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As oil prices rise and rate hikes loom, shares in Asia plummet
On Monday, the Asian share markets fell as supply concerns caused oil to spike again. Investors braced themselves for interest rate hikes this week in both Japan and the United States. Brent oil prices rose 3% after new attacks on Saudi Arabia, and on ships in the Gulf. This came as nerves were tested following an attack on Saudi Arabia's oil pipelines and the Houthis' advance into Yemen. The meeting between Iran and Gulf Arab States, which was scheduled to take place in Oman on Monday, for the purpose of discussing a deal about opening the Strait of Hormuz has been postponed. Analysts fear that oil prices will remain high for a long time, causing inflation worldwide. A report showing an uncomfortably high U.S. consumer price index on Friday prompted the markets to estimate that 86% of the time, Federal Reserve rates will be raised by 25 basis points by Wednesday and again by December. This would be the first rate hike since mid-2023. Michael Feroli, JPMorgan's chief U.S. economist, said: "We expect the Fed will hike twice this fiscal year, in September, and in December." At this stage, failing words with actions could put the institution's credibility at risk. He added that the data will determine whether these actions are a recalibration of sorts or a start to a longer-term hiking cycle. "We expect the first scenario, but we see risks in the second." Brent futures rose last 2.6% to $107.36 per barrel after gaining almost?9% the previous week. U.S. crude oil rose 2.4% at $102.48 a barrel. South Korea's Nikkei dropped by 3.3%, while Japan's Nikkei declined by 1.7%. MSCI's broadest Asia-Pacific share index outside Japan fell 0.8%. In Europe, EUROSTOXX Futures dropped 0.5%. DAX Futures declined 0.4%, and FTSE Futures fell by 0.1%. S&P futures on Wall Street fell 0.5% while Nasdaq's futures dropped 1.1%. High Yields Test Evaluated Equities The yields on 10-year Treasury bills were slightly lower, at 4,967%. They had been heavily sold in recent weeks. In just one week, the yields on 2-year Treasury notes rose by 26 basis points. The yields on 10-year Treasury notes also increased by 19 basis points. Ben Snider is the chief U.S. Equity Strategist at Goldman Sachs. He said that strong corporate earnings will support Wall Street in case borrowing costs increase. He added: "Equity prices tend to fall when the Fed begins to raise rates, but we expect the bull to continue." "The S&P 500 generated an average return of -2.2% over a three-month period at the beginning of seven hike cycles in the past few decades." "Yet, the S&P 500 generated an average return +9% over the 12-month period following the first increase." The markets also suggest that the Bank of Japan is likely to increase its cash rate on Friday by a quarter-point, or 1.25%. BOJ will also be expected to sound more hawkish about further tightening, as it tries to prevent the yen from falling back to its 40-year low after it was helped by market intervention. The dollar held steady at 153.49?yen after falling around 4% in the past two weeks and moving away from its July high of 163.99?yen. The euro was also not much changed at $1.1592, after finding support at $1.1570 last Friday. The pound was unchanged at $1.3522, with the Bank of England likely to keep its rate at 3.75% Thursday. However, the decision may be divided again. Gold fell 0.3% on the commodity market to $4,336 per ounce, as bond yields increased, reducing the appeal of gold, which does not pay interest.
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As oil prices rise and rate hikes are looming, shares in Asia fall.
On Monday, Asian share markets fell as oil prices spiked again due to supply concerns. Investors were also bracing for interest rate hikes this week in the U.S. and Japan. Brent rose 3% as new strikes against Saudi Arabia and?ships?in the Gulf tested nerves. This was after an attack on Saudi oil pipelines and an advance of Yemen's Houthis, which threatened to worsen wartime disruptions to global energy supply. The meeting between Iran and Gulf Arab States, which was scheduled to take place in Oman on Monday, for the purpose of discussing a deal regarding opening the Strait of Hormuz has been postponed. Analysts fear that oil prices will remain high for a long time, causing inflation worldwide. The markets have priced in 86% of the chance that the Federal Reserve will raise rates by 25 basis point on Wednesday and again by December. This would be the first rate hike since mid-2023. Michael Feroli, JPMorgan's chief U.S. economics, said: "We expect the Fed will hike twice this calendar year, in December and September." At this stage, if the institution does not follow up its words with actions, it could be at risk. He added that the data will determine whether these actions are a recalibration of sorts or a sign of a new, more consistent hiking cycle. "We expect the first scenario, but we see risks for the second." Brent futures rose?3.1% to $107.84 per barrel after gaining almost 9% the previous week. U.S. crude oil rose 2.8%, reaching $102.85 per barrel. Nikkei Futures fell 2% to 63,260 compared to a close in cash of 64,011. S&P futures on Wall Street fell 0.5% while Nasdaq's futures dropped 1.0%. High Yields Test Evaluated Equities Treasury futures firmed up a bit in early trading after being heavily sold in recent weeks. Last week, the 2-year yields jumped 26 basis points in a single week. The 10-year yields also rose 19 basis points. Ben Snider is the chief U.S. Equity Strategist at Goldman Sachs. He said that strong corporate earnings will support Wall Street in case borrowing costs increase. He added that "stocks typically suffer when the Fed begins to raise rates, but we anticipate the bull market?to continue." "The S&P 500 generated an average return of -2.2% over a three-month period at the beginning of seven hike cycles in the past few decades." "Yet, the S&P 500 generated an average return +9% in the 12 months after the first hike." The markets also suggest that the Bank of Japan is likely to raise its cash rate by a quarter-point, or 1.25% when it meets this Friday. BOJ will also be expected to sound "hawkish" on tightening further as it struggles against a relapse of the yen following market intervention that helped it recover from a low for 40 years. The dollar held steady at 153.77yen after falling 'around 4% in the last two week? and away from its July peak of 163.99. The euro is also little changed, at $1.1600. It was $1.1570 last Friday. The pound was unchanged at $1.3518, with the Bank of England likely to keep its rate at 3.75% Thursday. However, the decision may be divided again. Gold fell 0.3% on the commodity market to $4,336 per ounce, as bond yields increased, reducing the appeal of gold, which does not pay interest.
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Oil prices rise by more than $3 following new attacks on Saudi Arabia Strait of Hormuz
Oil prices increased by more than $3 per barrel at Monday's market opening, following new strikes on Saudi Arabia and on ships in the Gulf on Sunday. Brent crude futures increased by $3.62 or 3.46% to $108.23 per barrel as of 2214 GMT on Sunday. WTI futures increased $3.15 or 3.15% to $103.20 a barrel. Saudi Arabian media released footage on Sunday showing damage to homes and mosques from an attack they said was carried out by the Houthis in southern Jazan Province. The Houthis claimed they also attacked a Saudi military base in a neighboring province. The British maritime security agency UKMTO reported on Sunday that a vessel in the Strait of Hormuz had been struck by a stray projectile. This caused a fire, forcing the crew to evacuate the vessel. Iran reported that four members of the crew were injured and one person killed aboard a commercial vessel which was struck off its coast. The oil prices were expected to increase on Monday due to growing concerns over the supply of oil from Saudi Arabia, which is the largest oil exporter in the world. Last week, an Iraqi drone struck and shut down its East-West pipeline, cutting off oil supplies to Saudi Arabia. Tony Sycamore, IG's market analyst, said that unless the talks this week in Oman result in something operational -?or if the East-West Pipeline is brought online quickly - crude oil could continue to?expand its gains towards the $119.48 peak of?early march," he wrote in a Sunday note. Omani Foreign minister?Badr albusaidi stated on X?later Sunday that the scheduled meeting between Gulf countries, Iran and Oman to discuss the Strait of Hormuz on Monday had been postponed.
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Swedish election in dead heat as voters question liberal traditions
The results of the national elections in Sweden were deadlocked on Sunday. A partial count by the?election authority indicated a one-seat majority for?the centre-left opposition bloc, which could stop Sweden's 'drift' away from its liberal heritage. According to the Swedish election authority, the bloc headed by Social Democrats party leader Magdalena Andersson was expected win 175 of the 349 seats in the Riksdag based on votes cast from 4,853 out of 6,312 districts. As the ballot counting continues, it appears that Prime Minister Ulf Kritersson's right-wing bloc has won 174 seats. While the election is unlikely to alter Sweden's pro Western and pro Ukraine stance, it will determine whether Kristersson continues his push for a hard right clampdown on immigration. The winner of this race may not be known until several days after the overseas votes have been counted. Kristersson, in a pre-election promise, broke a long-standing taboo by saying he would bring the Sweden Democrats into government, a far right party with Nazi roots, to form a majority-right alliance. Right-wing voters say that a victory would be a vote in favor of policies which have reduced immigration and gang violence. Some Swedes are wary, stating that Kristersson's invitation of the extreme right is a step too much. Maria Malmer Stenergard is a member Kristersson’s Moderate Party and the Minister for Foreign Affairs. She said: "I believe it will be a long evening." "Maybe the results won't be known until Wednesday, when overseas votes arrive." Kristersson had gained ground in the last weeks of campaigning after he fell behind in polls for his entire four-year tenure. Andersson's Social Democrats were losing ground. Critics claim that the Kristersson government’s immigration policies undermine civil liberties by imposing incentives and penalties on migrants to either conform to Swedish cultural norms, or leave the country. The far-right parties in Europe would welcome the Sweden Democrats' electoral success, especially after the victory of the anti-immigrant Alternative for Germany at a German state elections last week. The National Rally, which is a far-right party in France, hopes to gain the presidency of France next year. 'DOES NOT LOOK LIKE SWEDEN Jimmie Akesson, long-time leader of the Sweden Democrats, said that the suburb in Rinkeby near Stockholm "doesn’t look like Sweden" because it is home to the largest Swedish-Somali population. Kristersson took power in Sweden?four years back. Sweden had been one of Europe's most tolerant countries towards immigrants for many years. His government abolished the permanent?residency of refugees, tightened welfare regulations and increased expulsions for those without a legal right to remain. The Sweden Democrats admit that they were founded by neo Nazis and white supremacists during the 1980s. However, they claim to have removed these extremists and apologized for their past. After an updated projection by Swedish broadcaster SVT, the party of Sweden's Democrats was greeted with cheers after an exit poll had shown a much smaller gap than the initial one. The original exit poll had placed the centre-left opponents ahead with 51%. You cannot imagine how nervous I am at the moment. "I feel like my life's work hangs in the balance," Ludvig Aspiling, a member of parliament and immigration spokeswoman for the Sweden Democrats. It's going to be a very tight race. He said, "We still have a shot."
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Trump tells Ukraine's Zelenskiy to stop hitting Russian diesel
U.S. President Donald?Trump called on Ukrainian president Volodymyr?Zelenskiy on Sunday to stop attacking Russian diesel infrastructure. He said the attacks are causing a fuel shortage that "hurts the world". In recent months, long-distance Ukrainian?drone attacks on Russian oil refineries have reduced the country's fuel production. This has led to gasoline shortages in all of Russia. Ukraine, which is regularly attacked by Russia on its own energy infrastructure says that refineries are legitimate targets. According to GasBuddy, the U.S. average price of?diesel - used in trucks, trains and ships, as well as farm equipment - rose above $6 per gallon on Thursday for the first ever time. Trump said to journalists that Zelenskiy must stop knocking down diesel fuel in Russia. This was during his visit to the Irish Open in west Ireland, which is held on a course owned by Trump's family. "We spoke to Mr. Zelenskiy. There are a number of other targets. ?Don't hit diesel fuel. He said, "That's bad for the world." Trump said that the global shortage is not caused by the Middle East but by Russia and Ukraine. According to a draft government forecast, the war has caused Russia to reduce its oil production forecast for this year to a 17-year-low and to revise its fuel exports forecasts for 2026 and 2027.
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Russian nuclear head says Ukraine attacked fuel trucks, endangered Zaporizhzhia plant
The head of Russia’s state nuclear corporation, accused Ukraine on Sunday of attacking diesel fuel truck and killing two Russian servicemen. He also said that Ukraine was deliberately compromising safety at the Zaporizhzhia Nuclear Power Plant in Ukraine. Alexei Likhachev stated that 'the attack took place on Friday, and resulted in other Russian soldiers being injured. In the first weeks of the Ukraine War that erupted in February 2022, Russian forces seized the Zaporizhzhia Plant, Europe's biggest with six reactors. Both sides have accused each other of taking actions that "endanger the safety of the plant" and increase the likelihood of a nuclear disaster. Likhachev?issued a?statement saying Ukrainian forces launched "a number of combined strikes" Friday against fuel trucks that?deliver Diesel to the station. He said that the strikes were very close to the station's perimeter. Two servicemen died, and many Russian soldiers, some of them seriously, were injured. All of them were involved in supporting a purely civil mission. Diesel generators are vital for the plant, as they provide the power needed to cool the nuclear fuel in the reactors when the two external power lines of the plant go down. Both links were down for almost a three-week period in August and Septembre. Moscow has rejected the Ukraine's demand that Russia abandon the station and return its operation to Kyiv. Currently, the fuel?generates zero electricity. The International Atomic Energy Agency (IAEA), the U.N.'s nuclear watchdog, has permanently stationed a team of observers at the station along with Ukraine’s three other working plants. The agency has "repeatedly" acted as an 'intermediary? when disputes arise. Last month, it helped to arrange a local truce in order for repairs to be carried out and external power connections restored.
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Ukraine prepares for harsh winter after Russian attacks on economy
Officials in Ukraine warned that the country is bracing itself for a harsh winter, as Russian attacks on its infrastructure and export industries compound a growing budget crisis. The Economy Minister Oleksandr Kravchenko stated that the damage to Russian infrastructure and fixed assets was estimated to be close to $10 Billion this year. In addition, the wider economic costs and de facto blocking of its ports are seen as about 1.5 percentage points on the gross domestic product. Kravchenko stated that "we anticipate a difficult winter, both in terms critical infrastructure which is destroyed by Russian attacks every day, as well as the overall economic situation in the country." He told diplomats, investors and officials at a YES Conference in Kyiv that "this all happens when the budget is very tight and fiscal?space is extremely constrained." Russia and Ukraine are increasingly targeting each other's economic assets and logistics networks to try and undermine the other's war efforts. Since more than two weeks, Russia has been launching near-constant attacks on Kyiv, using jet-powered drones that are faster. This has disrupted life, business, and government operations. Both Russia and Ukraine deny that they deliberately target civilians during air strikes. Moscow has also blocked Ukraine's Black Sea port by intensifying air strikes on the southern regions of the country. Kravchenko stated that the blockade could result in a loss of about $40 billion dollars in export revenues. Ukraine's major exports, agricultural products and steel and iron, are shipped through its Black Sea port. Budget Revenue Falls Behind The domestic budget has been under pressure as Russian attacks have damaged infrastructure and industry. Roksolana Piedlasa is the head of the budget committee of the parliament. She said that domestic revenue was $1.35 billion below expectations in the first eight month of the year. A quarter of these losses were recorded just in August. She said that the war is becoming more expensive and Ukraine cannot fully fund its defense needs with domestic resources as it did in previous years. In the first eight-month period of this year, Ukraine spent about $42 billion for its defence. This does not include in-kind support. Pidlasa stated that domestic revenue generation and borrowing from local sources only yielded $39 billion during this period. She said, "Unfortunately this year the war is so expensive that we cannot even cover our own share of the costs." She said that the daily cost of war increased to $190 million in this year, compared to $140 million by 2024, due to inflation, an increase in troop numbers, increasing social payments to families of fallen soldiers, and a higher consumption of ammunition. Ukraine will face a?funding gap for its defense through the end this year. The government is trying to find ways to reduce or delay non-military spending, and is in negotiations with its Western allies on financial support. But so far there hasn't been a clear solution.
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Moscow claims that it has hit ships and plants in Ukraine. Six people have been killed.
Officials said that Russian air strikes on Saturday in various Ukrainian regions killed six people and injured dozens. They also damaged infrastructure, residential buildings, and residential areas. In the last two months, civilian deaths in Ukraine have risen dramatically as Russia intensifies its attacks on infrastructure and 'power plants. Ukraine has attacked energy facilities and storage warehouses in remote parts of Russia, and both sides have targeted shipping. Vitaliy Bunechko is the governor of Ukraine’s Zhytomyr Region west of Kyiv. He said that a Russian attack on a grocery shop in Zvyahel killed two people. He said that two petrol stations, as well as a "foreign-invested enterprise" unidentified by him were also attacked. Volodymyr Zelenskiy, the president of Ukraine, reported earlier that attacks had been carried out in Kryvyi Rih and Zaporizhzhia?in the south-east. Ivan Fedorov is the governor of Zaporizhzhia Region. He said that two people have been killed and eleven injured in attacks on Zaporizhzhia, and other areas. Oleksandr Vilkul is the head of Kryvyi Rih’s military administration. He said that two people were killed overnight in attacks on?the city. The Russian military claimed that its forces had attacked Ukrainian steelmaker Zaporizhstal in the city of Zaporizhzhia. They also said they hit the Interpipe Steel Complex in Dnipro, several plants in Kryvyi Rih including the Northern Iron Ore Benefitation Works complex. It was impossible to independently verify the accounts of either side. Oleh Kiper said that in Odesa Region 37 people including an infant were injured overnight. Two people are missing. The Russian Defence Ministry stated that Moscow's forces have continued their strikes against Ukrainian ports. It claimed to have hit a cargo vessel in Odesa, which was carrying military goods. The ministry announced earlier in the day that its forces had hit two cargo ships overnight in the Black Sea port of Chornomorsk. Ukraine's military claimed it had caused a fire at one of Russia's biggest synthetic?rubber manufacturers in Togliatti?in the Samara area. It said that the Togliattikauchuk factory specialised in producing synthetic rubbers and fuel additives used in fuel for Russian missiles. Interfax reported that Russian regional governor Vyacheslav Federishchev claimed that Ukrainian drones had attacked industrial facilities in the?Samara Region, but did not specify which ones or whether they were damaged. Ilya Sukhikh, the mayor of Togliatti, in Samara Region, reported that several residential buildings had been?damaged, and one person injured. Svetlana Kambulova, the local mayor, told TASS that four commercial properties in Taganrog, in the Rostov Region, were also set ablaze.
Nikkei reports that Chubu Electric's president will resign after nuclear data scandal
Nikkei reported that the president of Japan's?Chubu?Electric?Power is expected to resign following a?finding?that the firm?had?falsified?seismic?data in its application for restarting the Hamaoka Nuclear Power Plant.
The paper reported that Chubu would withdraw its request to restart two nuclear units at the?plant.
Chubu's Hamaoka nuclear plant in central Japan was undergoing a safety assessment in order to restart its reactors. Japan's nuclear regulator had suspended an investigation following the data scandal. On Monday, Chubu released its investigatory report.
The incident could derail Japan’s efforts to restart its nuclear reactors. All 54 were shut down in 2011 after the Fukushima earthquake.
In the first half of this year, Tokyo Electric Power restarted Kashiwazaki Kariwa, which is the largest nuclear power station in the world.
The Nikkei reported that the resignations of Kingo Hayashi, President and Chairman of Chubu Electric, as well as Minoru Yasui who is currently an executive director, will be announced Monday.
Separately Chubu?said that it altered documents submitted to Japan’s nuclear?decommissioning funds manager in relation to the No. 1 ?and No. There are 2 plants being demolished at Hamaoka.
(source: Reuters)