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China tightens its restrictions on BHP cargoes, resulting in a rise in iron ore prices
The price of iron ore rose on Friday as the?increasing restrictions' on China's top buyer BHP to buy new seaborne cargoes raised supply concerns, which outweighed declining demand. As of 0206 GMT, the?most traded iron ore?contract at China's Dalian Commmodity Exchange (DCE)? grew 0.85% to $768 yuan ($111.21), a metric tonne. As of 0156 GMT, the benchmark April iron ore traded on the Singapore Exchange rose 1.03% to $101.05 a ton. People with knowledge of the situation said that China's state iron ore buyer instructed traders to purchase fewer seaborne shipments of BHP's flagship product: Mac fines and lumps. China's state-run iron ore buyer told traders this?week to buy fewer seaborne cargoes of BHP flagship products: Mac fines, Newman fines, and?Newman lumps. This comes after China banned domestic steelmakers and trader from buying BHP Jimblebar Fines since September and extended the prohibition to another BHP product,?Jinbao Fines, in November. Trading sources said that the latest restrictions have fueled fears over the future availability of iron ore, since BHP is the third largest supplier in the world and seaborne cargoes make up a significant portion of its business. The price increases were tempered by a waning demand and lingering production limits at North?China's steel mills. Mysteel, a consultancy, reported that the average daily hot metal production, which is a measure of iron ore consumption, had fallen by 2.4% by March 5 to 2.28 million tonnes, "the lowest level since December". According to an official report released at the annual parliament meeting, China has also reiterated its commitment to combat overcapacity, which could impact demand for feedstocks. Coking coal and coke, two other steelmaking ingredients, both gained in value. Steel benchmarks on the Shanghai Futures Exchange were mixed. Rebar gained 0.16%; hot-rolled coil remained unchanged; wire rod dropped 0.36%; and stainless steel fell 0.39%.
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Oil prices are expected to rise as the Middle East war continues. Stocks will be volatile this week.
In a volatile week for the global markets, the conflict in the Middle East has shown no signs of abating. Investors sought'safety in cash' as they realised that the U.S./Israeli war against Iran might last longer than originally anticipated. The central banks also began to adjust their rates in anticipation of more aggressive expectations. They were frightened by the possibility of an inflationary resurgence if energy prices continue to rise. The yields on U.S. Treasuries jumped 18 basis points, the most since nearly a full year ago, and the dollar is set to make its biggest weekly gain in over 16 months. "The range (of plausible outcomes) of the war has expanded, including both the possibility of a highly constructive resolution?and a very destructive one," Daleep Singh said, chief global economic at PGIM fixed income. Markets are asked to price a fatter set of tails, with little information about their likelihood or the paths in between. Brent crude futures are now trading at around $83 a barrel. They were as low as $69 a few days ago. U.S. Crude soared to a 20 month high this week. Both are expected to see a weekly increase of over 15%, the largest since February 2022. Klay Group’s senior investment team said that the most "market-relevant" risk is a severe escalation of infrastructure damage in key Gulf producers. This would lead to sustained upward pressure on crude oil prices, increase headline inflation, tighten liquidity globally, and raise recession risks. High-Flying Stocks Tumble The MSCI broadest Asia-Pacific share index outside Japan, which is the most representative of Asia-Pacific stocks outside Japan, was down 0.4% last week and expected to drop 6.6% this coming week. This would be its biggest weekly decline since March 2020. Japan's Nikkei fell 0.5%, and was on course for a weekly loss of 6.5%. South Korea's Kospi also was headed for the largest weekly drop in six years. Investors scrambled for profits to offset losses elsewhere. Even high-flying indexes and technology stocks, such as the Kospi, tumbled this week. Ben Bennett, the head of Asia Investment Strategy at L&G Asset Management, said that when funding conditions tighten, broader movements are often amplified, especially if leverage is involved. The U.S. stock market futures in Asia were unchanged on Friday. However, the EUROSTOXX50 futures and DAX Futures both rose by 0.6%. DOLLAR IS?KING Dollar is one of the few winners in this volatile week that has seen stocks, bonds, and even precious metals, a safe haven, fall. The dollar's rally halted on Friday but was still on course for a weekly gain of 1.4%, thanks to safe-haven demands and lower expectations about U.S. interest rate easing. The euro, still vulnerable to an increase in energy costs, is expected to fall by 1.7% this week. Sterling will also drop by 0.95%. Investors now expect the Federal Reserve to ease up by about 40 basis points this year. This is down from 56 basis points a week earlier. The odds of a Bank of England rate cut this month are also down, from being a near certainty last week, to just 23%. By the end of the year, it is expected that rates will be raised by The European Central Bank. In Asia, on Friday, the yield of the 10-year U.S. Treasury benchmark was unchanged at 4.1421% after rising 18 basis points this week. The yield on the two-year bond has increased by 20 basis points for the past week. Spot gold, meanwhile, was unchanged at $5,078.88 per ounce. However, it was on track for a weekly decline of 3.7% as higher yields and the stronger dollar overshadowed its appeal as a safe haven. (Reporting and editing by Muralikumar Aantharaman; Reporting by Rae Wee)
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McGeever: The data on US jobs forces us to look backwards from the Mideast chaos and AI "doom"
Investors will turn their attention, for a while, to the familiar economic terrain of the United States on Friday, as long as there is still war in the Middle East. jobs data. Since the joint U.S. and Israeli attack on Iran, last Saturday, the events have dominated the market thinking to such an extent that fears about artificial intelligence putting millions of white collar workers at risk of being thrown out have been pushed back. The U.S. Non-farm Payrolls and Unemployment Figures for February, which will be released on Friday, may bring these concerns back to the forefront in the minds of investors, and, depending on the specifics, they could also rise to the top of the agendas of policymakers. A poll of economists found that the median consensus was for a net increase in non-farm payrolls of 59,000 last month, which is less than half the January rise. The unemployment rate will remain at 4.3%. The jobs report is still closely monitored for any warning signs. These include weak job growth or net job losses. In fact, starting now, monthly payroll reports, as well as other labor market indicators, such "JOLTS", layoffs and weekly claims for joblessness, will likely be lightning rods in the debate about "AI doom", or whether AI technology will ultimately destroy jobs, economic growth and demand. APOCALYPSE, HOW? Last week, the markets were abuzz with talk about an upcoming AI "apocalypse." Investors were trying to identify AI winners and loser, while bets for multiple Federal Reserve rate reductions this year increased. Jack Dorsey CEO of Block Inc., who announced on February 26th that he would be firing "nearly half" of his employees, even though his fintech company was "strong... and profitability was improving," helped to incite fear. Some people think that Dorsey, and other CEOs or chief financial officers might 'blame' the disruptive power of AI on what are really cost-cutting measures - given the labor hoarding after the pandemic. Dorsey’s statement scared investors, but it was not surprising. A series of research notes and blogs describing the doomsday AI scenarios had been widely circulated. Investors and policymakers need to separate the facts from the noise when assessing AI's impact on the labor markets. This means analyzing hard numbers, which are often backwards-looking. It is a challenge to use that data to predict the direction of wind. The picture is more balanced than AI skeptics would have you believe. Suraj Srinivasan, a professor at Harvard Business School, and his team analyzed all U.S. jobs posted from 2019 to March of last year. The study found that after ChatGPT launched in November 2022 the demand for analytical, technical and creative roles increased by 20%, while openings for jobs that are most likely to be automated fell 13%. Goldman Sachs economists estimate AI is currently a hindrance to job growth by 5,000-10,000. This is negligible in an economy which creates over 30 million new gross jobs each year. Goldman's economics estimates that AI will eventually replace 11 million jobs, or 6-7% of all workers. The technology will also create new jobs. They wrote: "We do not expect a job apocalypse." The same is true of other?research. Morgan Stanley's survey of U.S. firms conducted in January revealed that companies in the industries most likely to adopt AI are more inclined to hire and retrain employees than to eliminate or not fill jobs. A Dallas Fed paper published last week concluded that AI has both helped and replaced workers. The headlines of the monthly U.S. Employment reports are usually all that matters. With AI 'doomsday' fears rife the details below the headlines could now take on a much greater significance and help cut through the fog. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
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US Treasury could announce measures on the oil futures markets as energy prices increase
A senior White House official has said that the U.S. Treasury Department may announce measures to combat rising energy prices as early as Thursday. This could include action on the oil futures markets. The global oil price has risen since the war with Iran began on Saturday as Middle East supplies are disrupted by the conflict. JOHN PAISIE, PRESIDENT STRATAS ADVISORS The U.S. government's stance on the issue could moderate oil prices, but the physical disruption of supply is still a problem, especially with the closing of the Strait of Hormuz. There is also no spare capacity in the Gulf. Financial manipulation will not work if significant oil volumes are removed from the market. The traders will keep betting that the oil price will go up, because it should. PHIL FLYNN SENIOR ANALYST AT PRICE FUTURES GROUPS "This is a very novel, think-outside-the-box move. You can sell the front of the curve and buy the rear end using futures instead of physical barrels. The?Treasury’s traditional role focuses primarily on fiscal policy, debt-management, and occasional intervention in currency markets via mechanisms such as the Exchange Stabilization Fund. But not in commodities such as oil. TONY SYCAMORE IG MARKET ANALYST "If they try to influence the futures themselves (deliverable contracts), it could create a temporary pause or scare some speculative investors, but I would be surprised if this moved the needle beyond a few days. The oil market is global and driven by supply/demand fundamentals, especially now that the Strait of Hormuz is choked with tankers and they are trying to avoid the real threat from a?Iranian?drone and other strikes. "A bit of Treasury jawboning and symbolic action will not unlock or change this." ED MEIR MAREX ANALYST "I don't know what they have in mind but if they plan to sell futures in order to bring prices down, it is a huge gamble. It will also be a unprecedented intervention in the crude oil market. The question that immediately comes to mind is "what happens if the prices continue to rise and go against a possible Treasury short position?" Will they use SPR oil as a delivery against their short, or will they continue to post a margin and ride their position? (Reporting and editing by Ni Williams in Bengaluru, Ashitha Shivaprasad and Anushree mukherjee from Bengaluru)
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Crews repair line at Russian-controlled Zaporizhzhia Nuclear Plant in Ukraine
The head of Russia's nuclear energy corporation announced on Thursday that repair crews had restored the external line of the Russian-controlled?Zaporizhzhia nucleopower plant in southeast Ukraine, nearly a month after the facility was shut down. In a public statement, Alexei Likhachev, the director general of Rosatom said that repairs were completed on the Ferosplavna-1 power line, which connects the plant with the grid, late Thursday afternoon. He said that the repair work was completed "one day earlier than scheduled" at Europe's biggest nuclear plant with its six reactors. The plant was taken over by Russia shortly after the invasion of Ukraine by Moscow troops in February 202. In the statement, Likhachev said he "wanted to personally thank our specialists who completed the task before schedule and did so while working around the clock under conditions of constant stress." A second external line?was in operation during the entire work. Rafael Grossi confirmed that the line was restored. He said its completion "strengthens the nuclear safety and security". Ukraine has not yet commented. Grossi stated at the time, that "military activities" were reportedly responsible for the line's failure on February 10. The IAEA mediated a ceasefire that allowed repairs to be carried out. The Zaporizhzhia nuclear plant does not produce electricity and relies on outside power to cool its nuclear material, preventing a catastrophic event. Russia and Ukraine accuse each of the other of putting safety at a?plant in danger by staging attacks near it. Last year, when both power lines were down for several weeks and the site was forced to use diesel generators, a similar truce had been set up. One of the most contentious issues during the peace talks mediated by the United States is who should operate and control the plant. (Reporting and Editing by Alistair Bell).
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Costco Wholesale beats holiday-quarter comparable sales estimates on resilient demand
Costco Wholesale exceeded Wall Street expectations?for comparable sales for the second quarter on Thursday. This was due to a resiliant holiday season?demand, both for essentials and "nice-to have" items in its membership-only shops. Walmart and Costco, which are big box stores that cater to all income levels and appeal to consumers who are looking for value in order stretch their budgets due high rent and gas costs, have become increasingly popular. Costco has invested in Kirkland?Signature, its own brand, since it raised its membership fee in 2024. The company was one of over 1,000 businesses that sued the government, claiming President Donald Trump did not have legal authority to impose tariffs in accordance with the 1977 International Emergency Economic Powers Act. Trump's decision to impose temporary levies against imports, while the Supreme Court has ruled down emergency?duties?adds to the macroeconomic strain for consumer companies who are already dealing with a volatile trade?background and increased cost pressures. According to LSEG, the company's same-store sales for the quarter, excluding gasoline, increased by?6.7% compared to analysts'?estimates that a 5.88% increase would be seen. The second quarter net?income?rose by nearly 14% to $2.04 billion. The shares of the company were mostly unchanged during extended trading on Friday. (Reporting by Sanskriti Shekhar in Bengaluru; Editing by Alan Barona)
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Official from the White House says that US is considering oil futures market actions to combat rising energy costs
A senior White House official stated that the U.S. Treasury Department will announce measures to combat 'rising energy prices' as early as Thursday. This could include potential actions involving the oil 'futures market. Washington's potential move would be an unusual attempt to influence energy costs through financial markets, rather than through physical oil supplies. Officials are racing to reduce the political and economic impact of rising fuel prices. The global oil price has risen by 16% as the conflict in the Middle East continues to spread. According to AAA, the U.S. travel agency that tracks fuel prices, the national average price of gas rose 27 cents in one week to $3.25 a gallon. The approach also reflects the background and experience of Treasury Secretary Scott Bessent. He was a former global macro investor and hedge fund manager who traded currencies, bonds, and commodities for decades before joining the Administration. Bessent was previously chief investment officer of Soros Fund Management, and later founded the macro hedge fund Key Square Group. No one from Treasury was available to comment immediately. Donald Trump said on Thursday that he is not worried about the rising prices of?U.S. In an exclusive interview, he said that the rising gas prices were due to the escalating conflict in Iran. When asked about higher prices at gas stations, he replied: "I'm not concerned about it." "They will drop?very quickly when this is done,?and they will rise if this continues, but it is more important that gasoline prices increase a little." (Reporting by Jarrett Renshaw, Editing by Franklin Paul; Cynthia Osterman and Mark Porter).
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Venezuela will ensure the security of mining companies and exceed oil production targets-Burgum
The United States Interior Secretary Doug Burgum struck an optimistic tone as he prepared to leave Venezuela after a two day visit. He told journalists that a new mining bill will create opportunities for businesses, and licenses to allow them to operate are on the horizon. Burgum, the U.S. National Energy Dominance Council's head, has praised the efforts of interim president Delcy Rodrguez to open up the South American nation to foreign investment for oil and minerals. This praise is similar to that given by U.S. Donald Trump. Burgum is the 2nd cabinet secretary to travel to Venezuela since the January U.S. raid which captured President Nicolas Maduro. In February, U.S. Energy Sec. Chris Wright made a visit to Venezuela. Venezuela has massive mineral reserves, including gold, iron ore, coltan and bauxite. However, the country's production is only a fraction of its capacity, as it urgently needs major repairs, upgrades and investments for plant expansions. Venezuela's largest conglomerate CVG is cash-strapped, and the company Minerven, a state mining firm, is also under U.S. sanction. Foreign?investment in the past decade has been minimal due to nationalizations by late President Hugo Chavez. Experts now see a room for an "immediate recovery" in gold exports, but have warned that massive investments - even more than the oil industry - are needed along with renewed efforts for exploration. Burgum said he brought with him more than two dozen companies involved in mining and minerals. He met with the leaders of major Venezuelan and foreign companies on Thursday morning. Burgum responded that companies who are interested in returning or entering Venezuela have a proven track record of?integrity' and the new law is an opportunity to create jobs. "I believe you're going to see that this government is very concerned with providing the right type of security. Burgum said that we heard assurances at the meeting yesterday and today that if companies wanted to reach these areas, they would do their due diligence, consider reopening mining operations, or even return to mines which they ran themselves 15 to 20 years ago. He added: "I feel very optimistic about the?environment in which investment will flow, not only to offshore oil and Gas, but also to Caracas, where these immense resources exist." Burgum said that there will be soon a set general licenses issued for the mining sector, similar to those already granted for oil producers. Burgum added that there will soon be a set of general licenses for the mining industry, similar to those already issued for oil producers.
Local media reports that Jamaica will end its medical cooperation with Cuba.
According to The Gleaner, the local media outlet, 'Jamaica’s Foreign Ministry announced on Thursday that it will terminate a medical 'cooperation program' with Cuba.
In a statement, cited by The Gleaner, the foreign ministry stated that the two governments could not agree on terms of a new agreement.
The Gleaner reported that the medical professionals would be allowed to continue working until their tenure is complete.
Jamaica's Minister of Health and Wellness Christopher Tufton said previously that?about 300 Cuban medical professionals and doctors were working in the island despite the previous agreement expiring in 2023.
Jamaica has become the latest country in the world to cut medical ties with Cuba. This comes at a time when the Trump administration is urging?countries around the world to cut ties with Cuba's communist-run government.
In February, Guatemala also announced that it was ending a program which?sent Cuban physicians to the country.
The Bahamas announced in June that it was planning to cancel contracts with Cuban healthcare professionals following a?discussion with the U.S. Government. (Reporting and writing by Zahra in Kingston, Inigo Alexander and Daina Beth, Solomon, editing by Daina)
(source: Reuters)