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Tech stocks drop on a weekly basis due to a sour mood
Investors are uneasy with the pace of the artificial intelligence stock rally, and have shifted their focus to safer assets like bonds and the Japanese yen. S&P 500 and Nasdaq futures firmed up a bit in Asia's morning. However, overnight the Nasdaq fell 1.9%. The world's largest tech index has fallen 2.8% this week. If that trend continues, it would be the biggest drop in a single week since March. This is a shock for an juggernaut which had gained more than half its value from the lows reached when tariffs were first announced in April. In morning trading, Japan's Nikkei dropped 1.8%, resulting in a loss of 4.7% for the week, the biggest since late march. Meanwhile, in Seoul, the Kospi declined 1.4%, resulting in a fall of 3.3% for the week, its worst weekly drop since late mars. Softbank Group Corp, a tech investor, fell more than 20 percent this week. Chip and cable manufacturers were also among the worst performers. Bitcoin, which is sometimes used as a barometer for tech sentiments, has fallen 8% this week to $101,092. MOOD SHIFT The pullback of AI-related shares has not been triggered by any obvious event, but the reaction to recent results reveals that some fears are beginning to surface about the possibility of a bubble and profitability questions. Meta's stock plunged late last month after it revealed large capital expenditures as the company builds data centres to support its AI push. Palantir Technologies, a data and AI company, has also seen its shares fall despite exceeding earnings expectations. Herald van der Linde is the head of equity strategies for Asia Pacific, HSBC. "And another one says it. Then a third. A fourth person says that these three are all selling. It's possible that I am selling, too. It's just a change in market sentiment. This could be happening now." Overnight, the S&P 500 index closed down 1.1% and the Philadelphia SE Semiconductor Index fell 2.4%. BONDS, YEN HIGHER Bond markets rose on the back of a demand for safety, and as second-tier U.S. data indicated a wave layoffs which could support future rate cuts in the U.S. The benchmark 10-year U.S. Treasury rates fell 6.4 basis point overnight to 4.09%, after Challenger, Gray & Christmas, an outplacement firm, said that there was a spike in job cuts announced in October. These private surveys have attracted attention on the market, while the prolonged U.S. shutdown has stopped official U.S. data publishing. The dollar fell overnight by nearly 0.5% to $1.1546 a euro. The dollar was last, at 153.17 Japanese yens and 0.8069 Swiss francs. The pound soared after the Bank of England held interest rates, but the possibility of a rate cut in December limited gains. It traded at a slight discount to $1.3128 on the Asian market. Gold held steady at just under $4,000 per ounce. Brent crude remained at $63.64 per barrel. (Editing by Shri Navaratnam).
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Australian shares flat as financials counter energy, real estate strength
Australian shares were little altered on Friday as gloomy performances in the financial sector following a disappointing profit half-year from Macquarie, a top investment bank, partially offset gains in local stocks in energy, real estate and healthcare. As of 2349 GMT the S&P/ASX 200 was flat at 8,826.80, and is on course for its second consecutive weekly loss if current momentum continues. Macquarie Group shares fell 5.5%, their lowest level in over five months. The lender missed expectations on its half-year profits due to a lacklustre commodity division. CBA, the top lender in Australia, lost 0.8% and ended a winning streak of two sessions during which they had gained 2.5%. Westpac shares also dropped 0.8%, after reaching a record-high on Wednesday. The broad financial index fell 0.6% on the Friday, but it was still on track to achieve its best performance for a week since late September. The benchmark index fell 1.4% following a poor close on Wall Street over night amid a sell-off in the tech sector. The shares of WiseTech Global, Xero and each other fell more than 1%. Rio Tinto, Fortescue and BHP all fell more than 1%. Rio Tinto was down by 0.2%, Fortescue by 0.5%, and BHP 0.5%. Gold miners recovered some of their losses by rising 1.1% on the back of a falling dollar, a surge in safe-haven demand and concerns about a long U.S. shutdown and the legality and legitimacy of tariffs. The shares of Northern Star Resources and Evolution Mining rose by 1.1% and 2.2%, respectively. The energy subindex rose by nearly 1%. Woodside Energy and Santos gained 1.6% and 0.6% respectively. The healthcare sub-index rose 0.6% while the real estate index climbed 0.4%. Qantas shares fell 4.1%, their lowest since mid-May. The Australian airline lowered its domestic unit revenue projection for the first half 2026. It also flagged an increase in fuel prices. The benchmark S&P/NZX50 index in New Zealand rose 0.4% to 13,625.29.
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China's Vice Premier urges the end of trade barriers that are holding back green transformation
Ding Xuexiang, vice premier of China, called on fellow leaders to show "true multiculturalism" at the climate summit held in Brazil. Ding, via a translation, said: "We must strengthen international collaboration in green technology and the industry, remove trade obstacles, and ensure free flow of high-quality green products, to better meet global sustainable development needs." Ding told the official Xinhua News Agency on Friday that the developed countries must fulfill their obligation "to lead in emission reduction and honour their funding commitments", as well as provide more assistance to developing countries. He said that China was willing to work with other parties to "persistently encourage green and low-carbon development". In September, Chinese President Xi Jinping stated that China aimed to reduce its economy-wide greenhouse gases emissions by 7% - 10% by 2035 compared to their peak. He said that as part of China's national determined contribution targets by 2035, the country's consumption of non-fossil fuels will represent more than 30%. (Reporting from William James in Belem, and Farah Masters in Hong Kong. Editing by Brad Haynes & Michael Perry).
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Safety fears hinder rescue efforts in South Korea after power plant collapse.
Fire and rescue officials reported that a worker died and six others remain trapped after a large structure collapsed at a South Korean power station being prepared for demolition. On Thursday afternoon, workers were removing parts of a massive steel structure that was a decommissioned heating system when it collapsed. The footage from the scene shows the structure toppled and mangled, surrounded by other structures. Kim Jung-shik, a fire official, told reporters that two people were rescued quickly and then another two were found under the rubble. He said that one worker died early Friday morning and another's condition was still unknown. Rescuers used heat sensors, remote scoping and search dogs to help locate other trapped workers. However, their efforts were hampered by a risk of further collapse, said he. The South Korean president Lee Jae Myung has called for a full-scale effort to rescue the trapped workers. (Reporting and editing by Ed Davies.)
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France launches $2.5 billion initiative for Congo forest protection
A document seen by revealed that European nations have thrown their weight behind a plan worth $2.5 billion to save the Congo forest. This conservation scheme could steal some of the thunder from Brazil's flagship initiative for the COP30. The U.N. Climate talks are being held this year in the Brazilian Amazon to draw attention to the issue of emissions caused by rampant deforestation. The initiative, led by France, is called "The Belem Call to the Forests of the Congo Basin". It has the backing of Germany, Norway and Britain. The initiative's supporters hope to mobilize resources in order to protect the second largest rainforest on earth. Five European nations signed the document in French dated 6 November. The document stated that "the donors are... committing themselves to mobilize over $2.5 billion in the next five year period, on top of the domestic resources which will be mobilized for the protection and management of forests of the Congo Basin by Central African countries." Signatories also said that they aimed to assist African nations in reducing deforestation by using technology, training and partnership. The Congo, the Amazon, the world's biggest rainforest, and the Borneo-Mekong-Southeast Asia basin, the third-largest, all face threats from expanding farm frontiers, logging, mining, and other industries. The Congo's protection has attracted attention, as it absorbs more greenhouse gases net than any other forest. However, the timing was not in sync with Brazil's priority of a global fund for forests that is central to its COP30 agenda. The Brazilian President Luiz inacio Lula da So has hailed the Tropical Forests Forever Facility as the future of climate financing because it replaces grants by a more scalable model. A diplomat who is familiar with both initiatives said that "in theory, they are both very different." He noted that the TFFF offers annual payments without strings to rainforest nations. The source said that the two rainforest funds competing with each other may not be helpful. Norway The TFFF has pledged $3 billion On Thursday, the largest contribution to date was made. France has said that it will contribute up to 500 millions euros to the Brazilian initiative. Reporting by Lisandra paraguassu from Belem, and Simon Jessop from Sao Paulo. Editing by Brad Hayes and Diane Craft.
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Stellantis cancels supply agreement with Alliance Nickel in Australia
Alliance Nickel, a company based in Australia, announced on Friday that carmaker Stellantis would terminate its supply agreement for battery-grade cobalt and nickel from the NiWest Project as of December 3. The reason given was missed milestone deadlines. The company blamed the delays on the challenging conditions of the global nickel markets, which had limited the opportunities for financing. Alliance is the latest Australian manufacturer forced to renegotiate its supply agreements with automobile manufacturers. The miner stated that nickel prices are still under pressure and have been for the past two-years, making it hard to finance new projects. Alliance says that weaker prices has affected its financial position and it is delaying other commitments as it works to secure sufficient financing for the NiWest Project in Western Australia. According to Alliance, Stellantis, which makes Jeep, Fiat, and Chrysler, has expressed a willingness to renegotiate offtake terms. Alliance Managing Director Paul Kopejtka stated, "We acknowledge that this is a good chance for both parties to negotiate a new contract that reflects the revised project development schedule and forward strategy." Early trading saw shares of Alliance fall as much as 6,4%. The two companies have signed an agreement in 2023 to supply 170,000 tonnes of nickel sulphate, and 12,000 tonnes of cobalt sulfurate, over a five-year initial period. This represents about 40% of NiWest’s projected annual production. The deal at the time highlighted Australia's increasing role as a major supplier of battery materials essential to the production of electric vehicles. A 2023 deal also saw the Italian-French consortium acquire an 11,5% stake in Australian company. Stellantis, the company formed by the merger of Fiat Chrysler with Peugeot maker PSA in 2021, cancelled the deal for the second time. Stellantis pulled out of an agreement earlier this week with Australian battery material supplier. Novonix Inability to agree upon product specifications was cited as the reason for the dispute.
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MP Materials' quarterly loss increases after sales to Chinese clients are halted
The U.S. rare-earths company MP Materials reported on Thursday that its third-quarter losses widened due to the suspension of sales to Chinese clients as part an agreement with the U.S. Government, even though the results exceeded Wall Street's expectations. After-hours, shares fell 7.4% to $48,40. The company has shifted its focus from relying on foreign sales, to becoming a major U.S. miner of rare earths. It also focuses on manufacturing magnets from these materials that are widely used in the automotive and electronics industries. MP is the owner of the only U.S. mine for rare earths and has plans to build a magnet plant in Texas. Las Vegas-based company MP reported a quarterly loss totaling $41.8 million or 24 cents per common share. This compares to a loss amounting to $11.2 million or 16 cents a share in the previous quarter. Without one-time items MP lost 10c per share. According to LSEG, analysts had expected a loss per share of 18 cents. During the third quarter, there were no sales of rare earths concentrator. These sales were the company's main source of revenue for many years. However, a July agreement with the Pentagon prevents future shipments. In accordance with the agreement, on October 1, the Pentagon began to guarantee a price floor of $110 per kilo for the two rare earths most popular, neodymium & praseodymium. MP executives confirmed this on a conference phone call with investors. CEO SEES NEW COLD WAR Jim Litinsky is the CEO of the miner. He described what he believes to be a "new Cold War", between Washington and Beijing, requiring investment by government in key industries. Litinsky, speaking on the investor's call, said: "In the Cold War of the past, America won through military might, backed by economic strength." He said that "in Cold War 2.0, the equation is reversed." "Economic power, as expressed by control over critical materials, advanced technology, and supply chains that support them, is now the decisive measure for national power." Litinsky is also one of the largest shareholders of MP. He added that he didn't believe most of its competitors could compete. Litinsky stated that "the vast majority of the projects being promoted will simply not work at any price." NEW FACILITY ONLINE SOON MP recorded $21.9 million of sales in the first quarter for magnetic precursors, which are the building blocks to magnets. MP expects to start commercial magnet production at its Texas facility by the end the year. MP had to construct a facility for the processing of so-called "heavy rare earths" in order to make magnets. The company plans to start up the facility by mid-2026, using ore from its California mine as well as third-party purchases. This facility will produce 200 metric tonnes of terbium and dysprosium per year - the two heavy rare earths that are used in magnets. (Reporting and editing by Bill Berkrot, Jamie Freed and Ernest Scheyder)
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Brazil raises 2.25 billion dollars in bond sales, including new sustainable notes
Brazil raised $2.25bn on Thursday through a new dollar-bond sale. This was its fourth international market transaction this year. It also included sustainable notes, as the country hosts world leaders at the United Nations Climate Summit. Brazil's Treasury issued a statement saying it had sold $1.5 billion of new sustainable bonds that are due in 2033, and $750 million more through a retap on its benchmark 10-year bond. IFR, a fixed-income news service, was the first to report on these values. Treasury said the 8-year bond was issued with a 5.75% yield, while the 2035 bonds have a yield 6.2%. This is the busiest year Brazil has had for bond sales abroad since 2010, when Brazil also issued four international bonds. Treasury says the new sustainable bonds demonstrate the government's commitment towards sustainability in the face of increasing demand from foreign investors. This deal was launched in the Amazonian town of Belem on the eve before the COP30 Conference. It is Brazil's 3rd sustainable bond issuance after its debut at the end of 2023. Brazil has already raised $8.4 billion through the traditional sovereign bond sale in February, June, and September. The order book reached a maximum of 150 people. This issue was a big hit with investors. The demand exceeded the volume of the issue by three times," said the statement. The government stated that the issuance aims to also boost liquidity along sovereign dollar yield curves, provide a standard for corporate issuers, and help prefinance future foreign debt maturity dates. Citibank, Deutsche Bank, and Goldman Sachs were the main players in this transaction. (Reporting and editing by Aida Pelaez-Fernandez, Aurora Ellis and Bernardo Caram)
Northern Hemisphere's record winter heat slashes gas usage: Kemp
The northern hemisphere has experienced the warmest winter season on record, with the unusual warmth concentrated around the Atlantic Basin, which has produced a massive surplus of gas and slump in rates because October.
Surface area temperature levels on land were +2.65 ° C above the 20th century average in between December and February, according to data assembled by the U.S. National Oceanic and Atmospheric Administration (NOAA).
Chartbook: Northern hemisphere winter 2023/24
Tape-record warmth in the winter season of 2023/24 beat previous highs of +2.44 ° C in 2019/2020 and +2.61 ° C in 2015/16 - likewise winters characterised by surplus stocks and slump in gas rates.
Global warming, strong El Nino conditions in the Pacific, a. highly favorable North Atlantic Oscillation, and the solar. activity cycle moving towards its 11-year peak, all contributed. to exceptional heat this winter.
THE United States AND CANADA
Europe has received most attention because of the local. gas market's disruption following Russia's intrusion of Ukraine,. but the most irregular weather happened in The United States and Canada.
Temperatures throughout The United States And Canada were +3.43 ° C above the. long-run average in between December and February ( Climate at a. glimpse, National Centers for Environmental Details, March. 2024).
North America experienced record warm anomalies in both. December (+4.66 ° C )and February (+3.59 ° C )slashing heating. need for both gas and gas-fired electricity.
U.S. gas stocks started the heating season just 64. billion cubic feet (bcf) (+2% or +0.24 standard deviations). above the previous 10-year seasonal average on Oct. 1.
Stocks were still just 129 bcf (+4% or +0.46 standard. variances) above the 10-year seasonal average at the end of. November.
The surplus had swelled to 307 bcf (+10% or +1.15. standard deviations) by the end of December following a run of. abnormally warm weather condition.
Cooler temperature levels triggered the surplus to narrow temporarily. in January, especially throughout the really cold spell between. Jan. 13 and Jan. 22.
But the surplus swelled again to 519 bcf (+29% or +1.31. basic variances) by the end of February as temperatures. reverted to well above typical.
With moderate weather condition continuing into March the surplus had. puffed up to a huge 606 bcf (+35 or +1.35 requirement. deviations) by March 8.
U.S. front-month futures prices averaged nearly $3.19 per. million British thermal systems in October, putting them in the. As soon as inflation is, 13th percentile for all months because 1993. considered.
By February typical inflation-adjusted rates had actually been up to. a record low of $1.80 as persistent heat and the unrelenting. develop of surplus inventories sent the marketplace into a tailspin.
EUROPE AND ASIA
Europe likewise experienced a very warm winter, with. temperatures +2.73 ° C above the long-run average, making the. winter season the 2nd warmest on record after 2019/20 (+3.32 ° C)
. A highly positive North Atlantic Oscillation directed. strong westerly winds into Northwest Europe bringing lots of. moisture-laden and warm air from the Atlantic.
The temperature level anomaly may not have been as extreme as. North America, but combined with prices well above the. pre-invasion average, it was enough to leave the area with. record seasonal inventories by the end of February.
Stocks across the European Union and the UK. started the heating season 167 terawatt-hours (TWh) (+18% or. +1.70 basic deviations) above the 10-year average on Oct. 1.
By Feb. 29, the surplus had swollen to 269 TWh (+60% or. +2.08 basic deviations), according to information from Gas. Infrastructure Europe.
Europe's front-month futures balanced almost 46 euros per. megawatt-hour (88th percentile for all months considering that 2010 in genuine. terms) in October, however had actually slumped to an average of simply 26. euros (48th percentile) in February.
By contrast to The United States and Canada and Europe, winter temperature levels. throughout Asia were closer to regular, a minimum of for the last two. years.
Asia's temperatures averaged +1.80 ° C above the long-lasting. average, but that made it only the 10th hottest winter season on. record.
THOUSANDSES OF GAS
The United States And Canada, Europe and Asia combined represented practically. two-thirds of worldwide gas intake in 2022 ( Statistical. evaluation of world energy, Energy Institute, 2023).
North America and Europe alone represented 40% of. around the world consumption, with a heavy weighting towards the winter season. months because of heating demand.
Exceptional heat around the Atlantic Basin in winter. 2023/24 therefore occurred in exactly the area to maximise the. influence on gas usage, stocks and costs.
When historians ask why Russia's invasion of Ukraine and. sanctions enforced in reaction did not trigger shortages and a more. extended and extreme spike in costs, they are likely to point out. extremely warm winters in both 2022/23 and 2023/24 rather. than policy actions as the primary factor.
Europe's gas customers got really fortunate in the winter season of. 2023/24 and have actually seen costs normalise. For the same factor,. Asia's importers are now taking advantage of enhanced schedule. and much lower costs.
On The Other Hand, North America's manufacturers have been pushed into. a deep downturn as they have a hard time to sell in a market awash with too. much gas.
Next winter season is most likely to be chillier in The United States and Canada and. Europe.
In the meantime, lower prices will result in slower or no. production growth in the United States, which must cause the. market to tighten up gradually over the next 12 months.
Associated columns:
- Europe gets lucky with a mild, windy winter season (March 13,. 2024)
- Europe's mild winter leaves gas stocks at record high. ( March 7, 2024)
- El Niño pushes real U.S. gas prices to multi-decade low. ( February 16, 2024)
- Europe's inflamed gas stocks drive costs lower (February. 13, 2024)
John Kemp is a market analyst. The views expressed. are his own. Follow his commentary on X https://twitter.com/JKempEnergy.
(source: Reuters)