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Stocks in Europe rise before German inflation data
European shares rose in choppy trade on Monday, as energy stocks rose. Investors awaited the inflation data that would be released by Germany, the largest economy of the euro zone, which could shed light on the impact the Middle East War has had on the Eurozone. The pan-European STOXX 600 index was up 0.2% to 576.55 as of 0938 GMT after two consecutive days of losses. The European stock index is down 9% this month, and will likely have its biggest monthly drop since March 2020. Michael Hewson is a senior analyst at iForex and expects that European stocks will continue to suffer as the conflict shows no signs of easing. Yemen's Iran backed Houthi tribe fired missiles on Israel at the weekend. This escalated the conflict, and raised fears that more disruptions to shipping routes would occur. Hewson said that the markets are undervaluing the possibility that this outbreak of violence will not be resolved quickly. Brent crude rose?above 115 dollars per barrel on Sunday, setting a new record for the month. Shell and TotalEnergies, two energy giants, added 1.3% and 1.8% respectively to push their energy index 1% higher. Orsted's shares jumped 7.6% when Bank of America upgraded its rating to "buy", citing improved outlook for offshore wind developer following the war. Data on the German consumer price index (CPI) and the harmonised consumer prices index are expected at 1200 GMT. Aluminum producer Norsk Hydro led the index gains with an 8% jump, after supply disruption worries lifted the price of the metal following Iran's attack on two of the Middle East's biggest producers. Data from LSEG showed that investors have reduced their bets about monetary easing due to rising price pressure. Money?markets are now pricing in three 25-basis point rate increases by the European Central Bank by 2026. This is a'sharp repricing' from the earlier expectation of steady rates throughout this year. Francois Villeroy de Galhau, the French central bank's chief, said that on Sunday ECB aims to stop energy-driven inflation spreading out. However it is too early to talk about dates for interest rate increases. The oil-sensitive travel industry fell by 0.9%, with Air France and Lufthansa both falling 1.5% and 0.60% respectively. Individually, UK-listed Rio Tinto shares rose nearly 4%, after the'miner' announced that operations had resumed at three of four Pilbara Iron Ore Port Terminals after Tropical Cyclone Narelle swept Western Australia's Pilbara Region. This helped London's FTSE 100 rise by 0.8%. Reporting by Avinash in Bengaluru, Editing by Sonia Cheema & Harikrishnan Nair
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Sri Lanka increases power tariffs when energy costs start to bite
Sri Lanka increased power tariffs on Monday for most households by 7.2%, and for industries by 8.7% as it grapples with rising energy costs resulting from the 'Iran War. The new power prices are linked to the $2.9 billion IMF program that Sri Lanka signed with them in 2023 for recovery from a severe economic crisis. Sri Lanka uses cost-reflective pricing for energy multiple times per year in order to maintain the financial stability of its state-run monopoly Ceylon Electricity Board. The country's energy regulator said in a press release that hotels linked to the?critical tourism sector of Sri Lanka?will pay 9.9% higher. The new prices will cost poorer households between 4.3% and 6.9% more. Prof. K.P.L. said that if 'energy prices' increase more because of the war, we will re-consider a request to raise electricity prices. Chandralal is the chairman of Sri Lanka's Public Utilities Commission. He spoke to reporters in Colombo. CEB initially requested a price increase of 13.56 percent to cover a revenue shortfall of 15.8 billion rupees ($52,6 million) due to rising costs. The new tariffs are set to be implemented at the beginning of April. Sri Lanka declared Wednesdays a public holiday. It also introduced fuel rationing and increased pump prices by 35% in order to manage fuel consumption. Janaka Rajakaruna, Chairman of the State-run Ceylon Petroleum Corporation, said that the island was in talks with Russia and India to ensure a continuous supply of fuel. The company will spend $600 million on fuel refinement for April. Rajakaruna stated that the country is struggling to buy 90,000 metric tons of crude to keep its island refinery operating and to produce enough furnace oil for its thermal power plants.
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EU Energy Ministers Coordinate Iran War Response
A document containing an EU internal briefing revealed that the European Union's energy ministers would meet on Tuesday in order to coordinate their responses to the disruption of oil and gas market caused by the Iran War. Europe's heavy reliance?on imports of energy has exposed it to spiraling prices, since the Strait?of Hormuz, the main shipping route was closed effectively and Tehran began attacking the energy infrastructure in Middle East. Since the U.S. and Israel's war against Iran began on 28 February, European gas prices have increased by more than 70%. The EU document asked ministers to "indicate which concrete measures can be taken to combat the tightening?of?the oil & gas markets?in a coordinated way." The document stated that it was important to avoid fragmented, uncoordinated national responses as well as disruptive signals for the market. In the document, it was stated that ministers should concentrate their efforts on filling up gas storage for winter next year and stabilising oil markets to ensure these supplies. The EU claims that its oil and gas supply is secure for the near future, as the top two suppliers of the bloc are Norway and the United States. The tightening of global supply of certain products, namely diesel and jet-fuel, is a concern for?Europe. Shell CEO Wael Sawan warned last week that Africa could face energy shortages as early as April. EU officials want to encourage countries to fill their gas storage caverns ahead of the winter season. This will help avoid any price spikes later in the year. The meeting will take place via videoconference at 1300 GMT, on Tuesday. (Reporting and editing by Kate Abnett, Sudip Kar Gupta, and Andrew Heavens).
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Brent oil stocks are in limbo as they head for a record-breaking month
Brent crude oil rose by 3% Monday, and was on track for a monthly record rise. Global stocks were in limbo while investors waited for the Gulf conflict that they fear could 'bring inflation to a climax and increase the risk of recession in many parts of the world. In a region that is more dependent on Gulf oil, the?Nikkei?index closed down 2.8% in Asia. European stock markets firmed up in early trading, and Wall Street futures indicated gains - albeit small given the recent sell-off. Investors were assessing conflicting developments. According to The Financial Times, Donald Trump said that the U.S. might seize Kharg Island, where Iran exports most of its oil from the Persian Gulf. However, he also suggested that a ceasefire may come soon. Pakistan has said that it is preparing "meaningful discussions" in order to resolve the conflict with Iran within the next few days. This comes despite the fact that Tehran accuses Washington of planning a land attack as the U.S. army builds up its forces in the area. Eren Osman is managing director of wealth at Arbuthnot Latham. He said that reopening the Strait of Hormuz would be the key to calm the world markets. He said he didn't expect a long-term conflict because he thought Trump had a pain threshold for the market. Madison Cartwright is a senior geo-economics expert at Commonwealth Bank of Australia. She said that Iran's control of Strait of Hormuz gave it little incentive for concession. The bank expected the war to last until at least June. Prices for fuel, oil, gas and fertiliser have risen as a result of the clampdown in the Strait. Food, pharmaceuticals and other petrochemicals are all expected to increase in price. This is especially bad news for Asia as much of this region depends on Middle Eastern energy. The broadest MSCI index of Asia-Pacific stocks outside Japan fell 1.8%. European stocks last gained 0.3%. S&P 500 and Nasdaq Futures both showed gains of 0.5% each. Bruce Kasman warned that the longer the Strait is closed, the more the buffer supply will be reduced, which could lead to dramatic price increases for crude oil, gas, and other commodities. If the Strait remained closed for another month, oil prices would rise to $150/bbl. This scenario would also be consistent with a possible increase in industrial energy consumers' costs. Brent crude is up 3% at $116 per barrel. This would be a gain of 60% in March, which would surpass the jump in price that occurred in 1990 after Iraq invaded Kuwait. U.S. Crude climbed 2% at $101.67. Investors have revised their outlook for interest rate rates in almost all countries due to the inflationary threat. The U.S. Federal Reserve chair Jerome Powell is scheduled to speak at an event on Monday. John Williams, the influential head of New York Fed will also be speaking. This week, data on U.S. manufacturing, retail sales and payrolls will give an update on the state of the economy. Bond markets have been hit by the energy shock and pressure on fiscal budgets due to higher borrowing costs. The yields on ten-year U.S. Treasury bonds were at their lowest point of?4.3959%. The increased volatility of the markets has helped the U.S. Dollar as the most liquid currency in the world. The U.S. also has a comparative advantage over Europe and Asia because it is a net exporter of energy. The dollar index traded?nearly a 10-month-high at 100.26 and was essentially flat for the day. The?dollar fell 0.3% to 159.775yen after more warnings from Japanese authorities about possible intervention. The?dollar has dropped 0.3% to 159.775 yen after more warnings from the Japanese authorities. The euro dropped 0.1% to $1.1493, which is not far off the March low of $1.1409. Gold gained 0.9% on commodity markets to $4,534 per ounce, after recently receiving little support as a haven for safe-havens or as a hedge from inflation risks. Reporting by Iain Withers, Wayne Cole and Thomas Derpinghaus; Editing by Muralikumar Aantharaman and Susan Fenton
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The gold price is capped by dimmed Fed rate cuts and dip buying;
Gold rose on Monday due to a surge in energy prices, which fueled inflation fears and dimmed expectations of interest rate reductions by the U.S. Federal Reserve this year. As of 0755 GMT spot gold was up 0.8% at $4,526.67 an ounce, bouncing back from a loss of 1% earlier in the day. U.S. Gold Futures for April Delivery gained 0.7%, reaching $4,554. Gold's price action last week, when it ended a three-week losing run, suggested that oversold behavior was at play and that recent declines could be reversed. This must be confirmed this week by the price action. Nicholas Frappell is the global head of institutional market at ABC Refinery. He said that given the rapid pace of headlines, it was easy to anticipate volatility. Brent crude rose above $115 per barrel after Yemeni Houthis attacked Israel over the weekend. This widened the ongoing war and added to inflation problems. The contract has risen 60% in March so far, which is a record monthly increase. The traders see little likelihood of a rate cut in the United States this year as higher energy costs threaten to increase inflation and limit monetary easing. This compares to expectations of two rate cuts before the conflict started. Gold's appeal is boosted by inflation, but high interest rates reduce its demand. The markets are now awaiting Federal Reserve Chair Jerome Powell’s remarks later that day at a Harvard conference, as well as remarks from New York Fed President John Williams. The U.S. Dollar, which has gained a little more than 2% since February 28, when the U.S. and Israeli war against Iran began, has been a major factor in the gold price's decline. Bullion has risen about 5% this quarter. The biggest macro-picture behind this underperformance is a huge shift in interest rate expectations... Frappell said that the USD has reacted to this. Spot silver increased 1.2%, to $70.43 an ounce. Palladium and platinum spot prices rose by 3.4% and 2.8% respectively. (Reporting and editing by Sumana Nandy, Harikrishnan Nair, and Noel John from Bengaluru)
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Floods and heavy rain kill 22 Afghans
The National Disaster Management Authority in 'Afghanistan (NDMA)' announced on Monday that heavy rains triggered flash floods and collapsed buildings, killing 22 people. It also injured 32 others. The majority of deaths occurred in the eastern and central provinces, such as Parwan, Maidan Wardak and Daykundi, where torrential rainfall caused flash floods, and collapsed houses. It said that conditions remained "unstable", with the risk of flooding and further rain in certain areas. Twenty-two people have been killed and 32 injured in floods and other weather related incidents that occurred across 13 provinces during the last two days, according to an NDMA representative who declined to be identified because he wasn't authorised to address the media. Afghanistan is susceptible to 'natural disasters, and the United Nations has listed it as one of?the most vulnerable countries to climate change. Since the Taliban took power in 2021, international aid has been cut, and the country is struggling to cope. In a report published by the United Nations Development Programme in November, it was stated that earthquakes, flooding, and drought had destroyed 8,000 Afghan homes in 2025, and stretched public services to their limit. Reporting by Sayed Hassib, writing Sakshi Dayal and editing Kate Mayberry.
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India's JioStar terminates Bangladesh IPL cricket broadcast deal, letter shows
Documents seen by the.. In January, Bangladesh banned IPL broadcasts. This was after Kolkata Knight Riders dropped Bangladesh pacer Mustafizur Rahman at the Indian Cricket Board's request. Tensions between the two nations were rising following the murder of a Hindu in Bangladesh. Even though Bangladesh is reviewing its ban, and said on Saturday that any further action will depend on the 'opinion of its sports minister,' the termination by JioStar will mean there will be no broadcaster local for the upcoming IPL season even if it were to change their stance. The agreement is terminated immediately," JioStar stated in a letter dated 17 February to Bangladesh broadcaster TSports. TSports had sublicensed rights from JioStar for IPL season from 2023-2027. The company said that its partner "continued to fail and default" in adhering the agreed payment deadlines. JioStar, the joint venture between Ambani’s Reliance Group and Walt Disney did not reply to questions. TSports, Bangladesh's sport and information ministries and the Ambani-owned Reliance did not reply to queries. IPL is the richest cricket league in the world, valued at $18.5 billion. It is hugely popular in Bangladesh where cricket is a passion, just like in the rest of the subcontinent. The latest season began on March 28. India-Bangladesh ties have been strained ever since the 'political transition' in 'Dhaka on August 20, 2024, which disrupted close ties between Sheikh Hasina and former Prime Minister. Hasina fled to New Delhi following a "mass uprising" in response. There are signs that the relations have thawed since Tarique Rahman said, in February, that Bangladesh will engage with its neighbours on the basis mutual respect and shared interests. In a separate JioStar email, also dated 'February 17', the company also announced that it had terminated the broadcasting deals for the Women’s Premier League Cricket Tournament in Bangladesh due to similar defaults. Reporting by Praveen Parmasivam, Dhaka, and RumaPaul in Chennai; editing by Aditya Koyyur and Arun Kalra
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South Korea confirms imports of Russian naphtha
The South Korean Industry Ministry confirmed the import of 27,000 tons of Russian naphtha arriving on Monday. The ministry refused to confirm the destination of the shipment or if it was for one South Korean company or multiple firms. Local media reported that this is the first time South Korea imports Russian?naphtha after the beginning of the Iran War. Local media reported that the industry ministry is working with the South Korean Foreign Ministry to secure additional supplies of Russian naphtha. Naphtha, a refined oil-based product, is typically used as a feedstock by petrochemical manufacturers and is also a key ingredient in plastics. The ministry said that although South?Korean firms are also trying hard to secure Russian crude, they haven't been successful yet. Ahn Dogeol of the ruling party, who attended a meeting on the economic impact of the Middle East Crisis, said that another problem is a shortage in synthetic resin, which is used to create plastic products and glues. The industry ministry was looking into ways such as limiting the exports of this material. Reporters at the parliament were told that the government was preparing measures to 'prioritise' key sectors such as healthcare, where plastics are used in many different ways, including medical procedures, or everyday necessities, should the war continue, and it'releases domestic oil reserves, or expands supply of petrochemicals,' lawmakers said. Reporting by Heejin Shim, Kyu-seok Kim and Joyce Lee. Editing by Christian Schmollinger & Kate Mayberry.
Oil, bonds divergence highlights United States fiscal worries: McGeever
U.S. Treasury yields often relocate tandem with the price of oil, but this relationship has broken down in recent weeks, recommending that the nearterm inflation outlook has taken a back seat to longterm deficit worries in the bond market.
Falling oil rates-- particularly negative year-on-year price relocations-- are typically disinflationary. And year-on-year crude oil prices have been negative given that mid-July, nearing -30% in September. This would normally be a bullish signal for Treasuries, as lower inflation increases the likelihood that rates will fall throughout the yield curve.
Yet yields and oil have diverged dramatically. Considering that the Federal Reserve's jumbo 50 basis point rate cut on Sept. 18, the 10-year Treasury yield has spiked by almost 70 basis points-- a. historically large shift-- even as the cost of oil has actually fallen.
Monday's price movements were particularly noteworthy. Crude. dropped 6%, while the 10-year yield leapt 5 bps to strike 4.30% for. the very first time in almost 4 months.
Oil's recent decline was mainly driven by geopolitics,. specifically signs of de-escalation in the dispute between Iran. and Israel. Despite the motorist, a fall in oil of that. scale would typically be accompanied by lower bond yields.
The 10-year yield has actually decreased on 7 of the nine days in. which the oil cost has fallen by 4% or more over the past year. The two occasions where it hasn't were both this month.
Significantly, the recent rise in yields coincided with a week. of heavy debt issuance from the Treasury: some $178 billion of. 2-, 5- and seven-year bonds were on the block, not to. mention a wave of expense sales and inflation-linked bonds too.
Financial issues nay be causing this market indigestion.
TRUMP TRADE
Can investors expect the relationship between Treasuries and. inflationary pressures to reassert itself whenever soon?
Bob Elliott, a previous executive at Bridgewater and creator. and CEO of possession manager Unlimited, keeps in mind that other bond. markets around the globe are also selling, indicating a. wider concern.
My sense is the divergence remains rather than compresses. It. highlights that sovereign debt is significantly out of favor for. not simply U.S. but international financiers, Elliott states.
Andreas Steno Larsen, CIO at Steno Global Macro Fund,. reckons the link will most likely restore itself soon, but. notes that the present divergence is one component of the wider. Trump trade.
That is, investors are positioning for very lax fiscal. policy, with the expectation that previous president Donald Trump. will win the White Home and possibly be supported by both a. Republican house and senate. Because situation, Trump would be. able to push through tax cuts and other potentially. budget-busting policies.
LOSING CONTROL?
The prospect of increasing bond yields amidst a Fed reducing cycle. might cause headaches for many, including Trump himself, a. former real estate operator and veteran singing advocate of. lower loaning costs.
This may also be rustling a few plumes on the Federal Open. Market Committee, especially amongst the doves, as home mortgage. rates are rising again due to the upward pressure of. longer-dated yields.
Could Fed Chair Jerome Powell address this concern next week? It wouldn't come as an overall shock given the massive relocation in. yields considering that September.
According to Jim Bianco of Bianco Research, the 10-year. yield's rise of practically 70 bps is the biggest rise following the. preliminary cut in a Fed alleviating cycle since 1989. This super-sized. relocation recommends the Fed may have lost control of the longer end of. the curve, and Powell might be eager to regain the reins.
But, for now, politics stay in the motorist's seat. With the. governmental election less than one week away, bond investors. appear to be voting with their feet, afraid that expanding. fiscal deficits will rise longer-term inflation and the danger. premium on federal financial obligation.
Possibly this will alter after the election. Maybe President. Kamala Harris or President Trump will suddenly vow to. restore financial discipline, however that's a long shot. In the. meantime, Treasuries are most likely to stay under pressure,. despite the oil price.
(source: Reuters)