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Investors assess inflation data in the US and Canada
Investors weighed in on key inflation figures from the U.S. and Canada, which weighed down Canada's benchmark index. Toronto's S&P/TSX Composite Index fell 0.4% to 27160.74 points after briefly reaching a new intraday record earlier in the session. Analysts had predicted that the annual inflation rate in Canada would rise to 1.9% by June, and automobiles, apparel, and footwear contributed to this increase. The CPI data in the U.S. showed that prices rose in June, as expected. Federal Reserve is likely to maintain rates at the same level in July, while watching inflation pressures. Heavyweight mining shares on the TSX fell by 0.9%, following a decline in gold prices. Lundin Gold, a gold miner, fell by 2.4%. Alamos Gold Mines and Agnico Eagle Mines both dropped about 1%. Energy stocks dropped 0.5%, while financials fell by 0.4%. Consumer staples also declined by 0.9%. Utility stocks rose by 0.1%. Brookfield Renewable Partners LP, the parent company of Brookfield Asset Management, saw a 3.3% increase after signing a $3 billion hydropower deal with Google. Markets are focused on a breakthrough in negotiations with U.S. trading partners despite President Donald Trump's renewed threats of tariffs. After Trump's Monday announcement that he was willing to speak with the European Union, and other trading partners, there are new hopes. "A lot of the issues keep coming back to trading and trade negotiations." Allan Small, Senior Financial Advisor at Allan Small Financial Group, said: "The president has set a deadline of August 1st to make deals. He said that he would be firm about that. So it's all trade." Riot Platforms, a U.S. bitcoin miner, announced Monday that it owned a beneficial interest of 10,29% in Bitfarms. Bitfarms shares fell by 3.4%. Reporting by Twesha dikshit in Bengaluru and Sukriti gupta; editing by Sahal muhammed
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Source: Israeli strikes in Lebanon kill 12, including 5 Hezbollah Fighters
A security source in Lebanon reported that heavy Israeli airstrikes in eastern Lebanon killed 12 people on Tuesday, including five Hezbollah members. Israel claimed the strikes were an attempt to warn Iran-backed Hezbollah against reestablishing itself. The Israeli military claimed that the airstrikes were directed at Hezbollah training camps and weapons warehouses in eastern Lebanon's Bekaa Valley. These airstrikes are the most deadly in the area since the ceasefire brokered by the United States between Israel and Lebanon last November. Bachir Khodr said that seven of the dead are Syrian citizens. Israel's last conflict dealt Hezbollah a heavy blow, killing Hassan Nasrallah and other leaders as well as destroying a large part of their arsenal. Israel Katz, the Israeli Minister of Defence, said that Tuesday's strikes were a "clear signal" to Hezbollah. He accused it of planning to re-establish the ability to raid Israel via the elite Radwan forces. Israel will "respond with maximum force" to any attempts at reconstruction, he said. He said that the strikes were also meant to send a message the Lebanese Government, who he said was responsible for maintaining the ceasefire. Hezbollah and the Lebanese Government did not respond immediately to the recent Israeli attacks. The United States submitted a proposal for the Lebanese Government to secure Hezbollah’s disarmament in four months as a trade-off for Israel ceasing its air strikes and removing troops from their positions in south Lebanon. According to the terms of a ceasefire brokered between the U.S., France and Lebanon, the armed forces of Lebanon were required to seize "all unauthorized weapons", starting in the area to the south of the Litani River -- the closest zone to Israel. Reporting by Steven Scheer from Jerusalem, and Maya Gebeily, Laila Basam and Tom Perry in Beirut. Writing by Ahmed Elimam and Nayera Abdallah; Editing and production by Alison Williams and Gareth Jones.
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Ghana's cocoa regulator warns production will drop due to heavy rains
Ghana's cocoa regulator stated on Tuesday that prolonged rain and lack of sunlight can lead to an increase in disease incidence, which could cause a moderate decline in production. This comes after farmers asked for government intervention to reduce the impact of bad weather. The West African nation, the second largest cocoa producer in the world, saw its output drop in previous seasons because of diseases, bad weather and illegal gold mining. These factors destroyed cocoa plantations, reducing yields. Last week, an association of Ghanaian farmer warned that the cooler temperatures and excessive rain combined with the lack of sunlight were reducing yields. In a press release, the statement said that this could cause damage to farmers and their incomes over time. Nana Oboadie Bonsu is the president of the Farmers' Association. She said: "We visited 72 cocoa-growing districts, and we saw fungi growing on various cocoa trees because of the climate conditions." COCOBOD, Ghana's regulator, said that it has intensified its mass spraying programmes and disease control programs in response to concerns raised by the association. The regulator said that while it was too early to give definitive numbers for the current year, preliminary assessments suggested a modest decline in production compared to previous projections. COCOBOD said that it also aims to finish the distribution of fungicides planned before the peak harvest season to minimise yield loss. COCOBOD data revealed in May that Ghana would likely miss its 650,000 metric ton output target for 2024/2025. (Reporting and editing by Emmanuel Bruce, Anait Miridzhanian Rob Corey-Boulet Tomaszjanowski)
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Gold prices drop as traders wait for tariff updates
The gold price fell on Tuesday, as traders awaited updates to tariffs. Meanwhile, an inflation report revealed that U.S. consumer costs rose last month. By 0940 am EDT (1340 GMT), spot gold had fallen 0.2%, to $3,336.99 an ounce. U.S. Gold Futures fell 0.4% to $3345. Gold prices for holders of currencies other than the U.S. Dollar increased by 0.2%. I think that the gold price is being supported by the continued focus on tariffs. Peter Grant, senior metals analyst at Zaner Metals, said that he remains bullish on the gold market, despite the fact that we are still within the range in which we have been since mid-May. Donald Trump, the U.S. president, threatened to increase tariffs over the weekend. These included 30% on imports coming from the European Union or Mexico. Data released on Tuesday showed that the U.S. Consumer Price Index rose 0.3% in June, as expected, following a 0.1% increase in May. This was the biggest gain since January. After the data, traders bet that Federal Reserve would be able start reducing short-term borrowing rates by September. "Gold should be more perky." This reinforces the idea that we need to find a new catalyst to push gold past $3,400," said Tai Wong. Investors will now look at Wednesday's U.S. Producer Price Index for guidance. In times of geopolitical and economic uncertainty, gold is a popular safe-haven investment. Gold tends to do well in low interest rate environments as it has no yield. Silver spot fell 0.4%, to $37.98 an ounce. It had reached its highest level since Sept. 2011 on Monday. "My next target for the silver price is $41.61/oz. Grant stated that he believes the market will view any setbacks as buying opportunities. Palladium rose 0.6% to 1,200.50, and platinum increased 1.4% to $1382.57. Reporting by Ashitha and Sarah Shivaprasad from Bengaluru
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Trump boosts coal to feed data centers that are energy hungry
Executive Orders to Boost the Coal Industry Trump Administration pulls back plants from retirement The United States has ceased its efforts to reduce coal consumption By Carey L. Biron Then, the Trump administration issued an order to keep the plant operating, citing a regional energy crisis caused, in part by the retirements of coal and natural gas power plants. Trump issued executive orders to boost the coal industry. These were in response to the rapidly increasing electricity demand for new data centres that run artificial intelligence tools. The rebound is a resupply of coal for the JH Campbell plant, located in West Olive, Michigan. Its coal pile once covered three football fields. It was just a tiny dollop, said Jan O'Connell. She is a senior energy issue organizer at the Sierra Club Michigan Chapter. Trump has made a decision to stop decades of efforts to wean America off coal. The move also includes a halt to programs that help communities in coal-producing areas transition to alternative industries. The Trump administration mandated, shortly after the Campbell order was issued, that a Philadelphia gas plant which had been scheduled to close continue operating. Both orders were 90-day emergencies that could be renewed. According to Sierra Club's tracking, in the last two decades, more than 75 percent of U.S. power plants have retired coal or plan to retire them by 2030. O'Connell expressed concern that the Campbell Plant order could create a precedent. She said: "We fear it will be a domino-effect, that they'll go from coal plants to coal plants and possibly erase their retirement dates." Ben Dietderich, Department of Energy Press Secretary, explained that the administration views the move as a way to ensure the country has enough energy. Dietderich stated that "American grid operators have warned for years about the dangers of decommissioning power sources like coal plants, which would compromise our grid system's reliability." This administration is committed in ensuring Americans can access reliable, affordable and secure energy, independent of whether the sun is shining or the wind is blowing. According to Clean Energy States Alliance - a coalition of energy agencies from states - Illinois, Georgia and West Virginia are among the states that have delayed retirement of coal plants. Other states may follow suit. LONG DECLINE According to the International Energy Agency (IEA), data center energy consumption is expected to increase by 12% between 2017 and 2024, and double by 2030. More than half of this energy demand will come from AI data centres. Trump declared U.S. dominance in global AI a priority for his administration. He cited the technology, and its energy requirements as a national security issue. Experts say that it's unclear how much the new orders can stop the decline of the coal industry. Daniel Bresette is the president of Environmental and Energy Study Institute in Washington, which is a Washington-based think tank. In 2014, coal produced 39 percent of U.S. electricty. By last year, that figure had dropped to only 15 percent. He said that the Trump Administration orders, combined with the rapid expansion of data centers which are energy-hungry, could help boost the industry. He said, "We are just unsure how much." In an email, White House Assistant Press Secretary Liz Huston stated that Trump's actions "fully unleash American energy dominance" and are "driving down costs and fuelling economic prosper". The coal industry claims that the move has brightened their prospects. Emily Arthun is the chief executive officer of the American Coal Council. She said that the industry group was "very optimistic" about the economic impact of the executive order, which has "already set the stage for regulatory changes." She said that coal is essential to meet the needs of AI and data centers. The response of major tech companies to a greater role for coal as a power source in their data centers is unclear. According to the Clean Energy Buyers Association (an industry group which includes Google, Meta, and Microsoft), many major tech companies are working towards net zero emissions and sustainability. The demand for clean energy, such as solar, will increase to 275 gigawatts in 2035. This would be enough to power over 200 million American average homes. Many industry groups and large companies refused to comment on the possibility of using coal-fired power to power their data centers or didn't respond to questions. 'FALSE HOPE' Environmental experts have warned that federal efforts to boost the coal industry overlook the communities who are trying to get beyond the declining industry. Jason Walsh, Executive Director of BlueGreen Alliance (labor and environmental groups) said, "Coal communities require investment and support as markets shift to cleaner and cheaper forms of energy." "What Trump gives them is denial and false hope, as well as... more pollution." He said that the budget negotiations concluded by Congress this month have gutted tax credits for clean energy. This includes a bonus to encourage investments in "energy communities" as well as green banks for investing in sustainable economic strategies in coal communities. Walsh stated that "people in coal communities are now aware there is no turning back."
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Wall Street opens at higher levels after inflation and bank results
U.S. stocks opened higher on Monday, and Treasury yields dipped as investors digested a slight increase in inflation that was expected, along with a number of positive quarterly results for big banks. After the U.S. consumer price index data showed that U.S. prices rose 0.3% in June, the S&P 500 and Nasdaq opened 0.5% higher, respectively. This was in line with expectations, but it was the biggest gain since January. The data is likely to be the beginning of an increase in inflation caused by tariffs, which has made the Federal Reserve wary about resuming interest rate reductions. However, it did not give any reason for the Federal Reserve to become more cautious. U.S. Futures were earlier boosted after Nvidia, a megacap company, announced that it would resume the sale of its H20 chip to China. This sent its shares up by around 4%. The Stoxx 600 Europe index rose 0.3%, the last increase. The traders continued to bet that the Federal Reserve will cut rates more than likely in September. They continue to price a 60% probability of a rate reduction after the data. Benchmark 10-year Treasury Yields fell around 2 basis points, to 4.41%. Nick Rees is the head of macro-strategy at Monex Europe. He said, "The market reacts to the month-on-month CPI core which was marginally below expectations but slightly." This sets up a major fight between the Fed, and the President. This gives the Fed enough reason to at least refrain from cutting in June, and to be a bit nervous about cutting in Septembre. But just enough for Trump to believe they should. Donald Trump, the U.S. president, has said that interest rates in the U.S. should be much lower. Investors also processed results from JPMorgan Chase, Citigroup, and Wells Fargo, which exceeded expectations. However, the market's reaction was mixed, with Wells Fargo dropping 3% after it cut its net interest income guidance for 2025, while Citi was up 3% and JPMorgan was up 1%. According to LSEG, profits for the S&P 500 are expected to increase 5.8% over the past year. The forecast has changed dramatically since Trump's trade war began in early April, when it was predicted that growth would be 10.2%. TRADE WAR The big picture of trade was also in the spotlight on Tuesday, following the threat by U.S. president Donald Trump over the weekend that he would impose 30% tariffs on the European Union (EU) and Mexico as of August 1, which is above the initial 20% tariffs imposed on the EU in April. Trump, however, said that he would be open to more negotiations, despite investor predictions of lower final tariff levels. Japan is reportedly also trying to schedule high level talks with the U.S. on Friday. Andrzej szczepaniak is a senior Europe economist with Nomura. "However, it is likely that this will be seen as a tool for bargaining ahead of the 1 August. This is in line with what investors thought about most of Trump's letters to trading partners from last week." JAPANESE ELSTION Investors are not only focused on U.S. politics. The upcoming Japanese election for the upper house of parliament is causing a stir in the Japanese government bonds market, which has spilled over to other markets. According to polls, the ruling coalition could lose its majority of the upper chamber to opponents who support more spending. The 10-year benchmark yield rose to 1,595%, its highest level since October 2008, as a result of concerns about the impact on Japan’s already fragile finances. In recent days, higher Japanese yields also pushed long-dated European yields and even U.S. rates higher. However, Germany's 30-year rate, which had hit a two-year-high on Monday, fell 6 basis points to 3.19% on Tuesday. In Asia, the data also showed that China's economy slowed down less than expected during the second quarter as a result of its resilience to U.S. Tariffs. The currency markets were relatively quiet on Tuesday. The dollar gained 0.4% against the Japanese yen, but the euro was unchanged at $1.1665. Spot gold was unchanged at $3,351 an ounce. Spot silver, however, was up 0.3%, to $38.14 an ounce. Brent futures were $69.18 per barrel, while U.S. Futures were $67.0.
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Shares of Grupa Azoty set to experience biggest drop in a single day after polymer project blowout
The shares of Grupa Azoty, a Polish chemicals company, fell by the most ever in a single day on Tuesday following the announcement that Orlen, the top oil refiner in Poland would not be buying more shares in the polymer production project. Orlen and Azoty have been discussing since 2024 options for GA Polyolefins (the chemical manufacturer's polymers division), in which Orlen already has a 17.3% stake. In a late-Monday statement, Andrzej Skolmowski, the chief executive of Grupa Azoty said that during negotiations Orlen had informed them that they were not interested in purchasing all or part shares in GA Polyolefins. Skolmowski said, however, Orlen has stated that it is "ready for further discussions in order to develop a way to utilize GA Polyolefins assets." Azoty reported that the parties have extended the deadline to hold talks about the future of the Project until the end July. Grupa Azoty's shares fell 14% at 1135 GMT and were on course for their worst day ever. Michal Kozak, a Trigon analyst, wrote in a recent note that "Grupa Azoty faces a dire situation." The failure of Orlen to buy the project should lead to negotiations with banks about a debt cut. Grupa Azoty has declined to provide any further comment than its Monday statement.
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OPEC predicts that the world economy could do better in the second half of the year
OPEC stated that the global economy could perform better than expected during the second half of this year despite the trade conflict. Refineries' crude intake will remain high to meet the increase in summer travel. The Organization of Petroleum Exporting Countries (OPEC) released a report every month on Tuesday. After reducing its estimates in April, the organization left their forecasts of global oil demand growth in 2025-2026 unchanged. In the report, OPEC stated that "India, China and Brazil have outperformed expectations thus far, while United States and Eurozone continue to experience a rebound since last year." The second half of 2025's economic growth could be better than expected. OPEC+ (OPEC, Russia, and other allies) would be able to move forward with their plan to pump additional barrels in order to regain market shares after years of market support. OPEC+ decided on July 5, to increase production by 548,000 barrels a day in August. This was the first time since oil prices jumped and then fell, after Israeli and U.S. attack on Iran, that they had agreed to this. Oil prices are not falling as much as expected despite an OPEC+ increase that was larger than expected and Donald Trump's comments. 50-day deadline End Russia The Ukraine War The seasonal increase in demand is a major factor. OPEC reported that global refinery crude consumption increased by 2.1 million bpd from May to June as refiners returned after maintenance. This is a sign of a strong oil market and a sign that the throughput will likely remain high. OPEC stated that "refinery intakes worldwide, particularly in the U.S. are expected to remain elevated in order to meet seasonal increases in demand for transport fuels, in particular gasoline, jet/kerosene, and residual fuel." OPEC's forecasts for demand are higher than other forecasters, because the agency anticipates a more gradual energy transition. International Energy Agency Last week, the company lowered its forecasts for demand but stated that it may be tighter in reality as refineries increase processing to meet summer travel demands. Brent crude remained steady at $69 a bar after OPEC released the report. RISE IN OUTPUT OPEC reported that OPEC+ pumped a total of 41.56 millions bpd in June, an increase of 349,000 bpd over May. The group's June quotas increased by 411,000 bpd, which is less than this. The actual increase was less than the headline increase of quotas, partly because some countries, like Iraq, reduced output as part a pledge to further reduce for earlier pumping over targets. Kazakhstan's output, which is being pressed to meet OPEC+ quotas despite a slight drop in May, increased last month and remained over the country’s quota. OPEC reports that Kazakhstan's oil output increased by 64,000 bpd to 1.847m bpd. (Editing by Kirby Donovan and Joe Bavier).
Trade talks and US data have helped most Gulf markets to gain an advantage over the US.
The major Gulf stock markets rose early on Tuesday, ahead of U.S. data on inflation due later that day. This indicates investors' positive outlook for talks between Washington and major trading partner countries.
After threatening to impose 30% tariffs on imports from Mexico and the European Union from August 1, U.S. president Donald Trump indicated he would be open to discussion on tariffs.
The Yomiuri reported that the Japanese Prime Minister Shigeru Shiba is planning to meet with U.S. Treasury Sec. Scott Bessent this Friday.
Investors will also be watching for U.S. consumer prices for June due Tuesday. They are looking for any upward pressure in the price of goods from tariffs, which could influence U.S. Federal Reserve rate decisions.
As most regional currencies are pegged with the U.S. Dollar, the Fed's actions will have an impact on the monetary policy of the Gulf region.
Dubai's main stock index rose 0.7%. This was led by the 2.7% increase of top lender Emirates NBD, and a 1.4% rise in blue-chip developer Emaar Properties.
Abu Dhabi Commercial Bank jumped 6%, a 0.7% increase, while the Abu Dhabi index rose by 0.7%.
According to LSEG, the lender, which is third largest in terms of asset volume within the Gulf, reported a net profit for the second quarter of 2,32 billion dirhams ($631.65 millions), exceeding both analysts' expectations and their consensus estimates.
The Qatari index rose 0.1% thanks to a 0.4% increase in the petrochemical manufacturer Industries Qatar.
Doha Bank, however, fell by 0.7% despite reporting a rise in its first-half profits.
Saudi Arabia's benchmark stock index fell 0.3% due to a drop of 0.6% in the oil giant Saudi Aramco.
Oil prices, a major factor in the Gulf's financial market, fell after Trump set a 50-day deadline to Russia for it to end its war with Ukraine and avoid sanctions. This eased supply concerns. ($1 = 3.6729 UAE Dirham) (Reporting and editing by Joe Bavier in Bengaluru)
(source: Reuters)