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Australian shares snap a three-day losing streak as Banks and miners drive the Australian share price upwards
Australian shares rose Friday, ending three consecutive sessions of losses. Banks and miners saw gains, while Origin Energy shares fell to a new two-month-low after the company reported a sequential decline in its first quarter revenue. By 0004 GMT, the S&P/ASX 200 Index had risen 0.5% to 8,930.80. The benchmark closed Thursday 0.5% lower. Origin, a power producer, was one of the biggest losers in the benchmark index after it reported a 12% decline in revenue from its stakes in the Australia Pacific LNG Project. This was due to lower LNG prices and volumes. The firm's shares fell 6.3% to A$11.81 in their lowest trading session since April 7. Separately shares of insurance broker Steadfast Group were the biggest losers on the benchmark index, dropping up to 18.9% to A$5.03, their lowest level since November 16, 2022. After the company's bell rang on Thursday, Robert Kelly, its CEO and managing director, announced that he would temporarily step down from his position while an investigation was conducted by an outside party into a complaint lodged against him. On the local stock exchange, the banks rose 0.8% while the "Big Four", which includes the four largest banks, rose between 0.1% to 1.3%. Gold miners rose on the backs of higher gold prices, which boosted their gains by 1.2%. The shares of gold miners Evolution Mining (up 3.5%) and Northern Star Resources (up 3.8%) rose respectively. JB Hi Fi continued to fall for the second consecutive session. The firm had posted on Wednesday a dramatic sequential decline in sales growth for its Australia and New Zealand segment in the first quarter. Shares of Mayne Pharma, a potential acquirer, fell to their lowest intraday performance ever after it was revealed that Australia's Treasurer would block the A$672 ($436.67$) takeover. The benchmark S&P/NZX50 index in New Zealand rose 0.4% to 13,509.0.
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Hastings, Australia, to negotiate an offtake agreement with Ucore on Yangibana Project
Hastings Technology Metals, an Australian company, announced on Friday that its Yangibana joint-venture project in Western Australia had agreed to negotiate a possible offtake agreement with Ucore Rare Metals Inc. of North America. The Yangibana project for rare-earths, niobium, and other metals is a joint-venture with Wyloo Metals of Andrew Forrest, who holds 60%, and Hastings Rare-Earths, which has the remaining 40% via its subsidiary Yangibana Jubilee. Hastings CEO Vince Catania said, "The joint assessment of a downstream Hydromet facility in the U.S. shows the efforts made by Wyloo Ucore and Hastings for accessing the financing and commercial opportunity arising from a rare-earths agreement recently announced by the U.S. government and Australian government to support jointly "ready to go "projects." The deal could cover up to 37,000 tonnes of high-grade rare earth concentrate per year, while both parties evaluate the feasibility of building an downstream hydrometallurgy facility in Louisiana. Hastings stated in a press release that the parties would work to execute a definitive agreement. This is expected be finalised by June 2026. If the current momentum continues, shares of the Australian developer of rare-earths could rise as high as 19.3% and reach A$0.68. This would be their best session in over a week.
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SK Innovation expects Q4 margins to be resilient
SK Innovation Co Ltd, the owner of South Korea’s largest refiner SK Energy said on Friday that it expects the refining margins to remain stable in the fourth-quarter amid global supply disruptions as well as the onset winter peak demand. The company reported an operating loss of 423 billion won in the period July-September, but a profit of 573 trillion won for that same period. This compares to an analyst's average forecast of 304 billion dollars in profit. The third-quarter revenue increased 16.3%, to 20.5 trillion won, from the same period last year. SK On, a battery supplier to Ford Motor Co., Volkswagen and Hyundai Motor, among others, increased its operating loss from 66.4 billion won to 124.8 billion in the third quarter. This was due to a slowdown in EV batteries shipments. SK Innovation stated in a press release that the performance of its battery unit in the third quarter was affected by lower sales of batteries, which were affected by the phase out subsidies for battery powered vehicles in the United States. In September, SK On entered into a contract with U.S. based Flatiron Energy Development for the supply of lithium iron phosphate batteries (LFP) for energy storage systems. This was its first order to use LFP batteries in ESS. SK's agreement echoes a growing trend of EV battery manufacturers expanding into energy storage to hedge against the slowdown in EV batteries demand. On Thursday, LG Energy Solution, SK On’s rival across the street from it in South Korea said that they expect U.S. EV batteries sales to decrease this year compared to a year earlier. After the earnings announcement, shares of SK Innovation rose 0.2%, compared to the benchmark KOSPI which grew by 0.3%.
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The strong dollar and ample supply of oil weigh on the price of crude oil, which is expected to fall for a third consecutive month.
The oil prices fell on Friday and are heading towards a third consecutive monthly decline as the stronger dollar has capped gains in commodities, while a rising global supply from major producers offsets the effect of Western sanctions against Russian exports. Brent crude futures fell 33 cents or 0.51% to $64.67 per barrel at 0027 GMT. U.S. West Texas Intermediate was $60.22 per barrel, down by 35 cents or 0.58%. In a recent note, ANZ analysts stated that a stronger USD impacted investor appetite for commodities. The greenback gained after Federal Reserve Chairman Jerome Powell stated on Wednesday that a rate reduction in December is not guaranteed. Brent and WTI prices are expected to drop by about 3% this October, as the Organization of the Petroleum Exporting Countries (OPEC) and other major producers will be increasing production to gain market shares. The increased supply will also help to cushion the impact on Russian oil exports, which are currently restricted by Western sanctions. These include China and India. Sources familiar with the discussions said that OPEC+ was leaning toward a modest increase in output for December. The group will meet on Sunday. Eight OPEC+ member countries have increased their monthly production targets by a combined total of 2.7 million barrels a day - about 2.5% global supply – in a series. The data released by the Joint Organizations Data Initiative on Wednesday showed that crude exports in August from Saudi Arabia, which is the world's top oil exporter, reached a six-month record of 6.407 millions barrels per day. They are expected to continue rising. The U.S. Energy Information Administration's (EIA), in a report, also reported a record production of 13,6 million bpd for the week. Donald Trump, the U.S. president, said that China had agreed to start the process of buying U.S. Energy. He added that an extremely large transaction could take place regarding the purchase of oil from Alaska. Analysts are unsure whether the U.S. - China trade agreement will increase Chinese demand for U.S. Energy. Michael McLean, Barclays' analyst, said that Alaska produces less than 3% of the total US crude output. "We think Chinese purchases would likely be driven by market forces," he wrote in a Barclays note. (Reporting and editing by Jamie Freed; Florence Tan)
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Australian shares snap a three-day losing streak as Banks and miners drive the Australian share price upward
Australian shares rose Friday, ending three consecutive sessions of losses. Banks and miners saw gains, while Origin Energy shares fell to a new two-month-low after the company reported a sequential decline in its first quarter revenue. By 0004 GMT, the S&P/ASX 200 Index had risen 0.5% to 8,930.80. The benchmark closed Thursday 0.5% lower. Origin, a power producer, was one of the biggest losers in the benchmark index after it reported a 12% decline in revenue from its stakes in the Australia Pacific LNG Project. This was due to lower LNG prices and volumes. The firm's shares fell 6.3% to A$11.81 in their lowest trading session since April 7. Separately shares of insurance broker Steadfast Group were the biggest losers on the benchmark index, dropping up to 18.9% to A$5.03, their lowest level since November 16, 2022. After the company's bell rang on Thursday, Robert Kelly, its CEO and managing director, announced that he would temporarily step down from his position while an investigation was conducted by an outside party into a complaint lodged against him. On the local stock exchange, the banks rose 0.8% while the "Big Four", which includes the four largest banks, rose between 0.1% to 1.3%. Gold miners rose on the backs of higher gold prices, which boosted their gains by 1.2%. The shares of gold miners Evolution Mining (up 3.5%) and Northern Star Resources (up 3.8%) rose respectively. JB Hi Fi continued to fall for the second consecutive session. The firm had posted on Wednesday a dramatic sequential decline in sales growth for its Australia and New Zealand segment in the first quarter. Shares of Mayne Pharma, a potential acquirer, fell to their lowest intraday performance ever after it was revealed that Australia's Treasurer would block the A$672 ($436.67$) takeover. The benchmark S&P/NZX50 index in New Zealand rose 0.4% to 13,509.0.
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Electric vehicles end China's annual holiday spike in gasoline consumption
Tianyu Jiang drove his electric car from the southwest Sichuan basin in China to Beijing during the national holiday week this month. "I used a petrol vehicle and never took an EV on such a long trip. But driving an EV over a distance doesn't seem like a problem any more," Jiang said. The expansion of the charging infrastructure has helped to reduce the use of gasoline during the "Golden Week" holiday in October. According to Chinese consultancy Sublime China Information, China's gas demand has fallen by 9% on an annual basis in October, to 12.5 millions tons. The average daily consumption is roughly the same as September. The sagging holiday demands are symptomatic for the broader decline of Chinese fuel consumption due to the wider adoption of EVs, which signals the end of China's decades-long role of being the primary driving force behind new global oil demand. The peak in gasoline consumption was reached in 2023 in the world’s largest importer of crude oil. According to the research division of the state oil company Sinopec, the demand is expected to drop by more than 4% in this year compared with 2024. During the nine-month period of this year, EVs accounted for almost half of new car sales. Transport ministry reports that a fifth of the 63.5 millions car trips made during the eight-day break was in hybrid or electric vehicles. The daily use of electricity at charging stations - a proxy for the use of EVs - increased by 45,73% during Golden Week in this year compared to 2024. China's drive to build charging infrastructure has led to a 54.5% increase in the number of charging ports at the end September. Jiang said that both charging and refuelling during peak travel times means waiting. If you need to charge your car, you can find a charging station within 10km (6 miles) of the highway. It's also cheap. (Reporting and editing by Clarence Fernandez in Beijing, Sam Li and Lewis Jackson)
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Brazil's Gerdau saw its adjusted Q3 profit fall due to domestic market.
The Brazilian steelmaker Gerdau reported on Thursday a 23.9% drop in its adjusted quarterly net profit compared to the same period a year ago, as its booming business in North America has been offset by poor results in its home market. In the quarter July-September, Gerdau's net profit adjusted fell to 1,09 billion reais (201.71 millions). The company's adjusted earnings before taxes, depreciation, and amortization (EBITDA), which is a measure of its profit, came in at 2,74 billion reais. This was down 9.2% from the previous year, but in line with what analysts expected in a LSEG survey. The company stated that the results were impacted heavily by steel oversupply, which drove prices down despite constant production. Its second largest market is Brazil, just behind North America. The domestic market's gross profit fell 70.1% from a quarter earlier, to 403 millions reais. This is despite the fact that the steel production was only down 0.4% during the same period. Gerdau's gross profits in North America jumped 48.9% from the previous year to 1.5 billion reais during the third quarter. The total revenue for the quarter was 18 billion reais. This is up 3.5% compared to a year ago and higher than analysts' expectations of 17.6 billion. $1 = 5.4039 Reais (Reporting and editing by Brendan O'Boyle).
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Miner Vale beats net profit for the third quarter
Vale Rio de Janeiro-headquartered Vale posted a $2.69 billion net profit for the July-September period, up 11% year-over-year and above the $2.1 billion expected by analysts polled by LSEG. The adjusted earnings before interest taxes, depreciation, and amortization (EBITDA), which was $4.4 billion, represented a 21% rise, beating the estimates of $4.1billion. Vale published its sales and production data last week. Iron ore production reached the highest level since the fourth quarter 2018 with 94.4 million metric tonnes. The company's net revenue increased by 9% from the same quarter last year to $10.4 billion. Analysts expected a revenue of $10.3 billion. Vale has also reduced its estimate of copper costs per ton this year from $1,500 to $1,000. Previous projections ranged between $1,500 to $2,000 per tonne. The company projected that its nickel costs would range between $13,000 to $14,000 per ton. This is a significant increase from the previous range of $14,500 to $15,500. (Reporting and editing by Brendan O'Boyle; Roberto Samora, Andre Romani)
Hedge funds search for trades in dead-heat US election
Hedge funds and other investors are looking for trades that make money from a win by Republican governmental prospect Donald Trump, however also provide limited downside in case of a victory by Vice President Kamala Harris.
As the almost deadlocked race nears, some are looking for so-called asymmetric trades including bitcoin or the yuan, assets which could yield huge revenues if Trump wins however would not trigger big losses if the wagers are incorrect.
Trading the election is hard provided how tight it is, stated Edoardo Rulli, head of UBS Hedge Fund Solutions.
Some wagering sites have actually preferred Trump, which has produced momentum behind the so-called Trump trades. Others are now forecasting those trades, which include bets that might benefit from a Trump victory, might lose momentum or reverse in the case of a Harris win.
Trades that might yield greater gains than losses in whichever scenario plays out include a long position in bitcoin, stated David Kalk, founder at hedge fund Reflexive Capital.
He said the prospective bitcoin benefit would be two to three times the cash which is endangered if Trump wins, as he expects a more friendly regulative approach to crypto under the former president. The unfavorable price action we expect (in. case of a Harris' success) simply appears much smaller sized than the. upside of a Trump win, Kalk stated.
Macro hedge fund MKP Capital Management's founder Patrick. McMahon said he sees shorting the yuan versus the dollar as an. asymmetric trade, provided the losses the Chinese currency might face. if tariffs were enforced.
Some have actually placed neutral bets, such as pairing a brief. position on a stock with a long one, decreasing directional. direct exposure, stated Robert Christian, chief investment officer at K2. Advisors. By doing this gains in one trade could balance out losses in. another.
Mario Unali, head of investment advisory at Kairos Partners,. which handles a fund of hedge funds, stated trades were pivoting. to a Trump win because a success for Harris is more about the. status quo, so losses would be limited.
The hedge fund industry has actually up until now published gains of 8.3% in. the very first nine months of the year, according to research study company. PivotalPath. The industry average is underperforming the S&P. 500's 20% gain, putting some hedge funds under more pressure to. embrace a more cautious stance on the race that will provide some. upside.
Jon Caplis, CEO of PivotalPath, anticipates some selling ahead. of the election. They could bank those returns, and then they. might wait for weeks or months, depending on the length of time it takes. before things become clear again.
TRUMP TRADE
Big wagers on wagering markets have raised concerns by. social networks users about whether they were swaying the markets. or whether forecast markets were simply a better leading. indication of the race.
The Trump trades included a selloff in Treasuries, the. yuan, and a rise in shares of Trump Media & & Innovation Group .
Since the two candidates are still neck and neck a couple of. days from the election, some financiers question whether a few of. the trades placed on expectations of a Trump success might be. exaggerated.
An average of national polls according to viewpoint survey. aggregator 538 on Thursday had Democratic presidential prospect. Kamala Harris at 48.1% versus Trump at 46.7%, a space which is 1.3. portion point smaller than on Oct. 1.
At the end of the day I believe this short-term move in. Treasuries is probably overdone, stated John Luke Tyner, head of. set earnings and portfolio supervisor at Aptus Capital Advisors.
If Harris wins you would probably see a breeze back lower in. long-lasting yields, but I think we're visiting it in either case,. he added.
Strategists at Citi said they have actually recently left a few of. their Trump trades, including one that made money from rising. five-year inflation expectations.
We have actually been taking revenues on the view that the. risk-reward is no longer compelling for some of these trades,. with prices and positioning having actually moved and, in our view,. perhaps more than surveys alone would have validated, they stated. in a note on Tuesday.
A Republican sweep could worsen the bond selloff due to. higher budget deficit expectations because scenario, however there. is likewise a significant risk of a sharp turnaround in a Harris. triumph, they added.
(source: Reuters)