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Gold prices rise as oil prices fall, easing inflation and rate hike fears
Gold prices rose by 1% on Tuesday, boosted by lower U.S. Treasury yields. Meanwhile, oil prices fell, easing fears of rising inflation and interest rates. By 1136 GMT, spot gold had risen 1% to $4,526.7 per ounce. U.S. gold for August delivery rose 1.2% to $4,58.60. After U.S. president Donald Trump announced that talks with Iran are ongoing, oil prices dropped. Lower fuel prices reduce inflation fears and may also help to reduce bets on higher interest rates. Gold is traditionally viewed as a hedge to inflation. However, in an environment of high interest rates it loses its appeal as a non yielding asset. Ole Hansen, analyst at Saxo Bank, said that gold continues to take cues from the oil market, given the crude's influence over inflation expectations, and by extension, interest rate, bond yields, and the dollar. The metal is still in a short term downtrend. A break above $4.630 would?signal more positive outlooks and possibly attract new momentum buying." The yield on 10-year U.S. Treasury notes fell by 1.1%. This reduced the opportunity cost for holding non-yielding gold. Lebanon announced a partial truce between Hezbollah, Israel and Lebanon on Monday. This would be a de-escalation in a conflict that has claimed thousands of lives and fueled the broader U.S./Israeli war against Iran. Investors are now awaiting the U.S. Nonfarm Payrolls Report for May due on Friday to assess the resilience of the labour market in light of'mounting concerns' about inflation caused by the Middle East conflict. This week, there will be a number of Federal Reserve Board members speaking, including Cleveland Fed President Beth Hammack and San Francisco Fed president Mary?Daly. "We remain optimistic over the long term as economic growth risk, worsening geopolitical relationships, currency 'volatility, and downside risks in equity?markets, will continue to support?gold's role as a?portfolio diversifier", ANZ stated in a report. Silver spot rose by 2.1%, to $76.39 an ounce. Platinum gained 1.4%, to $1950.95, and palladium rose by 1.3%, to $1379.77.
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Stocks rise on AI optimism, but jitters about Iran simmer
On Tuesday, global stocks rose, boosted by fresh AI optimism following Anthropic's move towards a U.S. Stock Market listing. Oil prices and bond yields also fell, on renewed hope of a U.S. Iran deal. Brent crude futures fell more than?1% under $94 per barrel on Tuesday, reversing the sharp gains of the previous session, after U.S. president Donald Trump stated that talks with Iran continue. The comments were made despite reports that Tehran had suspended indirect talks with Washington in order to end hostilities. This has kept investors on edge about the efforts to end the 3-month war, and highlighted the fragility of a continuing ceasefire. The STOXX 600 index in Europe was up 0.7% at midday on the back of a positive forecast by chipmaker STMicroelectronics. AI ENTHUSIASM Anthropic'said Monday that it had filed a confidentially for a U.S. Initial Public Offering, edging out rival OpenAI in a closely-watched race to'reach public markets. Alphabet, the parent company of Google, is also looking to raise $80 Billion in equity to finance its AI infrastructure expansion. This is a clear indication of the huge sums required to keep pace with the AI arms race. Russ Mould said that it represents a major shift from a period where there was a lot of free cash to relying on the markets for funding its expansion. The Institute for Supply Management reported on Monday that the U.S. manufacturing PMI increased to 54.0 from 52.7 in the previous month. This was a significant increase, and beat expectations of a four-year-high. It is likely due to firms placing orders ahead of time amid rising prices, and supply concerns related to the Iran War. Futures for the S&P 500, Nasdaq 100 and Dow Jones Industrial Average were all down between 0.1% and 0.2%. This indicates a weaker opening after both indexes had posted an eighth consecutive gain on Monday. This is the first time the S&P has had eight consecutive days of gains in a calendar year. If you consider the weekly moves, the S&P would have its 10th consecutive week of gains, something that hasn't happened since 1985, according to Deutsche Bank strategist Jim Reid. Nvidia's CEO Jensen Huang told reporters in Taipei that the company has enough supply to support a strong growth of central processing units (CPUs). South Korean equities are volatile. The benchmark KOSPI has swung sharply lower, after reaching a record high, as bellwethers such as Samsung Electronics or SK Hynix sawsawed. The dollar was slightly lower on the currency markets. The euro, which is still 1.5% lower than its value at the beginning of the war, rose by 0.1% to $1.1646. The euro zone core inflation rate was 2.5% in May, which is higher than the 2.4% expected and 2.1% for April. Money markets are pricing in a quarter point increase by the European Central Bank this month and at least another one before year's end. Bond yields fell by nearly 5 basis points, to 4.429%. Germany's Bund yield fell 6 bps, to 2.953%. Gold increased 1% to $4,527 per ounce. Gregor Stuart Hunter contributed additional reporting from Singapore. Stephen Coates and Mark Potter edited the article.
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Britain targets 87% reduction in emissions by 2040
The UK announced a goal on Tuesday to reduce emissions by 87% from 1990 levels by 2040. It has not yet specified how it will achieve this target. The reduction of carbon emissions is in line with the international effort to reduce global warming. According to the Labour government, cleaner energy will help the country to be more protected from the volatility in fossil fuel prices that has been exacerbated due to the Iran War. Energy Minister Ed Miliband stated in a press release that "Britain faces the second fossil-fuel shock of the decade. The only way to protect the finances of families and businesses is to move towards clean, domestic power we can control." The surge in energy costs this year is due to an unprecedented disruption of supply in the Middle East. This follows a similar spike in fossil fuel prices in 2022, when Russia invaded Ukraine. After the regulator Ofgem raised its price cap in response to an increase in wholesale gas costs, millions of households will see their energy bills rise by 13%. A TECHNOLOGY CHANGE AND LESS MEATS The price hikes of fossil fuels have caused divisions both in Britain and abroad between those who want more drilling for oil and gas and others who are pushing for a greater use of renewable energies. Climate Change Committee, which recommended the target last year, said that meeting the government's emission goal would require significant investment in low-carbon technology such as renewable energy, heat pumps, and?electric cars, and lifestyle changes, such as a reduction in meat consumption. The aviation emissions must also be reduced, and this would mean less flying. The opposition Conservative Party retracted its support for the 2050 target of net zero, claiming it was impossible. Britain's greenhouse gases emissions have dropped by 54% since 1990, with a 2% drop per year in 2025. This was largely because of a reduction in emissions from the industrial sector after blast furnaces were closed in the iron and steel industries. The government has said that its support for clean energy will create jobs. The report cited by the Confederation of British Industries Economics and the Energy & Climate Intelligence unit, which was also published on Tuesday, showed that the net zero economy supported more than one million jobs across the country. The government announced that a plan to achieve the emission reductions would be published in the shortest time possible after the parliament approved the target.
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Shock to the equity supply?
What is important in the U.S. and international markets today by Mike Dolan Editor-at-Large of Finance and Markets The 'global markets' appeared to be calm early on Tuesday. However, the latest AI twist and another set of confusing signals regarding the Iran conflict were hidden. Anthropic, an AI startup, stole the show Monday when it announced that it had confidentially 'filed' for an IPO. It seemed to beat rival OpenAI and catch the slipstream of SpaceX IPO which is expected in this upcoming month. Below, I'll get into this and more. Check out my most recent column about how the AI frenzy may be a greater inflation concern than the Iran energy scare. Listen to the Morning Bid podcast. Subscribe to the Morning Bid daily podcast and hear journalists discussing the latest news in finance and markets seven days a weeks. EQUITY SUPPLY SHOCKS? Alphabet raised $80 billion in equity funding, including $10 billion through a private placement with Berkshire Hathaway, while investors analyzed the Anthropic announcement. After hours, the Alphabet share price dropped by about 2%. These 'hyperscalers' have already raised tens and tens billions in new debt for their AI investments. But raising equity is another twist. The bigger question is whether investors will be able to stomach all of this new equity, especially at such'sky-high' valuations. The numbers are staggering. Anthropic's most recent funding round valued it at $965 billion, which is higher than OpenAI, and SpaceX's $75 billion planned offering valued it at $1.75 billion. It is important to know where this leaves the leaderboards of the top companies, the relative index weightings, and the concentrations of AI within equity benchmarks. Remember that in the past, huge IPOs have often been the culmination of speculative markets. Away from Wall Street the real AI demand continues to be strong. STMicroelectronics, Europe, rose 10% on Tuesday, its highest level since 2000, after it doubled their data-center revenue estimate for this year to $1 billion. Investors are increasingly concerned about how the AI scramble and chip buildout is impacting input and consumer costs, particularly as the U.S.-Iran talks on peace stall. Brent crude prices have retracted a bit from yesterday's 5% increase after President Donald Trump said that the talks with Iran will continue and could reach a conclusion this week. We've been in this situation before. On Monday, the fear was that Iran would maintain its red line and continue military exchanges. Oil prices may be down a little today, but year-end futures are still 30% higher than they were before the war began. This, along with the AI story, was summarized in the hot U.S. Manufacturing reading for the ISM survey. The headline factory activity index reached its highest level in four years. However, some questioned whether it was inflated by precautionary stockpiling. Input price component fell a little but is still high. Euro zone inflation increased to 3.2% as expected in May. A rate hike by the European Central Bank is expected to take place later this month. STMicro helped Europe's major stock indexes rise?early Tuesday, and Asian markets again benefited from the tech-driven excitement of Wall Street on Monday. Wall Street stock futures had fallen from Monday's record-breaking closing high. Long-dated U.S. Treasury rates were also a bit softer. Currency markets remained calm. Chart of the Day The S&P 500 Software Sector Index logged its largest monthly gain since November 2002 in May. It ended last week at its highest levels since late January, after strong results from Dell. The sector, which suffered a steep decline earlier this year due to concerns that AI agents might threaten traditional business models has nearly recovered all of its losses from 2026. Stocks like ServiceNow, IBM Adobe, Salesforce, Workday and others have continued this rally in the past week. The index also grew another 4% on Sunday. Watch today's events * U.S. JOLTS April job openings (10 am EDT) Beth Hammack, Cleveland Fed, speaks Want to receive Morning Bid every morning in your email? Subscribe to the newsletter by clicking here. Follow us on LinkedIn, X and ROI. The opinions expressed here are the author's. These opinions do not represent the views of News. News is committed to the Trust Principles and strives for integrity, independence and neutrality.
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India's record milk output is put to the test by extreme heat
* Extreme heat reduces milk production and fertility The cost of adaptation for small dairy farmers is rising Scientists warn that climate stress could threaten future output Bhasker Tripathi The baby was so tiny, it had almost no hair. Bharadwaj gave it milk and it slowly recovered. Scientists believe that such preterm births are a part of a larger pattern of intensifying summers, linked to climate changes. Bharadwaj’s?small farm? of six cows near Delhi, India is typical for millions of people in the country, which is responsible for a quarter or more of global milk production. Most of that comes from farms of between two and five cows. Dairy accounts for 5% of India’s GDP, and provides jobs to more than 80,000,000 farmers. The government predicts that demand for milk will increase as incomes rise and the population increases. Experts say that extreme heat causes cows to consume less food, produce less milk, have difficulty conceiving and produce fewer offspring. Farmers spend more money trying to keep their animals cool and fertile. Bharadwaj explained that "Milk Production Falls by Nearly 30% During Extreme Heat", describing the way in which falling output and increasing cooling costs are steadily eating away at his earnings. Record Production India's agricultural success story for decades was the rise in milk production, a result of crossbreeding programs designed to increase productivity while meeting growing urban demand. According to data from the government, India's production of milk reached a record high 239 million tonnes during fiscal year 2023-24, an increase of nearly 64% over a decade. Researchers, dairy experts and farmers claim that rising temperatures are exposing this model's vulnerabilities. According to scientists at the National Dairy Research Institute, heat stress can reduce feed intake as well as divert energy from reproduction and milk production. High-yield cows are especially vulnerable, as their metabolisms generate high levels of heat. Researchers found that heat stress causes more miscarriages, and reduces milk fat content. This is bad for farmers, who are paid based on the amount of solids and fat in their milk. Farmers spend more money on specialised feed and on water or electricity to cool down their animals. Bharadwaj invested 200,000 rupees (2,100 dollars) to modify his cattle sheds. He added tarpaulins and ventilation systems to reduce heat stress. Yearly maintenance cost another 50,000 rupees for repairs caused by?frequent storms. Pankaj Navani is a dairy entrepreneur who advises on climate adaptation for livestock. He said that larger dairy operators, such as those in Punjab, had adapted faster because they treat dairy more like a business and invest in cooling systems and ventilation, as well as feed management. Most dairy farmers have limited resources and a small number of cows, making such an investment difficult. Navani says that small backyard dairy operations of two to four cows will likely decline. Reduce Heat Stress Abhinav Garav, lead advisor of sustainable dairy practices at Environmental Defense Fund India (a Delhi-based nonprofit), said that farmers are more likely to invest into climate-resilient methods if they see clear economic benefits, but for households who already struggle with shrinking margins, it is difficult. NDRI has developed multiple strategies to reduce heat stress. These include breeding heat-tolerant cattle and improving shed design. Scientists in the country recently registered a heat resistant cattle breed that is designed to maintain milk production under hotter conditions. However, they claim it would take a long time to spread such interventions over millions of small farms. Scientists say buffaloes are sensitive to heat, as they depend heavily on water to regulate their body temperature. NDRI's research has shown that buffaloes who previously required wallowing only for a few months in the summer now require cooling?support between March and November. Government livestock data shows that crossbred and exotic cows account for a significant share of India's dairy output due to their productivity. Indigenous breeds, however, contribute a much smaller percentage, but are increasingly considered by some farmers to be better adapted to the rising temperatures. Bharadwaj stated that he selected indigenous breeds, such as Tharparkar, because they are more resistant to extreme heat and need fewer medical treatments than exotic breeds. Researchers warn, however, indigenous breeds may not be enough to solve India's dairy challenges in the long term. The dairy system in India was designed to increase productivity and meet the rising demand. Lower-yielding cattle could struggle to meet future demand without improvements in breeding and management, including feed management, cooling systems, and animal health. Companies are now offering heat stress products for livestock in India, as a result of repeated?heatwaves. IBISA is a Luxembourg-based company that offers parametric livestock insurance, which triggers payouts when temperatures exceed pre-defined thresholds. It has insured over 360,000 cattle in India across four heat seasons, and paid out more than $350,00 to farmers who suffered productivity losses due to extreme warmth. Officials from the company say that insurance only protects farmers to a certain extent against rising temperatures. "What farmers don't need is just insurance." Maria Mateo, CEO of IBISA, said that farmers need to become more resilient and adaptable to the heat. Bharadwaj, who farms near Delhi, is facing another challenging summer. The feed will need to be adjusted, and there will be more money spent on cooling and supplements.
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Copper reaches a two-week high amid US Tariff Uncertainty
The market was supported by tighter supply and tariff uncertainty outside the United States, as well as by a rise in copper. Aluminium also reached a four-year high. Benchmark three-month copper on the London Metal Exchange was up 1% to $13,966 per metric tonne at 0915 GMT, after touching $13,994 earlier. Investors will be waiting for a possible tariff recommendation by the U.S. Department of Commerce at the end of this month. Last year, the prospect of a similar duty helped to boost prices. However, it never materialised. Tom Price, an analyst at Panmure Liberum, said that investors with whom he spoke in the U.S. during last week's conference were interested in buying U.S. Copper equities are expected to be a hot commodity in the coming weeks. He said, "If it worked last time, it might work again this year." Price said that the elevated price does not reflect copper fundamentals. The White House on Monday changed tariffs for some imports of copper, iron, and aluminium, but it did not address the larger question about refined Copper that has caused regional market dislocation. The COMEX copper premium grew over the LME, resulting in increased shipments into U.S. storage facilities. Aluminum, on the other hand, rose 1.2% to $3,759.50 per tonne, after reaching $3,787.50 - its highest since March 2022 - as LME inventories The total has dropped to 335,450 tonnes, the lowest level in nearly four years. The cash LME Aluminium contract traded at a premium of $116.50 a ton over the forward three-month contract The tightening of the market is evident by the fact that. Price pointed to the slowing of Chinese exports and the loss of six million tons of supply per year from the war-torn Middle East. He said, "But copper and Tin just look like speculation playthings right now." Tin has risen by 2.4%, to $57.925. It is now within striking distance of its previous peak of $59 040, which was set in January of this year. Zinc rose 1.5% to $3.629.50. Nickel climbed 0.6% to $19360. Lead jumped 1% to $2,000.05. (Reporting and editing by Thomas Derpinghaus; Additional reporting by Dylan Duan, Lewis Jackson)
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Barry Callebaut identifies El Nino as having an impact on fuel prices and cocoa bean price, on the business.
El Nino could cause cocoa prices to rise by several thousand pounds per metric tonne, according to the chief executive of Barry Callebaut, one of 'the world's leading cocoa processors. El Nino, an 'climatic pattern that can increase temperatures and increase risk of extreme weather conditions, could reduce the yields of crops, including cocoa. This would limit supply and push up prices. Hein Schumacher, CEO of Hein Schumacher, said in a press conference that the prices shouldn't jump as much as they did over the past couple of years. London cocoa futures are trading at PS2,944 per ton ($3,964), down from over PS9,000 in April 2020. Schumacher said that "usually by the end of June and July you can sort of predict what El Nino will lead to." Barry, who was "very carefully" watching the phenomenon, noted the much higher rainfall in Ecuador, and the?much warmer temperatures in West Africa. World Meteorological Organization said that there is a 80% chance of an El Nino developing between June and August and a 90% probability it will last at least until November. El Nino occurs naturally every 2 to 7 years when weakening winds in the east Pacific cause surface water warming. This can cause higher temperatures around the world and disruptions to rainfall patterns, resulting in droughts and heavy rains in different regions. IRAN WAR-RELATED FUELS COSTS Schumacher said that he expected fuel to be the most affected by the war in the Middle East. Barry is concerned about the overall cost of next year. He said, "(Fuel has) a direct and indirect impact on our operations and on demand. We need to see how we can and want to mitigate that."
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Stocks rise as AI optimism offsets Middle East anxieties
The global stock markets rallied Tuesday,?boosted by new AI optimism following Anthropic's move towards a U.S. market listing. Meanwhile, oil prices and bond yields dropped on renewed hope of a U.S. Iran deal. Brent crude futures fell?more?than?1% to $94 per barrel, paring sharp gains from the previous session, after U.S. president Donald Trump announced that talks with Iran are ongoing. His remarks came despite reports that Tehran had suspended indirect talks with Washington for the end of hostilities. This has kept investors on edge about the efforts to end the war, which lasted three months. It also highlights the fragility and inadequacy of the ongoing ceasefire. The STOXX 600 index in Europe was up 0.8% this morning, thanks to a positive forecast by STMicroelectronics. AI ENTHUSIASM Anthropic announced on Monday that it had filed a confidential application for an initial public offering in the United States, beating rival OpenAI?in a closely-watched race to reach public markets. Alphabet, the parent company of Google, is also looking to raise $80 Billion in equity to finance its AI infrastructure expansion. This is a clear indication of the enormous sums required to keep pace with the AI arms race. Russ Mould said that it represents a major shift from a period where there was a lot of free cash to relying on the markets for funding its expansion. The Institute for Supply Management reported on Monday that the U.S. Manufacturing PMI increased to 54.0 from 52.7 in May, exceeding expectations of a four-year-high. This was likely due to firms placing orders early amid rising prices and concerns about supply linked to the Iran War. Futures for the S&P 500 & Nasdaq 100 are down about 0.1%. This indicates a weaker opening after both indexes had posted a record-breaking eighth consecutive gain on Monday. "This is the first time in a year that the S&P has had eight consecutive days of gains. If you consider the weekly moves, the S&P would have its 10th consecutive week of gains, something that hasn't happened since 1985, according to Jim Reid, Deutsche Bank's strategist. Nvidia's CEO Jensen Huang said in Taipei that the company had enough supply to support a strong growth of central processing units and graphics processing unit (GPUs), though he acknowledged that supply constraints are still a concern. South Korean equities are volatile. The benchmark KOSPI has swung sharply 'lower? after reaching a record high, as bellwethers such as Samsung Electronics and SK Hynix sawsawed. The dollar's value was largely stable on the currency markets. The dollar was broadly stable. The euro zone core inflation rate rose by?2.5% in May. This was above the expectations of 2.4% and April's 2.1%. Money markets are pricing in a quarter point European Central Bank rate increase this month. At least one additional hike is expected by the end of the year. The yield on the 10-year Treasury Bond in the U.S. fell by 4.4 basis points, to 4.43%. In Germany, it dropped by nearly 6 basis points, to 2.956%. Gold increased 1%, to $4,527 per ounce. Gregor Stuart Hunter, Singapore, contributed to this report. Stephen Coates, Mark Potter and Stephen Coates edited the article.
LA drivers continue to drive despite sticker shock and gridlock
Think again if you thought that the rising prices at the pump since the start of the Iran War would 'help clear the notoriously congested highways in?Los Angeles. According to government data, drivers in the gridlocked city of Los Angeles are used to sticker shock.
Caltrans, the California Department of Transportation, in an exclusive report for The Los Angeles Times, found that vehicle miles travelled on major Los Angeles freeways has not decreased significantly since February 28, when Israel and the U.S. attacked Iran.
This analysis covered eight weeks ending April 23. It examined traffic data from Interstates 405, 10 & 5. These are the busiest freeways in the country, and they're part of our cultural fabric thanks to Hollywood movies and viral news stories like O.J. Simpson's 1994 slow-speed chase with the police.
While most major freeway segments showed a slight increase or decrease, others had increases or declines as high as 9%.
Los Angeles resident Marco Falcon (?44) shrugged off the findings. The data confirms more than 20 years of research that shows U.S. demand for gasoline to be mostly inelastic, meaning drivers are unwilling or unable change their habits when prices rise.
In fact, a 2006 paper by the National Bureau of Economic Research found that drivers had changed their driving habits less when gasoline prices rose in the 2000s compared to the oil crisis of the 1970s.
According to AAA, the average price of a gallon in Los Angeles on Monday was $6.07. This is up 28% from last year and 36% above the national average.
Los Angeles drivers, Falcon said, understand that while they don't like paying higher gas prices, it is part of the price of living in a car-obsessed state.
"You've got to figure out your priorities," said Falcon. He continues to drive, because taking a?lower cost bus would take?three?to?four times as long.
Time is money to me.
According to the Los Angeles County Metropolitan Transportation Authority, the total weekday bus and rail ridership rose 1.6% between March and April compared to the previous year, while passenger miles increased 0.8%.
A spokesperson for the agency said that while high gas prices may have contributed towards the growth, the network has also added new stations and expanded into new areas.
Brian Taylor, research fellow at the Institute of Transportation Studies, University of California, Los Angeles, said that people don't really change their behavior.
Taylor explained that if traffic in Los Angeles sometimes appears lighter, this is due to the fact that small reductions of vehicles on Los Angeles' near-capacity highways creates outsized changes in flow.
Taylor stated that a 10% decrease in traffic could result in a 40 or 50 percent reduction in delays. (Reporting and editing by Andrea Ricci; reporting by Lisa Baertlein)
(source: Reuters)