a stronger indication of inflation than expected. Investors could get clues about the Fed's future policy by watching the data that is due later today. The dollar also extended its gains from the previous session. Increased crude oil prices can fuel inflation and increase the likelihood of higher interest rates. Gold is often seen as a hedge against inflation but high interest rates tend to put a strain on this non-yielding investment. BofA Global Research & Goldman Sachs have scaled back their expectations for U.S. rate?cuts in this year citing high inflation due to energy prices and growing strength of the labour market. The markets are also closely watching Trump's two day visit to China, where he will meet Chinese Xi Jinping and discuss a wide range of topics including the Middle East. Silver spot rose by 0.4%, to $86.39 an ounce. Platinum fell 1.4%, to $2,101.60. Palladium dropped 0.6%, at $1,500.20. (Reporting and editing by Subhranshu, Harikrishnan Nair, and Rashmi aich in Bengaluru)
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Prices of oil rise amid supply concerns as fragile US-Iran negotiations continue
Prices of oil rose by nearly 1% on Tuesday as the talks to end U.S. - Israel's?war on Iran? appeared fragile. Tehran's response?to a Washington proposal highlighted stark differences which have kept supply concerns alive. Brent crude futures rose 86 cents or 0.8% to $105.07 per barrel. U.S. West Texas Intermediate was up 99 cents or 1% at $99.06 as of 0411 GMT. Both benchmarks rose by nearly 2.8% Monday. U.S. president Donald Trump said on Monday that the ceasefire agreement with Iran is "on life support." He cited disagreements on several demands such as the cessation?of?hostilities across all fronts, removal of the U.S. navy blockade and the resumption Iranian oil sales. Tehran has also stressed its sovereignty over the Strait of Hormuz through which a fifth of all oil and gas liquefied flows. Suvro Sarkar, DBS Bank's energy sector team leader, said that optimism about a?imminent (peace deal) seems to have faded again. If we do not see a deal before?the?end of May then there are upside risks for oil prices. A survey released on Monday showed that OPEC's oil production in April was at its lowest level for more than 20 years. Tim Waterer is the chief market analyst for KCM Trade. He said that a genuine breakthrough towards a peace agreement could cause a sharp correction of $8 to $12. Any escalation in tensions or new blockade threats will quickly push Brent prices back up toward $115 and beyond. Amin Nasser, CEO of Saudi Aramco, warned on Monday that disruptions in oil exports could delay the return of market stability until 2027. This would result in the loss of 100 million barrels per week. Analysts in a?poll predicted that U.S. crude stockpiles would be down around 1.7 millions barrels from the previous week. Walt Chancellor, a Macquarie Group energy strategist, said that the draw will take place against a background of "continued strong net waterborne product export flows in the coming weeks." Market participants also kept a close eye on Trump's meeting with Chinese president Xi Jinping scheduled for Wednesday after Washington imposed sanction on three individuals as well as nine companies who facilitated Iranian oil shipments into China.
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Scientists say global fire outbreaks are at a record high, as 'unprecedented heat extremes' loom.
Scientists warned that climate change is causing unprecedented fire outbreaks in Africa, Asia, and other parts of the world this year. Conditions are expected to worsen as summer in the northern hemisphere approaches and El Nino weather patterns take hold, they said. Scientists warned that fires in the northern hemisphere from January to April had already caused unprecedented damage. They burned more than 150,000,000 hectares of land (370.66,000,000 acres), 20% more than previous records. Researchers said that temperature records may be broken this year. This will cause widespread fires and drought, as well as the effects of climate change caused by humans. Theodore Keeping is a wildfire specialist at Imperial College London, and part of the WWA group. He said that while the global fire season in many places has not yet heated up, the rapid start in combination with the forecast El Nino means we are looking at a severe year. He said that 85 million hectares have been burned in Africa this year, which is 23% higher than the previous record of 69 millions hectares. He said that the unusually high fire activity is caused by rapid changes from extremely wet conditions to extremely dry ones. The previous growing season was characterized by high rainfall, which produced more grass. This created an abundance of fuel for the recent savannah blazes caused by heat and drought. This month, EL NINO conditions are due Keeping reported that Asian fires had burned up to 44 million hectares this year. This is nearly 40% more land than in 2014, the previous record-breaking year. India, Myanmar Thailand, Laos, and China were among the worst affected. El Nino is expected to increase the risk of drought and heat in Australia, Canada, the United States, and the Amazon rainforest. He said: "The risk of extreme fires could be higher than we have ever seen before if an El Nino is strong." World Meteorological Organization has said that El Nino weather conditions caused by warming sea surface temperatures of the Pacific Ocean are expected to begin in May. The U.N. warned that it could cause droughts and flooding in Australia, Indonesia, and other parts of southern Asia, as well as temperature increases in other areas. Friederike Otto is a climate scientist from Imperial College London, and the co-founder and director of World Weather Attribution. She said: "If there is a strong El Nino this year, it is possible that climate change combined with El Nino will lead to unprecedented weather extremes." (Reporting and editing by David Stanway)
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Indian shares drop, rupee falls to record lows as Mideast peace hopes fade
The rupee hit a new record low on Tuesday as crude prices rose. Talks to end the Iran War appeared to be fragile. This fueled concerns about supply and potential economic impacts. The Nifty?50 dropped 0.44% as of?9 :20 a.m. IST to 23,712.2, while the BSE Sensex fell 0.56%?to?75,590.56. Ten of the sixteen major sectors suffered losses. The broader small and mid-caps fell 0.5% and 0.30%, respectively. Other Asian?markets dropped 0.5% as oil prices rose from about $100 a barrel to $105 after U.S. president Donald Trump said that the ceasefire agreement with Iran is "on life support". He had dismissed Tehran's response following a U.S. proposed peace as "stupid". The world's third largest oil importing country is negatively affected by higher crude prices, as they increase inflationary pressures. They also affect growth and corporate earnings. Investors also await India's retail inflation data for April, due later that day. This could provide clues on how the war with Iran has affected the price pressures of the economy.
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Calbee switches to monochrome packaging after being hit by the ink shortage caused by Iran.
Japan's leading snack maker has come up with a "creative" solution to conserve oil-derived materials. It will "switch from brightly colored packaging to black and White". Calbee of Tokyo announced on Tuesday that it will temporarily use only two ink colors on 14 products, including its Potato Chips and Kappa Ebisen snack foods, as well as the Frugra cereal. The new packaging is expected to hit the shelves on May 25. Calbee has the largest market share in the domestic snack market. The company said that the initiative was to maintain stable shipments due to unstable supplies affecting "certain raw materials" as a result of the U.S./Israeli war against Iran. Japanese companies are trying to minimize the impact of rising prices and shortages in input materials, while the government tries to reassure businesses and the public about the supply. For printing ink, Japan imports about 40% of the oil derivative naphtha from the Middle East. Calbee’s Potato Chips can be instantly recognized by their multi-hued design featuring product images against backgrounds that are orange or yellow. The news of the company's 77-year old move was reported in newspapers across Japan. This followed a short panic among fans in March when a different brand of crisps temporarily stopped production of a popular snack, citing difficulty in obtaining the heavy oil required to run their factory. A?government spokesperson was asked about Calbee’s decision. He said that domestic naphtha refinery continues using crude oil stockpiled, and imports from outside the Middle East tripled between May 2014 and the levels before the Iran War broke out. Kei Sato, Deputy Chief Cabinet Secretary, said: "We've not heard of any immediate disruptions in the supply chain for naphtha or printing ink. We recognize that Japan has all the necessary quantities." Since the Iran War began, the Strait of Hormuz has virtually been closed. This has caused a global energy shortage.
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Markets assess tensions in the Middle East ahead of US inflation data
The gold price remained stable on Tuesday as the markets weighed developments in the Middle East conflict, interest rate expectations and key U.S. Inflation data. By 0246 GMT, spot gold remained at $4732.89 an ounce. U.S. Gold futures for delivery in June gained 0.3%, to $4742.40. U.S. president Donald Trump stated on Monday that the ceasefire agreement with Iran is "on life support". This was after Tehran's reaction to a U.S. plan to end this war showed how far apart they are on many issues. Ilya Spirak, the head of global macro at 'Tastylive', said that expectations have already shifted for many central banks to a more hawkish stance. We're looking at the CPI numbers to see if they give a stronger indication of inflation than expected. Investors may get a clue about the Fed's monetary policy by looking at the data that is due later today. In early Asian trade, oil prices increased, and the dollar continued its gains from the previous day. Increased crude oil prices can cause inflation and increase the probability of higher interest rates. Gold is often seen as a hedge to inflation but high rates tend to weigh on this non-yielding investment. BofA Global Research & Goldman Sachs have lowered their expectations for U.S. rate cuts in this year, citing high energy costs and the 'growing strength of the labour market. The markets are also closely watching Trump's two day visit to China, where he will meet Chinese President Xi Jinping and discuss a variety of topics including the Middle East. Silver spot was unchanged at $86.08 per ounce. Platinum fell 1.6% to $1,098.25 and palladium dropped 1% to $1,494. (Reporting by Pablo Sinha in Bengaluru; Editing by Subhranshu Sahu and Harikrishnan Nair)
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AI rally pauses while Middle East ceasefire is on 'life-support'
The dollar and oil rose on Tuesday, as traders waited for U.S. inflation data and a 'chip rally' that had been raging in the chip stock market cooled. Donald Trump, the U.S. president, said that the ceasefire agreement with Iran was "on life support", after Tehran's reaction to a proposal from the U.S. The proposal to end the conflict made it clear that the two sides are still far apart. Brent crude futures rose 0.7% to $105. S&P futures fell 0.2%, and the KOSPI index in Seoul, which is considered to be unstoppable by many investors, dropped 3%. Tokyo's Nikkei index was flat, but MSCI's broadest Asian share index excluding Japan dropped 1%. European futures fell ?1%. The markets are watching Trump's visit to China on Wednesday, but they don't expect any progress in the area of trade or Iran. They just want the status quo to continue. Investors shouldn't expect to see sweeping deals. "A 'win' means no new tariffs or export controls and maybe small symbolic deals such as agricultural purchase, aircraft orders, signals on rare Earths, said Daniel Casali chief investment strategist of Evelyn Partners. These may seem minor, yet stability on the margins is important. Wall Street has been resilient despite the rising oil price. The S&P 500, and Nasdaq have all reached new highs. The U.S. consumer price index is expected to rise by a scorching 3.7% on a year-over-year basis. Markets could be rattled by any suggestion that the Federal Reserve might need to raise interest rates this year, rather than reduce them as investors expected before World War II. Global bond yields increased overnight, led by a selloff of gilts, after Prime Minister Keir starmer's speech did not dispel investor doubts regarding his political survival following Labour's heavy loss in the local elections last week. Japan's 10-year bond yield jumped to a new 29-year high, 2.54%, ahead of a later auction. Summary of the opinions expressed at the Bank of Japan meeting in April reinforced the growing hawkish tilt on the board. This leaves the door open to a rate hike in June. The benchmark 10-year Treasury yields remained at 4.42%. The dollar rose to 157.53 Japanese yen in currency trading. U.S. Treasury Sec. Scott Bessent, who is visiting Tokyo to meet with Japanese officials, did not mention his support for Japan's currency interventions in a press conference on Tuesday. Satsuki Katayama, Japanese Finance Minister, said: "We agree that we are extremely well coordinated on recent market movements including exchange rates." The euro fell 0.2% to 1.1762, and the Australian dollar dropped 0.25% to $0.7232. The Australian government will announce a smaller budget deficit than it had previously announced on Tuesday.
Russia says it inflicts 'huge' retaliatory strike on energy websites in Ukraine
The Russian defence ministry said on Thursday it hit fuel and energy complex facilities in Ukraine with a enormous retaliatory strike utilizing highprecision, longrange weapons from air and sea along with drones over night.
The strikes remained in reaction to Ukrainian efforts to harm Russia's oil and gas market and energy facilities, the ministry said.
As an outcome, the work of Ukrainian military industry enterprises was interrupted, the transfer of reserves to combat areas was warded off, and the supply of fuel to the squads and military units of the Armed Forces of Ukraine was obstructed, it stated.
According to Ukrainian authorities, Russian rockets and drones ruined a big electrical power plant near Kyiv and struck power facilities in numerous regions on Thursday, ramping up pressure on the embattled energy system.
Ukrainian drone attacks have actually reduced Russian primary oil refining capacity by some 14% as of the end of March according to calculations.
Russia says the drone attacks total up to terrorism. Ukraine says its drone attacks on Russia are justified because it is defending survival and has actually suffered damage to its infrastructure from Russian airstrikes.
(source: Reuters)