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MORNING BID AMERICAS-China chip champ
What's important in the U.S. and Global Markets Today By Mike Dolan. Editor-at-Large for Finance and Markets The start of another volatile week for the markets is aided by a pause in the Iran conflict, and the significant decline in crude oil prices from the $100 mark. Calendar is packed with events, including the Federal Reserve meeting, a third?of?the 'S&P 500?reporting earnings - such as Apple, Microsoft, Meta, and Qualcomm?and second-quarter U.S. Gross Domestic Product estimates. Below, I'll go into more detail. Listen to the Morning Bid podcast to get a preview of the coming week and the oil market's latest decline. Subscribe to the Morning Bid daily podcast and hear our journalists break down the week ahead, including oil's latest retreat. CHINA CHIP KING Despite the recent drop in oil prices, there's still a 1 in 4 chance that the Fed will raise rates on Wednesday. This is priced into futures. Bank of England and Bank of Japan will also meet this week. The former is focusing on a recent yen decline, while the latter meets just before a new UK Prime Minister takes office. Oil prices were the first to set the tone this week. Brent crude started falling from triple-digit levels on Friday. The U.S. announced that it would pause its attacks on Iran following 13 days of continuous strikes. Iran said it would respond in kind and now we have to wait?to see if mediation resumes. Many in the market now assume that $100 oil will be a point of pressure - at the very least, in Washington. Brent dropped further on Monday morning to $89/bbl. Before the bell, shares in Asia rose and Wall Street futures jumped sharply. The hyperscalers' earnings will be examined forensically again, after Alphabet’s second-quarter burn caused its stock to fall last week, despite an impressive earnings beat. The Wall Street Journal reported, in other AI news, that Nvidia is in discussions to provide OpenAI with a $250 billion loan as part of its data center project. This is a reflection of the increasing cross-financing and OpenAI's own efforts to develop its infrastructure. The Chinese chipmaker CXMT saw its stock rise nearly 500% on its Shanghai debut in a massive IPO. Chart of the Day: New chip in the market? China's CXMT, which made its Shanghai debut on the market on Monday, soared nearly 500%. It is now China's most valuable stock, surpassing the Industrial and Commercial Bank of China. Asia's largest IPO raised $8.6 billion and has a value of over half a trillion dollar. CXMT’s?enlarged capital share was only 6.73% freely tradeable when it listed, since most shares were locked up. The initial small float magnified the price swings, and led to a high level of turnover. CXMT, a Chinese chip manufacturer, is expected to play a key role in China's own AI and tech ecosystem. This makes it a global strategic firm. Watch today's events * U.S. June ?durable goods (8:30 a.m. EDT) Auctions of U.S. 2-year, 5-year and 10-year notes Want to receive the Morning Bid every morning in your email? Subscribe to the newsletter by clicking here. Follow us on LinkedIn, X and ROI. The opinions expressed by the author are their own. These opinions do not represent the views of News. News is committed to the Trust Principles and upholds integrity, independence, as well as freedom from bias.
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Copper prices increase as US-Iran lull calms fears of oil and economic growth
Prices of copper rose on Monday as oil prices dropped after the U.S. & Iran suspended their 'hostilities', alleviating concerns over price pressures and global growth. Benchmark 'copper' on the London Metal Exchange rose 0.32% to $13,688.5 per metric ton by 0700 GMT. The Pentagon suspended its campaign against Iran on Friday after 13 nights of increasing airstrikes by the United States. Iran has been holding a 'fire' for two days after it had responded to each night’s U.S. airstrikes with its own attacks on countries in the region that house U.S. bases. The oil prices fell as the ceasefire in fighting raised the hopes of a diplomatic solution allowing shipping in the Strait of Hormuz to resume. Tom Price, Panmure Liberum analyst, said that the market was waiting for a resolution. It is pricing peace instead of a war. "Chile was hit by unusually severe storms that put pressure on the electricity distribution grid, and raised questions about the copper production guidelines across the industry," said Panmure Liberum analyst Tom Price. The market is also focusing on the copper stocks stored in LME approved warehouses. With 272,975 tonnes Stocks are down 30% since May's end. Since February of last year, producers and traders have been importing copper into the United States. This is because President Donald Trump had threatened to impose import tariffs. The result was a premium in U.S. Copper over LME Prices. The U.S. Commerce Department was supposed to finish a review on the copper market before June 30, but Trump has yet to announce a decision regarding tariffs. Other metals saw a 0.6% increase in aluminum to $17.385, a 0.8% rise in zinc to $3.621, a 0.3% rise in lead to $1.839, and a 1.3% jump for tin to $54,500. Nickel was unchanged at $17.385.
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Gold rises by 1% amid U.S. Iran truce; attention on Fed meeting
Gold prices rose on Monday as a pause between strikes?between U.S. forces and Iranian forces?helped?crude oil?price?fall. This helped ease inflation fears and concerns about the possibility of higher interest rates during a week when policymakers from the Fed will be meeting. Spot gold rose by 0.9% to $4.089.03 an ounce at 0805 GMT. U.S. gold futures for delivery in August also increased by 0.5%, to $4.090.80. "Precious Metals started the week in a positive way, thanks to a pause of hostilities in the Middle East. "Oil has fallen and both the dollar yields and U.S. Treasury yields are down," said Ross Norman, an independent analyst. The U.S. dollar index fell by 0.2% making greenback bullion prices more affordable to buyers abroad. A senior Iranian official said that Iran?will stop its attacks if the United States does?the same?. Washington has halted its bombing campaigns after Donald Trump's advisors informed him that they had run out of targets. They also expressed concern about the depletion of U.S. arsenal. The oil prices fell more than 6% Monday, increasing hopes for a diplomatic solution that would de-escalate conflict in the Strait of Hormuz. Energy prices are rising, which increases inflation fears and expectations for higher interest rates. Gold is often seen as a hedge to inflation. However, its non-yielding nature makes it less attractive in an environment of high interest rates. Investors are now focusing on the Fed's rate decision meeting scheduled for Wednesday. About 66% of participants in the market expect that rates will remain unchanged. "Gold is flashing cautiously positive signs: one eye on Iran and the other on the Fed. Norman said that if Warsh resisted the roughly two hikes embedded in the curve now, it could be quite supportive for the gold. According to the CME FedWatch Tool, traders?price in a?77% probability of a rate hike in September. Spot silver increased by 1.7%, to $59.15 an ounce. Platinum rose 2.7%, to $1.631.20. Palladium rose 3.3%, to $1.284.00. (Reporting by Sukanya Mitra in Bengaluru; Editing by Ronojoy Mazumdar)
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Oil prices fall after Middle East conflict pause, global stocks rise
As tensions in the Middle East eased, oil prices fell sharply and inflation fears were reduced. This was ahead of a busy week of central bank meetings and earnings reports. Iran announced on Sunday that it would cease?its? own attacks if the United States also did so. The U.S. Military was reportedly worried about the dwindling supply of ammunition. Brent crude fell 6.3% to $90.70 a barrel during the lull of fighting in the Strait of Hormuz, while U.S. Crude dropped 5.7% to $74.12. On Monday, stock markets around the world staged a relief rally after fighting in the Middle East pushed oil to over $100 per barrel during the last week. At one point, the STOXX 600 index in Europe climbed by nearly 0.5% and reached its highest level since July 7. Retail and travel stocks, which are sensitive to the economy, rallied by more than 2%. However, a decline in oil stocks hurt the market as a whole. S&P futures increased by 0.9% while Nasdaq Futures rose 1.5%. The MSCI broadest Asia-Pacific share index outside Japan increased by 0.3%. The euro rose 0.23% to $1.1395. The dollar also gained against most major currencies as traders reduced the likelihood of rate hikes by the Federal Reserve in the coming week. Markets indicate that the U.S. Central Bank's decision will be made on Wednesday. The markets suggest a 1 in 3 chance of an increase, but most analysts do not believe Chair Kevin Warsh is likely to support such a move. "A rate increase this week would send a powerful message at the beginning of his term, that he's serious about improving the Fed’s credibility in fighting inflation. We are not convinced that he will back up his tough words on inflation this week with policy actions," Lee Hardman said, a senior forex analyst at MUFG. If inflation risks don't ease over the summer months, it is more likely that a rate hike in September will be necessary. Both the Bank of England and Bank of Japan are expected to remain cautious in their approach, while maintaining their current policy. The dollar dropped 0.2% versus the yen, to 163.53. Earnings from TECH BULLS Chinese blue-chip stocks gained?1.2% after chipmaker CXMT Corp surged almost 500% in Shanghai's trading debut, following its raising of $8.6 billion through Asia's largest initial public offering. According to LSEG data, about a third of S&P500 companies will report earnings this week. Earnings are expected to increase by 26.5% over last year. Even 'blockbuster' results may not satisfy investors, given the high expectations and growing unease about the cost of AI capex. A Wall Street Journal article reported that Nvidia had been in discussions to provide an estimated $250 billion backstop for OpenAI, as part of a project involving data centers. This week, companies reporting include tech darlings Microsoft and Meta Platforms as well as Amazon, Apple, Qualcomm and a number of industrial, healthcare and defence stocks. Highlights of the data include:?U.S. The second quarter GDP is expected to grow at an annualised rate of 1.5%, after a sluggish start to the year. The week's calendar includes the PCE price index for June, personal income, consumption, weekly claims of unemployment, the second quarter employment cost index, and consumer sentiment in July. The Euro Zone's schedule includes the flash Q2 GDP (Gross Domestic Product), July economic sentiment, consumer confidence and flash inflation. According to the Ifo Institute survey conducted on Monday, German business morale increased more than expected in August due to significantly better expectations. The 10-year Treasury yields fell 3.8 basis points, to 4.64%. The drop in yields has helped gold prices to rise by 0.92%, or $4,090.45 per ounce, on commodity markets. (Reporting and editing by Stephen Coates and Sam Holmes; Mrigank Dhaniwala and Wayne Cole)
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Taganrog governor: Ukrainian drones target Taganrog after killing two in Rostov-on Don, Russia
Yuri Slyusar, the regional governor, said that Ukrainian drones allegedly killed a couple of people in Rostov-on-Don, a city in southern Russia. He also noted that apartment blocks, warehouses, and a shelter to house homeless people were damaged. Slyusar stated that the air defence forces shot down about?50 Ukrainian drones in his region, and that Kyiv had targeted the cities Rostov and Taganrog, as well as four districts of the region, Chertkovsky Tarasovsky Sholokhovsky Millerovsky. He said that eight people were injured in 'Rostov. One of them was in critical condition, according to a?statement. He said that in the port city of Taganrog on the Sea of Azov, home to various industrial sites and a grain depot, an unnamed production facility was damaged. Volodymyr Zelenskiy, the Ukrainian president, said on Monday morning that his forces had attacked a Russian oil facility in Yaroslavl as well as a Russian export terminal?in the Rostov?region. In recent weeks, Russia and Ukraine have increased their'military activities in the Black Sea, the Sea of Azov, and surrounding areas. Each side has attacked dozens of ships including cargo and oil tankers. (Reporting from Moscow buro, Jekaterina Glubkova and Andrew Osborn in Tokyo)
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LME Aluminium stocks drop to lowest in the last century due to supply shortage
The 'London Metal Exchange's aluminium stocks have fallen to their lowest level in the past century as consumers draw down their inventories due to supply constraints. The bourse reported total aluminum stocks in LME storage warehouses On July 24, the total had fallen to 271,275 tons. This is the lowest total since records began in January 1998. It's equivalent to less than one day of global aluminum consumption. Duncan Hobbs is the research director for Concord Resources. He said: "The LME stock relative to market size are very, very small today." The LME's on-warrant aluminium stock, which is the amount of aluminum that has not been earmarked for delivery outside the system, was 245,350 tonnes as of July 24,?the lowest level since April 2025. According to recent LME stock origin reports, the vast majority of the little available inventory is Russian aluminum. Some traders are reluctant to trade Russian metal, even though it was produced before April 13th 2024. The Gulf accounts for 9% of the primary aluminium capacity but its two largest smelters have been targeted by Iranians in late March. The market may be "too complacent" about the risks of supply, Hobbs stated, pointing out that the Strait of?Hormuz is causing continued disruptions, making it hard for Gulf smelters and their raw materials to enter and export metal. In August 2022, the LME's?alluminium?inventory was at a low of 271,450 tonnes. This was after?Russia invaded Ukraine on a full scale. The LME then began to restrict deliveries of Russian aluminum into its warehouses. In ?top metals consumer China, Shanghai ?Futures Exchange aluminium stocks Since mid-June, the number of tons has been decreasing but is still a healthy 455,092 tonnes. By 0830 GMT, the benchmark three-month aluminum on the LME had traded 0.3% higher at $3170 per ton. (Reporting and Additional Reporting by Pratima Dasai, Editing by David Goodman.)
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Impala Platinum suspends Rustenburg mining after injuries and fatalities
Impala Platinum announced on Monday that it had'suspended the mining operations at its Rustenburg operation in South Africa as it conducted a comprehensive safety reset following recent injuries and deaths. Impala didn't provide any details about the incidents but the Association of Mineworkers and Construction Union stated that seven workers have died at Impala Rustenburg since the beginning of the year. In a press release, Impala Rustenburg said that the 'temporary suspension' will affect PGM production for eight days. Impala, with an annual production of 3.5 million ounces of PGMs, is one of the world's largest PGM producers. Impala, Valterra Platinum, and Norilsk in Russia are all major players in the global supply chain of metals such as platinum, palladium, and rhodium used to make autocatalysts, which reduce vehicle emissions. Impala said it would carry out comprehensive workplace audits, as well as targeted?training?for its rail-bound and underground locomotive operators. The Impala Rustenburg operation employs about 51,500 people across mining and processing operations. It is forecast that the group will produce between 1,67?million ounces and 1,76 million ounces PGMs by June 2027. This is roughly half of what was projected. The company stated that the?actual impact of the suspension on production would be assessed. Reporting by Nelson Banya Editing and Joe Bavier by David Goodman
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The US and Iran pause their strikes as oil prices drop, allowing copper to benefit.
Prices of copper rose on Monday as oil prices fell following the U.S.-Iran pause in their two-week long conflict, which eased concerns about inflationary risks for?global growth. The benchmark three-month 'copper' on the London Metal Exchange gained 0.32% to $13,688.5 per metric tonne by 0700 GMT. The Shanghai Futures Exchange's most traded copper contract was up 0.31% to 105,050 Yuan ($15.523.64) per metric ton. The U.S. announced that it was halting its airstrikes against Iran after 13 nights of attacks. Tehran also said it would cease its attacks. Brent crude dropped more than 6% on Monday, after reaching $100 per barrel for the first since last Friday. Energy costs are a major factor in raising inflation and causing bets for higher interest rates. This could have a negative impact on commodities that depend on economic growth, such as copper. Markets will be closely monitoring the Federal Reserve's meeting on Wednesday for their interest rate decision. According to CME's FedWatch, interest-rate traders have priced in a 63.7% probability that there won't be a rate change during the meeting. Gold that does not yield a return gained and the dollar index dipped. The dollar is cheaper, making greenback-traded commodity like copper more affordable for buyers who use other currencies. The waning stock of copper outside the U.S. has also helped to support its price. Metal has been'shipped in at large scales ahead of possible tariffs on'refined copper. The SHFE monitors a warehouse in?China, the top consumer. Last week, copper stocks dropped 12.9% to their lowest levels since February 2024. They now stand at?69.610 tons. Overall LME Copper Stocks On Friday, they were at their lowest level since March. Aluminium was down by 0.03% on the LME, while zinc rose 0.6%. Lead ticked up 0.11%, and nickel fell?0.31%. Tin gained 1.16 %. On the?SHFE, aluminium fell 0.11%; zinc gained 0.46%; lead dropped 0.79%; nickel rose 0.09% and tin grew 2.17%.
Take Five: A Crude Summer
This week, it's all central banks. Rising energy prices are likely to keep rate-setters in Tokyo, Washington and London alert even if oil is below $100.
Tariffs from the United States are now back on the list of worries for markets that worry about inflation and growth risks due to war.
Rae Wee, Dhara Ranasinghe and Alun John are in London. Lewis Krauskopf is in New York.
1/ DOUBLE THREAT
Investors are now watching two chokepoints for energy shipping to see how much oil and natural gas comes out of the Middle East.
Houthi attacks may make the Bab el-Mandeb strait inaccessible, linking the Indian Ocean with the Red Sea. This could eventually lead to the Strait of Hormuz being squeezed. Brent crude surpassed $100 per barrel for the first since May on Thursday. The U.S. and Iran stopped their strikes on Monday, which caused the price to drop to about $90. However, they are still up more than 20% for this month.
Last week, European gas prices reached their highest level since March.
Investors will also be checking Truth Social for news on the Gulf, as a U.S. peace deal with Iran is still elusive. The U.S. imposed new tariffs on Friday of 10% and 12.5% on 60 trading partners including the European Union, China and others. This has added to the uncertainty in the market.
Earnings Tests 2/ FED
The U.S. market is in for a busy week, thanks to a U.S. Federal Reserve Meeting and a number of earnings reports from technology giants.
It is expected that the Fed will hold rates at their second meeting on Wednesday under Kevin Warsh. Warsh is not giving any guidance, but has vowed to get inflation to the target. This uncertainty persists as it's possible that rate increases will be necessary at some point. The recent consumer and producer prices were lower than expected, which helped to calm down rate-hike betting. However, a rise in oil prices has caused traders to increase their bets. Investors are focusing on AI trends and a strong U.S. quarter of corporate profits as they await the earnings reports from Apple, Microsoft, and Amazon. Alphabet shares have been under scrutiny since last week, when investors questioned the company's cash flow and capital expenditure plans.
3/ IN DOLDRUMS When the Bank of Japan convenes on Friday, much depends on the policymakers' ability to send a hawkish signal that could lift the yen from its four-decade low versus the U.S. Dollar. The yen has not been lifted by a well-telegraphed increase in interest rates last month, $73billion worth of currency interventions, or the hope that money will return home. It recently fell below 163 per dollar for the very first time since 1986. Some BOJ sources said that they see room to increase rates faster than the 'dominant market view' of twice a years if a weaker yen or rising energy prices continue to put pressure on prices.
Tokyo's July Inflation figures are due ahead of the BOJ's Friday policy decision. However, market participants do not expect that the data will change the BOJ's outcome.
What's the hurry?
Unlike the European Central Bank or Bank of Japan, the Bank of England, has so far, resisted policymakers' urges to raise rates due to oil price pressure. The Bank of England is widely expected to raise rates again on Thursday. The markets expect at least one increase in interest rates this year, as inflation is expected to pick up. However, signs of weakness on the jobs market could lead the BoE to adopt a more dovish stance. The rate-setters met just days after Andy Burnham, the new Prime Minister of Britain, entered Downing Street with a promise to reshape Britain. Andrew Bailey, the BoE's?chief Andrew Bailey will likely be asked about his views on Burnham’s agenda for monetary policies in the briefing that follows policy-meeting. Economists believe that a decision to reduce the tax on electricity would be able to slow inflation by 0.1%. Bond markets will also assess the new finance minister John Healey to determine whether he is a friend or foe.
Barclays says that Europe is experiencing its busiest earnings week this year, with 40 percent of the STOXX600 market cap reporting. AstraZeneca is on the list, along with LVMH and Shell, as well as Airbus?and UBS. The second-quarter profit for Europe will increase by 17.3% if you combine the results of the companies who have already announced with those that are pending.
This would be the highest growth rate since the 4th quarter of 2022. The surge in oil prices is largely responsible for this growth. If you exclude them, LSEG I/B/E/S predicts a modest 7.2%. The ECB's decision to raise interest rates this year will be influenced by the latest inflation and growth figures for the euro zone.
(source: Reuters)