2024-11-12 07:00
LONDON, Nov 11 (Reuters) - Donald Trump's U.S. presidential election win has not sparked a repeat of the explosive copper rally which followed his unexpected victory in 2016. That coincided with a market that was heavily short of both futures and options and triggered a mass realignment of fund positioning. This time, copper was in risk-off mode ahead of what seemed a close-call result. Fund managers were net long of copper ahead of last week's election, but only modestly so. Moreover, the market focus was as much on China as it was on the U.S. as the other big event last week was the meeting of China's National Peoples Congress (NPC) Standing Committee. The resulting $1.4 trillion package to ease local government's "hidden debt" burden disappointed metal bulls looking for something much stronger from China's cabinet. As far as Doctor Copper is concerned, the main question around a second Trump presidency is whether the threat of tariffs will spur China to do more to fire up its sputtering growth engine. ELECTION WEEK WOBBLES Copper's price reaction to the U.S. elections was revealing in what it said about the market's real focus, namely China. London Metal Exchange three-month copper slid by 4.1% on Wednesday in what looked like a knee-jerk reaction to U.S. dollar strength in the wake of the election results. By the close of Thursday, copper had clawed back almost all its losses as traders bet the Trump tariff threat to Chinese exports would encourage the NPC Standing Committee to open up the stimulus taps. Friday's announcement of what is in essence a debt swap between central and local governments dashed bullish expectations and triggered a renewed sell-off. Copper closed Friday at $9,443.50 per metric ton, representing a weekly loss of 1.3%. Although trading was volatile, the net weekly change was small and a far cry from the turbulence of 2016. Fund positioning was much lighter this time ahead of an election that looked too close to call. Money mangers held a modest net long position of 20,714 contracts on the CME copper contract as of the close of Nov. 5. That had been sharply reduced from 41,127 contracts at the start of October. TARIFF TURBULENCE Copper is clearly unsure how to price in the bearish prospect of Trump's promised 60% tariffs on Chinese goods and the potential bullish offset of more urgent stimulus from Beijing. Tariffs, which are still several months away, are unlikely to make much difference to direct flows of metal from China to the United States. The Biden administration has already tripled import duties to 25% on imports of Chinese aluminium and steel products in response to China's growing exports. Canada has done the same and imports from Mexico, which has been accused of being a transshipment point for Chinese metal, must now come with a certificate of analysis proving non-Chinese origin. The bigger question is the potential impact on the broader Chinese economy, which looks a lot more vulnerable to a U.S. trade war than was the case eight years ago. Which is why copper's immediate response to the U.S. election result was to look for a reaction from Beijing. What it got was a debt tidy-up, which although positive is unlikely to move the growth dial in the short term. The U.S. election may have provided some brief distraction but copper's gaze has fully returned to the world's largest metals user. Metal bulls are hoping that a change of administration in Washington will provoke a change of stimulus policy in Beijing. The opinions expressed here are those of the author, a columnist for Reuters. Sign up here. https://www.reuters.com/markets/commodities/copper-views-trump-win-through-chinese-lens-andy-home-2024-11-11/
2024-11-12 06:48
Bitcoin extends staggering rally; eyes $90K Tariff worries weigh on euro and yuan China exposure drags European stocks lower NEW YORK, Nov 12 (Reuters) - A gauge of global stocks declined on Tuesday after advancing for five straight sessions while the dollar hit its highest level in over six months as investors weigh the impact of U.S. President-elect Donald Trump's likely path of policies. Investors have flocked in to assets expected to benefit from Trump policies for his second term in office, after he pledged to impose high tariffs on imports from key trading partners, as well as lower taxes and loosen government regulations. The S&P 500 (.SPX) , opens new tab has surged recently, partly driven by a jump in shares of banks (.SPXBK) , opens new tab, which are likely to benefit from a reduced regulatory burden. Domestically focused small-cap stocks have jumped on expectations for less competition from tariffs and lower tax rates, with the Russell 2000 (.RUT) , opens new tab vaulting to a three-year high on Monday. Bitcoin, the world's biggest cryptocurrency, has shot up about 30% since the Nov. 5 election, rocketing toward the $90,000 mark. Trump is seen as a proponent of cryptocurrencies, promising during his campaign to make the United States the "crypto capital of the planet." U.S. stocks have rallied since the election, but closed slightly lower on Tuesday after each of Wall Street's three major indexes closed at record levels in the prior session. But concerns that Trump's policies could cause a re-emergence of inflation after a long battle to reduce price pressures following the COVID-19 pandemic have pushed U.S. Treasury yields and the dollar higher. Markets will get the latest inflation reading on Wednesday in the consumer price index (CPI) for October. "Given the all-time highs we've been hitting over recent days and we came into today at all-time highs, it's somewhat of a profit-taking move and consolidation from investors today," said Russell Price, chief economist at Ameriprise Financial Services in Troy, Michigan. "Markets internationally were down based on perceptions of what might occur with the tariff action." The Dow Jones Industrial Average (.DJI) , opens new tab fell 382.15 points, or 0.86%, to 43,910.98, the S&P 500 (.SPX) , opens new tab fell 17.36 points, or 0.29%, to 5,983.99 and the Nasdaq Composite (.IXIC) , opens new tab fell 17.36 points, or 0.09%, to 19,281.40. Shares of Home Depot (HD.N) , opens new tab shed 1.28%, giving up earlier gains, after the home improvement retailer reported quarterly results. In Europe, shares closed lower, weighed down by names with a large exposure to China, with news that Trump was expected to select U.S. Senator Marco Rubio as his secretary of state. Rubio is seen as the most hawkish option on Trump's list of candidates. MSCI's gauge of stocks across the globe (.MIWD00000PUS) , opens new tab fell 6.17 points, or 0.71%, to 856.93. The STOXX 600 (.STOXX) , opens new tab index lost 1.98%, while Europe's broad FTSE EuroFirst 300 index (.FTEU3) , opens new tab closed down 40.36 points, or 1.99%, as both suffered their biggest daily percentage drops since early August. The yield on benchmark U.S. 10-year notes jumped 12.2 basis points to 4.43%, just off the 4-month high of 4.479% hit last week. Aside from the CPI data, several Federal Reserve officials are speaking this week following the central bank's policy decision last week to cut interest rates by 25 basis points. Richmond Fed President Thomas Barkin said that with inflation close to the Federal Reserve's 2% target, the labor market resilient and the U.S. central bank in the process of lowering borrowing costs, policymakers are ready to respond if inflation pressures rise or the job market weakens. Minneapolis Federal Reserve Bank President Neel Kashkari said the economy is "in a good place" and he feels U.S. monetary policy is currently "modestly restrictive," with short-term borrowing costs continuing to slow inflation and the economy, but not by a lot. The dollar index , which measures the greenback against a basket of currencies, rose 0.47% to 105.91, with the euro down 0.28% at $1.0624. The greenback has risen in four of five sessions since the election to reach 106.17, its highest level since May 1. Against the Japanese yen , the dollar strengthened 0.53% to 154.52. Sterling weakened 0.93% to $1.2749. The dollar strengthened 0.18% to 7.239 versus the offshore Chinese yuan. The greenback is expected to continue to strengthen against China's currency and those sensitive to its economy as a result of Trump's trade policies and because of expectations of higher U.S. Treasury yields. Markets have been scaling back expectations for more rate cuts from the Federal Reserve, currently pricing in a 58.4% chance of a 25 basis-point cut at its December meeting, down from 77.3% a week ago, according to CME's FedWatch Tool , opens new tab. U.S. crude settled up 0.12% at $68.12 a barrel and Brent rose 0.08% to settle at $71.89 per barrel on the day, holding near a two-week low after OPEC's latest downward revision for demand growth. Sign up here. https://www.reuters.com/markets/global-markets-wrapup-1-2024-11-12/
2024-11-12 06:31
Nov 12 (Reuters) - German chemicals distributor Brenntag (BNRGn.DE) , opens new tab reported a 4.9% drop in its quarterly core profit on Tuesday, missing market expectations, as it paid more to implement its digital transformation while growing volumes drove up transportation costs. Its shares, down 26% since the start of the year, fell 3% by 0710 GMT in early Frankfurt trade. The group's operating earnings before interest, taxes and amortisation (EBITA) fell to 281.1 million euros ($298.9 million) in the third quarter, below analysts' average forecast of 292 million euros in a poll , opens new tab by Vara Research. Quarterly sales reached 4.06 billion euros in the same period, down slightly from last year and short of analysts' consensus of 4.13 billion euros. "Our cost-saving measures are showing positive effects and we made good progress in executing our divisional strategies. However, we cannot be satisfied with the outcomes yet and need to step up our efforts," CEO Christian Kohlpaintner said in a statement. Brenntag announced measures to reduce operating costs and counteract inflation-related cost increases last year, expecting 300 million euros annual cost-out effect by 2027. "Q3 was another difficult quarter with ongoing strong competition and pressure on average selling prices. Brenntag counterbalanced that with increasing internal efforts to optimize pricing, the structure and reduce costs," Baader Helvea analyst Christian Obst said in a note to clients. Germany's chemical industry suffered throughout 2023 from high production costs and weak demand amid rising inflation. The sector flagged first signs of recovery early in the year, but that optimism has since faded as the country's industrial outlook continued to deteriorate. Brenntag said it expected the challenging geopolitical, macroeconomic and operational conditions to persist for the rest of the year, and confirmed its full-year guidance for an operating EBITA of 1.1 billion to 1.2 billion euros, which it has cut twice this year. ($1 = 0.9404 euros) Sign up here. https://www.reuters.com/markets/commodities/brenntag-reports-q3-core-profit-below-expectations-2024-11-12/
2024-11-12 06:16
OPEC cuts oil demand growth forecast for 2024, 2025 US dollar rises to 4-month high against other currencies Nov 12 (Reuters) - Oil prices held near a two-week low on Tuesday after dropping about 5% over the past two sessions as investors absorbed OPEC's latest downward revision for demand growth, a stronger U.S. dollar and disappointment over China's latest stimulus plan. Brent futures were up 6 cents, or 0.1%, to settle at $71.89 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 8 cents, or 0.1%, to settle at $68.12. On Monday, both crude benchmarks settled at their lowest prices since Oct. 29. "A normal tendency in crude following a sharp drop would be a recovery back to about the middle of the prior day's range within a couple of sessions," analysts at energy advisory firm Ritterbusch and Associates said in a note. OPEC cut its forecast for global oil demand growth in 2024 and also lowered its projection for next year, marking the producer group's fourth consecutive downward revision. The weaker outlook highlights the challenge facing OPEC+, a group that includes the Organization of the Petroleum Exporting Countries and allies such as Russia. This month, the group postponed a plan to start raising output in December against a backdrop of falling prices. "With China's demand remaining lackluster, supply-side tinkering by OPEC is not having the desired impact other than to maintain the Brent price floor at $70," said Gaurav Sharma, an independent oil analyst in London. OPEC said world oil demand would rise by 1.82 million barrels per day (bpd) in 2024, down from growth forecast of 1.93 million bpd last month. The group also cut its 2025 global demand growth estimate to 1.54 million bpd from 1.64 million bpd. OPEC remains at the top of industry estimates and has a long way to go to match the International Energy Agency's far lower view. OPEC's forecast on robust growth in China is "at odds with other forecasters, who have considerably reduced their end-2024 estimates on China's poor macroeconomic performance and disappointing fiscal stimulus," said Harry Tchilinguirian, head of research at Onyx Capital Group. CHINA DEMAND On Friday, China unveiled a 10-trillion-yuan ($1.4-trillion) debt package to ease local government financing strains. Republican former President Donald Trump, who won the Nov. 5 U.S. presidential election, has threatened more tariffs on Chinese goods. Analysts said China's plan fell short of the amount needed to boost economic growth. Another factor that could limit oil demand growth is the foreign policy team Trump is putting together. Trump is expected to tap U.S. Senator Marco Rubio to be his secretary of state, sources said. Rubio has in past years advocated for a muscular foreign policy with respect to America's geopolitical foes, including China, Iran and Cuba. "The foreign policy team (including possibly Rubio) is being brought in to tighten the screws on China, which will threaten oil demand growth from the largest oil importing country on the planet," Bob Yawger, director of energy futures at Mizuho, said in a report. DOLLAR STRENGTH Also weighing on oil prices, the U.S. dollar (.DXY) , opens new tab rose to a four-month high versus a basket of currencies as investors kept piling into trades seen benefiting from Trump's victory. A stronger greenback makes oil more expensive in other countries, which can reduce demand. In Germany, the biggest economy in Europe, investor morale clouded over this month, an economic research institute said, as Trump's election and the collapse of the German government unleashed added uncertainty over Germany's already ailing economy. Protectionist policies from the incoming U.S. administration will hamper global growth and Europe must be better prepared than in 2018, European Central Bank policymakers said. Sign up here. https://www.reuters.com/business/energy/oil-prices-hold-their-ground-after-falling-china-stimulus-2024-11-12/
2024-11-12 06:12
MOSCOW, Nov 12 (Reuters) - Rosneft (ROSN.MM) , opens new tab, Russia's biggest oil company, denied reports that it had any intention of taking over a major chunk of the Russian oil sector, and said such reports were a attempt to cast its chief, Igor Sechin, as a wicked influence. The Wall Street Journal reported , opens new tab that Russia is working on a plan to merge Rosneft, which already accounts for 40% of Russia's total oil production, with Gazprom Neft (SIBN.MM) , opens new tab and Lukoil (LKOH.MM) , opens new tab, in what would create one of the world's most powerful oil companies. Rosneft issued a statement on the reports which it called a "false flag" and said the reports cast CEO Sechin as "Evil Sechin" and falsely intimated "Igor Sechin's insidious intentions". "The alleged intentions having nothing to do with reality" and did not follow "any reasonable business logic", Rosneft said. Sechin, who speaks fluent Portugese and French, worked alongside Vladimir Putin for many years - both before Putin rose to the presidency and afterwards. One of the most powerful men in Russia's vast energy sector, Sechin has served as CEO of Rosneft since May 2012. During his tenure Rosneft grew into the world's largest publicly-listed oil producer by volumes before Saudi Aramco first entered public markets in 2019, accounting for around 4% of global oil output. Sign up here. https://www.reuters.com/business/energy/rosneft-denies-evil-sechin-reports-plan-take-over-russian-oil-giants-2024-11-12/
2024-11-12 06:05
BAKU, Nov 12 (Reuters) - This year's U.N. climate summit - COP29 - is being held during yet another record-breaking year of higher global temperatures, adding pressure to negotiations aimed at curbing climate change. The last global scientific consensus on climate change was released in 2021 through the Intergovernmental Panel on Climate Change, however scientists say that evidence shows global warming and its impacts are unfolding faster than expected. Here is some of the latest climate research: 1.5C BREACHED? The world may already have hit 1.5 degree Celsius (2.7 F) of warming above the average pre-industrial temperature - a critical threshold beyond which it is at risk of irreversible and extreme climate change, scientists say. A group of researchers made the suggestion in a study released on Monday based on an analysis of 2,000 years of atmospheric gases trapped in Antarctic ice cores that extends the understanding of pre-industrial temperature trends. Scientists have typically measured today's temperatures against a baseline temperature average for 1850-1900. By that measure, the world is now at nearly 1.3 C (2.4 F) of warming. But the new data suggests a longer pre-industrial baseline, based on temperature data spanning the year 13 to 1700, the study published in the journal Nature Geoscience said. Either way, 2024 is certain to be the warmest year on record. SUPERCHARGED HURRICANES Not only is ocean warming fuelling stronger Atlantic storms, it is also causing them to intensify more rapidly, for example, jumping from a Category 1 to a Category 3 storm in just hours. Growing evidence shows this is true of other ocean basins. Hurricane Milton needed only one day in the Gulf of Mexico in October to go from tropical storm to the Gulf's second-most powerful hurricane on record, slamming Florida's west coast. Warmer air can also hold more moisture, helping storms carry and eventually release more rain. As a result, hurricanes are delivering flooding even in mountain towns like Asheville, North Carolina, inundated in September by Hurricane Helene. WILDFIRE DEATHS Global warming is drying waterways and sapping moisture from forests, creating conditions for bigger and hotter wildfires from the U.S. West and Canada to southern Europe and Russia's Far East creating more damaging smoke. Research published last month in Nature Climate Change calculated that about 13% of deaths associated with toxic wildfire smoke, roughly 12,000 deaths , opens new tab, during the 2010s could be attributed to the climate effect on wildfires. CORAL BLEACHING With the world in the throes of a fourth mass coral bleaching event — the largest on record — scientists fear the world's reefs have passed a point of no return. Scientists will be studying bleached reefs from Australia to Brazil for signs of recovery over the next few years if temperatures fall. AMAZON ALARM Brazil's Amazon is in the grips of its worst and most widespread drought since records began in 1950. River levels sank to all-time lows this year, while fires ravaged the rainforest. This adds concern to scientific findings earlier this year that between 10% and 47% of the Amazon will face combined stresses of heat and drought from climate change, as well as other threats, by 2050. This could push the Amazon past a tipping point, with the jungle no longer able to produce enough moisture to quench its own trees, at which point the ecosystem could transition to degraded forests or sandy savannas. Globally, forests appear to be struggling. A July study found that forests overall last year failed to absorb as much carbon dioxide from the atmosphere as in the past, due largely to the Amazon drought and wildfires in Canada. That means a record amount of CO2 entered the atmosphere. VOLCANIC SURGE Scientists fear climate change could even boost volcanic eruptions. In Iceland, volcanoes appear to be responding to rapid glacier retreat. As ice melts, less pressure is exerted on the Earth's crust and mantle. Volcanologists worry this could destabilize magma reservoirs and appears to be leading to more magma being created, building up pressure underground. Some 245 volcanoes across the world lie under or near ice and could be at risk. OCEAN SLOWDOWN The warming of the Atlantic could hasten the collapse of a key current system, which scientists warn could already be sputtering. The Atlantic Meridional Overturning Circulation (AMOC), which transports warm water from the tropics to the North Atlantic, has helped to keep European winters milder for centuries. Research in 2018 showed that AMOC has weakened by about 15% since 1950, while research published in February in the journal Science Advances, suggested , opens new tab that it could be closer to a critical slowdown than previously thought. Sign up here. https://www.reuters.com/sustainability/climate-energy/cop29-what-is-latest-science-climate-change-2024-11-12/
