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Oil prices drop on forecasts of demand, but global stocks gain
Global equities rose on Wednesday, after mild inflation data confirmed that the Federal Reserve would keep interest rates unchanged. Oil prices fell as investors weighed a drop in demand against an impasse in U.S. - Iran talks. Separate attacks on ships were reported by the United States and?Yemen?s Iran-aligned Houthis. Oil prices dropped as investors considered lower demand projections. Data released on Wednesday showed that U.S. consumer price index increased by 0.1% in July. This was in line with the expectations. This small increase may weaken the case for a Federal Reserve interest rate hike next month. Money markets had a 50% chance that a rate hike would occur before the release of data. Robert Pavlik is a senior portfolio manager with Dakota Wealth Management, Fairfield, Connecticut. He said that the data "relieves a lot of concerns" about the Fed being forced to raise rates due?to higher energy prices, which are fueling inflation. The data has dented bets on rate hikes. U.S. Treasuries gained, resulting in higher yields. Data did not reflect the recent increase in oil prices, which have "hurtled" higher amid tensions with Iran and the U.S. The MSCI index of global stocks rose by 0.33%, to 1,154.42. Wall Street saw the Dow Jones Industrial Average rise 0.05% to 53.820.52, the S&P 500 add?0.31% at 7,752.45 while the Nasdaq Composite rose 0.64% at 26,613.91. CoreWeave's positive results after the close of the Tuesday market gave the AI industry a boost. Other AI infrastructure providers rose as well. The STOXX 600 index fell by 0.16% in Europe. The broadest MSCI index of Asia-Pacific stocks outside Japan, closed up by 0.92% to 1,636.51 in Asia. Emerging Market Stocks rose by 0.95% to 1,681.25. Talks to End the War in Iran Continue The markets were still closely following the talks to end war and open the Strait of Hormuz for shipping traffic. Both the U.S., and Yemen's Houthis who are aligned with Iran, reported separate attacks against shipping on Tuesday. Meanwhile, both Iran and U.S. rhetoric has increased in recent days. Iran's top security official stated on Tuesday that the Strait of Hormuz will remain closed until the U.S. agrees to Iran's terms. Investors have remained calm. Dorian Carrell is the head of Schroders' multi-asset income. We don't think the Strait of Hormuz will be at full capacity. This puts a floor under the oil prices and keeps an energy-driven inflationary force in the markets for?the short-to-medium-term." After forecasters lowered their projections for global demand in 2026, oil prices dropped after rising $1 earlier during the session. Brent crude futures fell by 0.37%, to $88.58 a barrel. U.S. crude dropped by 0.26%, to $82.98. BOJ HEADING UP? MARKETS PREDICT A BOJ INCREASE The yield on the benchmark U.S. 10 year notes dropped 1.6 basis points, to 4.668%. The markets are increasingly pricing in an early rate increase in Japan. This puts pressure on Japan's short-dated bonds. Investors have priced in a nearly 60% chance of an increase of one quarter point at the Bank of Japan meeting of September. The yen has weakened by 0.07%, to 159.39 dollars per yen. This is still below the highs of last week of 155.20. The dollar index, which measures greenbacks against a basket including the yen, the euro and other currencies, increased by 0.15%, reaching 99.95. However, the euro fell 0.1% to $1.1528. Spot gold increased by 0.88%, to $4405.10 per ounce. (Reporting from Samuel Indyk and Rocky Swift in London, Chris Prentice and Sinead carew in New York, and additional reporting from Sinead carew; editing by Edwina gibbs, Stephen Coates and Barbara Lewis)
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Gold reaches a two-month high as US inflation data dampens bets on rate hikes
Gold rose to a two-month high after the?U.S. The?inflation rate was in line with expectations, which boosted bets on the Federal Reserve keeping rates at current levels. Spot gold increased 0.9% by 1:30 pm EDT (1730 GMT) to $4,406.64 an ounce, and rose above the 100-day average, currently $4,387.22. Bullion rose more than 1% in the morning session to its highest level since June 5. U.S. Gold Futures closed 0.6% higher, at $4,467.5. The Fed's argument to raise interest rates next month could be weakened by the fact that U.S. consumer prices grew slightly in July. It increased by 0.1% in July, which is on par with expectations, after falling 0.4% in June. The CPI data was?encouraging. The CPI data was higher than the previous month but in line with estimates, as well as a "weaker dollar" and technicals, which all helped gold piggyback," Marex analyst Edward Meir stated. According to CME FedWatch, traders now price in a 40% chance that the Fed will raise interest rates at its September meeting. This is down from 46% prior to the inflation data. On July 29, the Fed?left its benchmark policy rate at 3.50%-3.75%, despite three policymakers voting against it, who favored a rate increase instead. Gold that does not yield tends to be less attractive in an environment with higher interest rates. The Producer Price Index (PPI) is due Thursday. Separate attacks by the U.S., Yemen's Iran aligned Houthis and the U.S. on Tuesday were reported as the prospects of ending the Iran War appeared dim. Meir stated that a resumption of hostilities could cause oil to move up again towards $100. In this case, you might see interest rates rise and gold struggle. Silver spot, among other metals rose by 1.3%, to $65.49 an ounce. It had reached its highest level in June 22 during the previous session. Palladium rose 0.5%, to $1367.23, while platinum rose 0.9%, to $1759.50. (Reporting by Sukanya Mitra in Bengaluru; Editing by Leroy Leo and Diti Pujara)
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Investors weigh down lower demand on US-Iran talks and the oil prices are little changed
After forecasters reduced their projections of global oil demand for 2026, the price of crude oil remained stable in volatile trading on Wednesday. Meanwhile, attacks on Middle East ships continued, and talks to end Iran's war reached an impasse. Brent futures fell 3 cents to $88.88 per barrel at 12:10 pm. ET (1610 GMT). U.S. West Texas Intermediate Crude rose?11 Cents, or 0.12%, to $83.31. In its monthly report on the oil market, the Organisation of the Petroleum Exporting Countries (OPEC) lowered its forecast for world oil demand growth to 580,000 barrels a day by 2026. The International Energy Agency, another rival forecaster, has lowered its demand projections for 2026 and expects to see a 1.6-million bpd decline this year. The Paris-based agency predicts a 4.3m bpd decline in supply for this year and a deficit of around 1.27m bpd by 2026. Anas Alhajji said in a recent note that the demand for energy has dropped significantly. He warned, however, the demand figures included inventory changes, and could therefore differ from actual consumption. The Energy Information Administration reported on Wednesday that U.S. crude oil stocks rose unexpectedly last week, and had their biggest weekly gain since the start of 2023. Analysts say the build in inventories last week is mainly due to unusually low crude exports, and an increase in imports. TWO SHIPS ATTACKED MIDDLE EST? Prices rose after a senior Iranian official said that there had been 'no discussion between the U.S. and Iran to extend the ceasefire agreement because the deal, according to Tehran, did not have a start date. On Tuesday, the U.S. reported that the Houthis of Yemen and Iran-aligned Houthis of Yemen had launched separate attacks against shipping in the Strait of Hormuz as well as the Bab el-Mandeb Strait. These are two vital export routes for Middle Eastern gas and oil in addition to the Suez Canal. The number of vessels that transited Hormuz on Tuesday fell to a low of just eight, a week-low. 125-140 vessels used to pass through this vital waterway every day before the war. (Additional reporting by Shadia Naralla, Robert Harvey Sam Li and Colleen Waye. Jan Harvey, Mark Potter, and Chris Reese edited the article.
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BofA will take 49.9% of Jio Credit in India for $1.9 billion
In a deal worth 182.68 billion rupees (about $1.92 billion), Bank of America will take up to 49.9% stake in Jio Financial Services' non-bank lending division. The U.S. lender is expanding its presence in India’s rapidly growing financial sector. Bank of America and Jio Credit announced on Wednesday a preferred allocation of equity shares, warrants, and other securities. BofA initially holds a stake of 26.5% in the transaction. This could increase to 49.9% if warrants are exercised. As part of this deal, Jio Credit will sell shares and warrants up to 66.13 Billion Rupees. BofA CEO Brian Moynihan stated that by combining Jio Financial Services’ scale, local expertise, and customer base with Bank of America's global presence,?digital experiences, and nearly 250 years of banking leadership, they can expand access to financial products and services, and support India's economic growth. A BofA spokesperson said that the deal is subject to approval by regulators and is not an expansion of retail banking in India. This is the latest large investment by foreign companies in India's Financial Services, following the investment of Japan's MUFG in Shriram Finance as well as the acquisition by Dubai-based bank Emirates NBD of a 60% stake at lender RBL Bank. Jio Credit is one of India's fastest growing NBFCs. Its assets under management reached $3 billion at the end of June, just two years after it began operations. Jio Financial is a listed company in 2023, after a demerger from Mukesh Ambani’s Reliance Industries. It operates businesses like digital lending, payment, insurance brokerage, and asset management services. Through its joint ventures with BlackRock, the company provides asset and wealth management services. The company has also formed a joint venture with Germany's Allianz for general and health insurance.
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Gold reaches a two-month high as US inflation data dampens bets on rate hikes
Gold rose more than 1% to a two-month high on Wednesday, supported by a weaker dollar following a U.S. reading of inflation that matched expectations. This boosted bets on the Federal Reserve keeping rates at current levels in September. Gold spot rose by 1.1%, to $4,414.32 an ounce, at 11:50 am EDT (1550 GMT). It also climbed above its 100-day moving median, which currently stands at $4,387.28. Bullion scaled to its highest level since the 5th of June earlier in this session. U.S. Gold Futures increased 0.7% to $4474.00. The Fed's argument to raise interest rates next month could be weakened by the fact that U.S. consumer inflation rose slightly in July. The rate of inflation in the U.S. increased by 0.1% in July, which is on par with expectations, after falling 0.4% in June. The CPI data was?encouraging. The CPI was higher this month than last, but in line with expectations, "along with the weaker dollar, and technicals that have all helped to piggyback gold on it", Marex analyst Edward Meir stated. Dollar-priced gold is now more affordable to buyers abroad, thanks to a slight decline in the U.S. index. According to the CME FedWatch Tool, traders now price in about 40% of an interest rate increase at the Fed meeting on September, down from the 46% they had before the inflation data. On July 29, the Fed left the benchmark rate unchanged, ranging from 3.50% to 3.75 %, but three out of twelve policymakers who voted against it preferred a rate increase. Gold that does not yield tends to be less attractive in a higher interest rate environment. The Producer Price Index (PPI) is due Thursday. As the prospects of ending the Iran War appeared to be fading, both the U.S. as well as Yemen's Iran aligned Houthis launched separate attacks on shipping on Tuesday. Meir stated that a resumption in hostilities could cause oil to move back towards $100, and you might see rates rise. Gold may also struggle. Silver spot rose 1.5%, to $65.64 an ounce. It had reached its highest level in June 22 during the previous session. Palladium rose 1%, to $1373.58, and platinum gained 1.5%, to $1769.80. (Reporting by Sukanya Mitra in Bengaluru; Editing by Leroy Leo and Diti Pujara)
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Oil stocks rise globally, but US CPI remains stable
Oil prices fell on Wednesday as traders awaited the outcome of talks to end Iran's war. U.S. inflation data showed only a small increase, which dampened some expectations about a Federal Reserve rate hike. The U.S.-Iran talks were at a standstill. Both the United States and Yemen’s Iran-aligned Houthis have reported separate attacks on ships. Oil prices fell as investors took into account lower demand expectations. Data released on Wednesday showed that U.S. consumer price index increased by 0.1% in July. This was in line with the expectations. This small increase may weaken the case for a Federal Reserve interest rate hike next month. Money markets had a 50% chance that a rate hike would occur before the release of data. Robert Pavlik is a senior portfolio manager with Dakota Wealth, Fairfield, Connecticut. The data shattered rate-hike bets, and gold prices increased by more than 1%. Data did not reflect the recent increase in oil prices, which has risen amidst tensions between the U.S. The MSCI index of global stocks rose by 0.37%, to 1,154.92. Wall Street saw the Dow Jones Industrial Average rise 0.10% to 53.848.98. The S&P 500 rose 0.31% to 7.752.35 while the Nasdaq Composite gained 0.65% to 26,617.60. CoreWeave, a cloud-based AI company, released positive results after the markets closed on Tuesday. This gave a boost to the AI trade. The pan-continental STOXX 600 index fell 0.04% in Europe while the broad FTSEurofirst 300 Index lost 0.09%. The broadest MSCI index of Asia-Pacific stocks outside Japan, closed up by 0.92% to 1,636.51. Emerging Market Stocks rose by 1.05% to 1,682.95. Talks to End the War in Iran Continue The markets were still closely following the talks to end war and reopen Strait of Hormuz for shipping traffic. Both the U.S., and Yemen's Iran aligned Houthis, reported separate attacks against shipping on Tuesday. Iran and the U.S. both have increased their rhetoric over recent days. Iran's top security official stated on Tuesday that the Strait of Hormuz would remain "closed" unless the U.S. accepted Iran's demands. Investors have remained calm. Dorian Carrell is the head of Schroders' multi-asset income. We don't think the Strait of Hormuz will be at full capacity. This puts a floor under the oil prices and keeps an energy-driven inflationary force in the markets for?the short-to-medium-term. Brent crude futures fell by 0.26%, to $88.68 a barrel. U.S. crude dropped by 0.49%, to $82.79. The benchmarks for both Brent and U.S. crude oil settled higher by more than $1 on Tuesday. This was their highest closing since July 31. Markets anticipate a BOJ hike The yield on the benchmark 10-year notes of the United States fell 1.81 basis points to 4.666% and that on German benchmark Bunds of 10 years. The yield on benchmark 10-year U.S. notes dropped 1.81 basis points, to 4.666%. And the yield on German 10-year Bunds also fell 3.77 basis?points, to 3.139%. The markets are pricing in a rate hike early in Japan. This puts pressure on Japan's short-dated bonds. Investors have priced in a nearly 60% chance that the Bank of Japan will raise rates by a quarter point at its September meeting. The yen gained 0.11%, to 159.08 per dollar. This is still below the high of last week of 155.20. The dollar index (which measures the greenback versus a basket including the yen, the euro and others) fell by 0.08%, to 99.73. Meanwhile, the euro rose 0.1%, at $1.1552. Spot gold increased by 1.61%, to $4436.99 per ounce. (Reporting from Samuel Indyk and Rocky Swift in London, Chris Prentice and Sinead carew in New York; additional reporting by Sinead carew; editing by Edwina gibbs Stephen Coates and Barbara Lewis.
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India and Southern African Customs bloc renew trade pact discussions
India and the five members of the Southern African Customs Union signed terms-of-reference on Wednesday, to begin talks on a preferred trade agreement. New Delhi is seeking lower tariffs for exports such as cars, pharmaceuticals, and industrial machinery. After five rounds of talks that ended in 2010 without an agreement, the move brings back India's negotiations with SACU. SACU is made up of South Africa, Botswana Namibia, Lesotho, and Eswatini. The agreement could be India's first significant trade agreement with a regional African bloc. It would give Indian companies access to 65 million people in Africa while also helping SACU members increase their exports?to the fastest-growing major economies of the world. The scope, objectives, and procedures of the negotiations are determined by the terms of reference. A preferential trade agreement is different from a comprehensive?free trade agreement because it usually cuts duty on a list of agreed products and less likely to cover services, investments or intellectual property. South Africa is considering raising the duty on autos imported from India and China from 25% to 50%, which would threaten a major Indian export. After signing the agreement, Ndiitah Nghipondoka Roberti, executive director of Namibia's Ministry of International Relations and Trade with Yashvir Singh (an additional secretary in India's Trade Ministry), said that these terms would guide negotiators to a "balanced and mutually beneficial agreement oriented towards development." India's trade minister Piyush Goyal expressed his confidence that SACU and India will "benefit enormously" from an equitable, balanced, and fair agreement which he hopes to finalise within the next few months. Trade officials and industry representatives have said that India is expected to seek duty concessions on automobiles and auto components, pharmaceuticals, machines, electrical equipment, textiles, and chemicals. In the fiscal year ending March 2026, India's exports to SACU were $1.7 billion in value. India's exports totaled $7.5 billion to SACU in 2025/26. Imports were $9.2 billion. South Africa accounted for the majority of trade, with Indian exports totaling $7 billion and imports $9.2 billion. New Delhi also seeks to improve its access to SACU's supply of minerals that are critical for manufacturing, batteries, and clean energy technologies, such as manganese, platinum group metals, and copper. Manoj Kumar is the reporter. (Editing by Alison Williams, Mark Potter and Alison Williams)
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Hungary seeks to cool nuclear plant using Danube engineering
In a video posted on Facebook, Peter Magyar, the Prime Minister of Hungary said that the government would carry out engineering works?on the Danube River to raise water levels and ensure cooling for Paks Nuclear Plant. In recent weeks, the Danube fell to record lows amid a heatwave and a drought that lasted across Europe. The plant is now only operating at around 25% of capacity with only two out of eight turbines still running. The summer droughts have caused havoc on the European power industry, shipping and health care systems. Romania's neighbor, for instance, may shut down its final working?reactor Thursday due to the continued fall in levels of the Danube, despite attempts to divert cooling?water to?the plant. The engineering work that will be done in Hungary includes a "riverbed sill", which is a submerged dam-like structure, built across the bottom of a channel to regulate water flow. RAISING WATER LEVELS The military will help to start the construction of the sill immediately, using nearly 150,000 cubic metres of stone. This will cost approximately 6 billion forints (19 million dollars). Magyar stated that the river sill could raise the water levels by as much as 1 meter and ensure that within a few weeks, the plant will be back to full capacity. Magyar stated that "the prolonged low water level on the Danube is causing immense damage to the Hungarian budget and economy. This is why we need to find a?solution that can be implemented 'immediately. He also said that preparations were made for the possible sinking of two barges of 80 meters 'as a temporary measure, as the water levels will drop further within the next four to five day, leading to the shutdown of the nuclear power plant. Magyar stated that sinking the 'barges' could raise the water level by 20 centimeters within a short time period, allowing the facility to operate during the construction of the riverbed sill. On Friday, the government will decide whether or not to sink barges.
Investor rewards boosted for top US refiners as profits soar
Fuel prices and refinery margins soared in the second quarter, as a result of the disruptions of crude oil supplies via the Strait of Hormuz. Analysts said that the massive profits of refiners and their strong buyback programs were likely to continue in the third quarter. This highlights how U.S. fuel?makers are among the largest financial beneficiaries from the Iran War. International buyers are willing to pay higher prices to secure supplies due to the disruption of global energy shipping caused by the conflict. The attacks on Russian oil refineries have further restricted supplies and increased prices for consumers already under inflationary pressure. Marathon Petroleum, Phillips 66, and Valero Energy, three of the largest independent U.S. oil refiners have earned combined profits in the quarter of $12.6 billion, the highest since Russia invaded Ukraine 2022. Simon Wong, Gabelli Funds Portfolio Manager said that to say they made "a lot of money" is an understatement. According to calculations by? Calculations show that the three refiners returned $6.3 billion to shareholders through stock repurchases and dividends in the second quarter, which is the highest amount for more than two-years. This compares to $2.6 billion in profits returned during the same period last year, which totaled $2.9 Billion.
Jason Gabelman is an analyst with TD Cowen. He said, "We believe the buyback program will continue to be pretty robust" for Valero.
Gabelman estimates that between the third and end of the year, the two refiners would repurchase around 20% of their current market value. Valero's value is around $90.1 billion, while Marathon is worth about $91.3 billion. Gabelman stated that Phillips 66 is 'expected to repurchase around 10% of its $81.2 billion market value, due to its increased focus on debt reduction and growth investments. Phillips 66 approved a $10 Billion increase in its share repurchase programme by the board of directors. A filing revealed that Valero Energy had authorized a $5 billion share purchase program to be added to its existing $2.5 billion program. HF Sinclair, a smaller rival, increased its quarterly dividends by 5%.
Marathon shares, the largest U.S. refiner based on volume, have risen around 110% in value to $342 as of Wednesday. Valero shares, the second largest U.S. refining company by capacity, have risen more than 98%. Phillips 66 shares are up around 75%. This compares to the S&P 500's energy sector, which has seen a 36% increase so far this year.
CAUTIOUSLY OPTIMISTIC Fuel supply disruptions that have slashed global inventories, have pushed U.S. gasoline crack spreads and diesel crack spreadings, a measure for refiner profitability to record levels.
On?August 10, the ultra-low sulfur futures crack spread reached a new record high of $93.84 a barrel. On July 17, the U.S. gasoline crack spread reached $60 per barrel, its highest level since early 2020. For the first time since more than three decades, the average U.S. 'price at pump' rose above $4 per gallon by the end of march. This was the largest monthly increase in many years. Refining executives are cautiously optimistic as we enter the second half of this year. Typically, the demand for gasoline and heating oil is weaker during the transition from summer driving to winter heating.
Rick Hessling said that product margins are still robust but have slowed down from their previous levels in the second and early parts of the third quarters. He made this statement during a conference call with investors held earlier this month. Gary Simmons, Valero Energy's chief operating officer, stated that Valero had benefited from strong jet fuel margins during the second quarter. However, this support has not been present in the third. He said that an arbitrage opportunity had reopened in the jet fuel exports into Europe. The company also expects the jet fuel margins will improve over the rest of the quarter, as refiners switch from winter diesel specifications.
Simmons: "I'm sure we'll see the jets get stronger as we progress through the quarter."
(source: Reuters)