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Morning Bid Europe-Rising Oil, rains on AI Party
Wayne Cole gives us a look at what the future holds for European and global markets. While Spain hoisted the World Cup in celebration, the U.S. Military began?its ninth day of attacks against Iran. Iran was also?hitting targets throughout the region. On Sunday, only a few ships crossed the 'Strait of Hormuz. One was on fire. Brent crude oil rose above $90 per barrel for the very first time since June. Treasury bond futures fell as investors lowered the odds of a Federal Reserve interest rate hike in September. The implied probability was around 65%. The rise in 30-year Treasury rates above 5.0% is a warning to equity valuations. A quick glance at a chart shows that yields have rarely risen above this barrier over the last two decades. Stocks tend to suffer when they do. This week, Alphabet, Intel and Tesla are among the companies that will be reporting their earnings. The expectations for tech profits is sky high and the results must be truly exceptional to avoid being punished. Taiwanese chips maker TSMC beat its guidance last week, but shares fell 7%. The chip-heavy South Korean market has fallen by a quarter over the last month, as retail investors were forced out of leveraged positions. The index fell another 3.0% Monday, but that was a better result than many had expected. The Nikkei 225 was on holidays in Japan, but the futures actually traded higher. This gave hope of stabilisation. Futures for Nasdaq &?S&P500 were slightly firmer. This was a good performance, given the recent negative news. The latest spike in oil prices will cause a headache to the European Central Bank, which is meeting on Thursday. It's expected that they will keep rates at 2.25 percent following June's increase. Markets are almost fully priced in for an increase at the September meeting, and rates of 2.5% to begin next year. The sterling held steady at $1.3447 while bond markets awaited the appointment of a new Treasurer by Britain's incoming PM Andy Burnham. Shabana Mahmood is the preferred candidate of the market ahead of Ed Miliband. Market developments on Monday that may have a significant impact - Canada CPI, U.S. Leading Index for June
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Copper prices rise as fears over supply offset demand concerns
Prices of copper edged up on Monday due to a?shrinking inventory and supply risk, but uncertainty about the?demand outlook limited gains. By 0300 GMT, the benchmark three-month copper contract on the London Metal Exchange had risen 0.16% to $13,546.5 per metric ton. The Shanghai Futures Exchange's most traded copper contract rose 0.39%, to 104210 yuan (US$15,389.50). Daniel Hynes said that the growth of copper production in Chile, the world's largest producer, has been "elusive" so far, according to a note by Daniel Hynes senior commodity strategist with ANZ. South32, an Australian mining company, reported lower fourth quarter copper production, falling short of market expectations. Inclement weather at the Sierra Gorda Project in Chile hampered operations. BHP Group announced last week that its fourth-quarter output of copper fell by 5%. It also predicted a decline in Chilean production of copper next year. Goldman Sachs stated on Monday that it expects ex-U.S. Copper market to remain tight in the near term. Goldman Sachs said that prices may be affected if the Middle East conflict escalates and increases inflation and rate hike fears. Copper inventories are declining. Copper stocks available on the LME The number of warrants issued has dropped sharply in the wake of a wave cancellations. As of Friday, more than half (55%) of the copper stored in LME registered warehouses was under a cancelled warrant, which means that they were earmarked for removal, according to data from the exchange. The U.S. has also imported metal ahead of a possible tariff on?refined?copper. In the meantime, the U.S.-Iran conflict continued over the weekend. This boosted oil prices while fanned fears that inflation would lead to higher interest rates for longer. Increased interest rates dampen economic activity, which in turn affects industrial minerals that are dependent on growth. Aluminium?added 0.32 %, Zinc?strengthened 0.38%, Lead?slid 0.05% and Nickel rose 0.47%. Tin gained 0.51%. Aluminium fell 0.24% on SHFE. Zinc dropped 0.61%. Lead ticked higher by 0.06%. Nickel dipped by 0.18%. Tin rose 1.88%.
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Weather agency: 'Super El Nino' to bring record temperatures to Malaysia next year
Malaysia's meteorological department has said that it expects to record high temperatures in Malaysia next year due to the strengthening of?El Nino. El Nino is a natural part of the weather cycle. It's characterized by weakened trade winds, and warmer ocean currents. Climate experts warn of a super-strong El Nino in this year. This could lead to severe weather like droughts, heatwaves and floods. Malaysia's Director-General of the Meteorological Department, Mohd Hisham Mohd Aip, said that the agency predicts El Nino will peak between March 2027 and May 2027. Maximum temperatures are expected to exceed the 1998 Chuping record of 40.1, degrees Celsius (104.2 degrees Fahrenheit). In an interview, he stated that Malaysia's average temperatures have risen since the 1980s. The highest temperatures are often recorded when "super" El Nino occurs. Mohd Hisham said that the global warming was a factor in the rising heat. He said that the?department expected much lower rainfall in the northern areas of Malaysian Peninsula, as well as higher temperatures in Sabah and Sarawak - Malaysia's two largest palm oil producing States on Borneo Island. Sabah's proximity to the Pacific is one of the reasons why some of El Nino's most powerful effects are seen there, he said.
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European chemical earnings will test the recovery of demand after conflict-driven pricing boost
Investors are increasingly interested in whether this temporary boost can offset weak demand and the mounting competition of Asian producers. The Middle East conflict has tightened supply conditions, which have helped to support pricing. This has given breathing space to Europe's chemical sector. However, weak demand, overcapacity globally and increasing competition from Asia are still weighing on the long-term outlook of the industry. Investors are also interested in whether the companies have reported sustained volume gains or only temporary price increases, as well their outlooks for second half of the calendar year. Brenntag, BASF, and Evonik are among the chemical companies that have recently increased their profit forecasts for the full year. This suggests that parts of industry are benefiting from higher prices and resilient demand, despite concerns over excess capacity and low volumes. Lanxess Clariant Wacker Chemie results will be closely examined for signs that recent price support is translating to stronger earnings. Analysts say investors have shifted their focus in recent weeks away from the margin benefits of shortages in supply to concern over the underlying weakness in demand in Europe's chemicals sector. MIDDLE-EAST CONFLICT DRIVEN UPLIFT TO FADE Since years, European chemical companies have been struggling with high energy prices, weak demand, and fierce price competition from Asian competitors. The Middle East conflict provided a short-term boost to the chemicals industry in the region, as disruptions in supply raised prices for Asian competitors and made customers prioritize reliability over price. The increase in investment and demand has not been enough to compensate for the weakening of the industry. VCI, the German chemical industry's body, warned that recent improvements in the chemical sector following Middle East disruptions may only be temporary. The report said that the risks for the second-quarter have increased due to the economic boom caused by the Middle East war. It referred to the stockpiling of customers and the precautionary purchases made after supply concerns. The association stated that demand could re-soften once supply chains are adjusted and pre-purchasing activity fades. This would expose what the association described as a structural weakness in market. The report warned that the sector may face new price pressures and lower order volumes. Before the latest Middle East tensions, European manufacturers warned that Asian competitors would gain ground as energy markets stabilized and regional supply chains adapted. Analysts and Strategists say that periodic disruptions in traffic through the Strait of Hormuz, and rising energy prices may keep commodity chemical prices high. However, they doubt prices will return to their peaks at the start of the U.S. - Iran war. Sebastian Bray, Berenberg analyst, said that the latest impact was likely to be less than it was before. He added, "I suspect that some Southeast Asian producers of chemicals have become more proficient at producing feedstocks now."
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Gold falls as oil prices rise, Fed rate hike voices grow
Gold?prices?fell on Monday?as a escalation of the Middle?East?war pushed Brent?crude above $90 a?barrel, heightening concerns about inflation after many U.S. Federal Reserve officials signaled that interest rate increases may be necessary to curb price pressures. As of 0242 GMT, spot gold was down by 0.1%, at $4,014.53 an ounce. U.S. Gold Futures for August Delivery were unchanged at $4,019.80. U.S. officials announced that they had completed nine consecutive nights of attacks against Iran. Earlier, the U.S. announced that two U.S. soldiers were killed in Jordan. Meanwhile, U.S. partners in the region reported more Iranian attacks Sunday. The weekend escalations increased the risk of both sides launching a full-scale offensive, which could threaten gold prices, as the opportunity costs for holding the metal would increase if the ongoing stagflation fear started to take hold, said Kelvin Woong, senior market analyst at OANDA. Brent oil prices rose 3% on the back of reduced energy shipments through the Strait of Hormuz. Oil prices that are high can cause inflation fears, and increase the odds of interest rates staying higher for longer. Gold is often seen as a hedge against inflation, but high interest rates can increase the cost of owning the non-yielding investment. Cleveland Fed President Beth Hammack has added her voice to the growing chorus of policymakers who believe that interest rates need to be raised to combat persistent?inflation. This will set up a heated debate at the Fed’s next meeting, and could lead to disagreements during Chairman Kevin Warsh’s second meeting. CME FedWatch Tool shows that traders now price in an 82% chance for a December interest rate hike, up from 73% last weekend. Wong said, "On the long term, I am more cautious about?gold. I look at the $3,886?level which, if broken on the?downside, could potentially unleash a further decline towards $3,500." Other metals, such as spot silver, rose 1.9%, to $56.95 an ounce. Platinum was up by 0.5%, at $1,599.97, and palladium fell 0.2%, to $1,244.50.
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Indian shares could open slightly lower due to concerns about the Middle East; earnings are in focus
Indian shares will open slightly lower?Monday due to rising oil prices, a result of the escalating conflict in the Middle East. This is offset by better than expected earnings from 'heavyweights' Reliance Industries & ICICI Bank. As of 7:59 am IST, the GIFT Nifty futures GIFc1 were trading at 24,297.5. This indicates that the Nifty 50 may open below Friday's closing price of 24,334.3. U.S. troops struck Iran for the ninth day in a row as the number of American?military casualties increased to three. Concerns grew over shipping through the Strait of Hormuz. Brent crude futures rose 2.5%, topping $90 per barrel for a first time in more than a month. This is causing concern for economies that are import-dependent like India. The focus at home will be on earnings, after India's top four private banks (and oil-to-telecom conglomerate Reliance Industries) announced their quarterly results over the weekend and after the market hours. Reliance Industries, owned by billionaire Mukesh ambani, beat expectations in the first quarter of net profit. This was due to strong performance across its retail, telecom, and oil-tochemicals businesses. ICICI Bank reported higher than expected earnings for the second quarter of this year, due to a stronger loan demand and lower provisions for bad debts. Kotak Mahindra Bank, Axis Bank and other private lenders in India also reported earnings that exceeded analysts' expectations. Jefferies reported that ICICI Bank surprised positively. Kotak Bank followed, then?Axis Bank. HDFC Bank's results were weaker. Last week, India's benchmark Nifty and BSE Sensex grew by 0.5% and 0.8% respectively. This was due to IT stocks that had better than expected earnings. Meanwhile, heavyweights HDFC Bank, ICICI Bank, and Reliance Industries climbed between 1.4% and 2.4%.
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Carney says Trump told him that Canada needs to control wildfires
U.S. president Donald Trump said on Sunday that he had told Canadian prime minister Mark Carney that Canada must 'do better' at controlling Ontario wildfires, whose smoke has affected many U.S. state. Trump claimed that he had spoken to Carney on Sunday, at the FIFA World Cup Final they both attended. Trump said to reporters that he had a "good relationship" with Mark Carney but that they needed to put out the fires in New Jersey. "Maybe we should impose some tariffs or they could pay us some damages." The smoke from fires burning in Ontario has blanketed the United States, from the Midwest through the Northeast to the Mid-Atlantic. Residents have been warned to stay inside as much as possible. Carney's Office did not respond immediately to a comment request on Trump's remarks. In a Saturday post on X,?Carney stated that?Canada is deploying more than 5,300 firefighters and using data and advanced thermal 'imaging? to support real-time detection efforts and mitigation. According to government data, approximately?5,9 million acres (2.4 millions hectares) of land in Canada has been burned by wildfires this season. According to climate experts, rising temperatures are driving wildfires across the globe. (Reporting and editing by Sergio Non, Michael Perry, and Hannah Lang in New York)
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What is China's next surprise on the oil market? Lower fuel imports and higher fuel exports: Russell
China's reaction to the Iran conflict is not surprising, but the degree to which the world's largest?crude oil importer reduced its oil imports and refinery production. China has a "strong record" of reducing crude imports to respond to rising prices and increasing arrivals when the price drops. The collapse of imports in June to their lowest level in nearly 10 years was dramatic. This is especially true when you consider that, despite the fact that crude prices spiked in the weeks following the U.S.-Israeli attack on Iran in February, they did not reach the levels reached in 2022 after Russia invaded Ukraine. According to official data, China's crude imports in June were 7,12 million barrels a day (bpd), which is the lowest level since October 2016, and down 41.3% compared with the same month last. A drop of this magnitude would normally have led to a huge drawdown on China's inventory, but that didn't occur. Refiners in China reduced processing rates in June to 12,47 million bpd, a 17.7% drop from the same period in 2025. This is the lowest level since March 2020 during the COVID-19 Pandemic. China does not reveal the volume of crude oil flowing in or out of strategic and commercial stockpiles. However, an estimate can easily be calculated by subtracting the amount processed from total crude produced domestically and imported. This means that refiners have a total of 11,53 million bpd. The 12.27 million bpd they processed meant that approximately 940,000 bpd were drawn from inventory, up from around 500,000 bpd back in May. China added reserves to its first-half total despite drawing from stockpiles for the past two months. The surplus crude was around 530,000 barrels per day. Beijing's unofficial export restrictions of refined products were a major factor in China's ability to reduce refinery runs dramatically in June. This was seen as a response to ensure a sufficient supply of fuels for the domestic market, during the Iran conflict. According to Kpler's data, China exported 393,000 barrels per day (bpd) of light and medium distillates in June. This is slightly less than the 400,000 bpd exports in May, but higher than the 54-month-low of 338,000 bpd that was recorded in April. It is clear that China played a major role in adjusting the demand for crude oil throughout the current Iran Crisis, which saw the loss of approximately 10 million bpd of supply of crude and refined products due to the closure of the Strait of Hormuz. China's exports have also been reduced since April, contributing to the tightness of product markets. What is China going to do to respond to the current crisis? Prices are key China could be planning another surprise for the markets if the answer is seen through the prisms of prices. China's crude imports will likely?recover' in August and September, as refiners have likely bought up the cargoes that were able to leave the Strait of Hormuz after the short ceasefire between Iran and the U.S. The market expected a return of normal Middle East supply and therefore, a glut. Benchmark Brent futures fell to $70.14 per barrel on July 2. They had been as high at $126.41 a barrel at the end April. The return of hostilities on Monday morning saw Brent rise to $90.80 per barrel. China's refiners will likely reduce imports as crude prices rebound. This means lower arrivals in October, given the time lag between cargoes being arranged and delivered. What happens to China's refined products exports is the wildcard. Beijing is confident that it will be able to survive on its huge stockpiles, estimated at?least 1 billion barrels. China could also be tempted by the opportunity to take advantage of high margins in Asia. Gasoil (the building block of diesel) ended July 17 at $143,03 per barrel, a $54.93 premium to the Brent closing prices and almost three times that $18.94 markup which?prevailed the day before U.S. and Israel launched their attack on Iran. Kpler has tracked shipments of light and medium distillates of 787,000 Bpd for July. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of the columnist, an author for.
Ecuador to raise rate for most-used fuels as it cuts aids
Ecuador's federal government is set to raise the price of the nation's mostused kinds of gasoline as part of plans to cut fuel subsidies, the Economy Ministry said on Friday, in spite of calls by unions and others for protests versus the step.
The strategy, which is most likely to come into effect next month, will raise the cost of two various types of gas to be in line with international prices and develop a system to set monthly prices.
President Daniel Noboa, who was chosen in October to finish his predecessor's term and is anticipated to run again in 2025, has stated removing state aids for gasoline is needed to improve the nation's beleaguered finances.
Aids for diesel and domestic gas will stay in place.
Under the measure, both extra gasoline and ecopais. fuel will rise in cost by 0.26 cents to $2.72 per gallon,. though rates can increase by as much as 5% or fall by as much as. 10% month-to-month depending upon worldwide crude costs,. according to a file shared by the Economy Ministry.
Efforts to remove fuel aids have actually previously triggered. mass protests by unions, social motions and Native. organizations and Noboa's procedures have already drawn ire, with. some groups alleging the modifications were ordered by the. International Monetary Fund, though Noboa drifted them before a. current deal with the IMF.
Ecuador and the IMF in May reached a contract to underpin. a four-year, $4 billion extended fund center.
The government will supply compensation to some 85,000. owners of transportation automobiles, including taxis and cargo trucks,. depending on ranges driven, and is holding talks with. various interested groups, according to the ministry.
Compensation would amount to some $35 million between July and. December this year, a substantial fall from the $644 million. spent by the federal government on aids for the 2 fuels last. year.
(source: Reuters)