2023-11-15 05:44
Two-pronged approach likely to become more frequent Australian companies have home advantage Australia lithium still a hot investment sector MELBOURNE, Nov 15 (Reuters) - Australian mining moguls who have gatecrashed the country's recent international lithium deals have pushed bankers into trying fresh measures to fend off interlopers unwilling to pay the full price for their target. Australia's vast lithium deposits needed for batteries for electric vehicles and the energy transition are drawing interest from global chemicals makers but local mining moguls Gina Rinehart, the country's richest person, and Chris Ellison have already thwarted two deals and threaten another. While Rinehart's Hancock Prospecting and Ellison's Mineral Resources (MIN.AX) have refrained from full takeovers of the companies in the local lithium sector, their tactical efforts to keep foreign companies from doing so gives them time to establish a stronger footprint in the emerging industry. Hancock disrupted a proposed $4.3 billion deal between Australia's Liontown Resources (LTR.AX) and top lithium maker Albemarle (ALB.N) after it bought a 19.9% stake in the lithium developer, enough to block Albemarle's bid under Australian law. Hancock and Mineral Resources are threatening the same with the deal between Azure Minerals and Chile's SQM (SQMA.SN), the world's second-biggest lithium chemicals maker, after the companies accumulated shares of 18.9% and 13.6%, respectively. In taking the stakes, Hancock has underscored its expertise in building mining projects, while Mineral Resources has said it wants to be part of projects that will sustain its growth for decades. Neither company has made an outright bid for Azure or Liontown. Hancock and Mineral Resources declined to make additional comments. Building these stakes offers influence over lithium developers for less money than a full takeover, and an option to take a bigger part in the growing industry, which will include downstream processing, said Marc Upcroft, a partner at PwC in Australia. "If you have a blocking stake, that means that no one else is going to be able to easily come in and take control of the project. Then you've effectively, for a smaller price, built your role to play with that project going forward," he said. Falling lithium prices over the past year, leading to lower stock prices for the developers, have propelled the interest in the acquisitions, along with the outlook for surging demand for the metal. As well as Liontown, Core Lithium (CXO.AX), Leo Lithium (LLL.AX) Latin Resources (LRS.AX) Patriot Metals , Chalice (CHN.AX), Centaurus (CTM.AX) and Rex Minerals (RXM.AX) have all been cited by brokers as buyout prospects. TWO-PRONGED SOLUTION Their deep pockets, risk appetite and Australia's competition laws means mining magnates have a home advantage against listed companies, industry sources say. "M&A in Australia is a rough game and home players have a big advantage especially when it's private money," said a financier at a global bank active in the lithium space, who asked to remain unidentified because of company policy. One example that bankers offered in the case of SQM's bid for Azure was a two-pronged solution to erode any interloper advantage. SQM's $900 million offer for Azure was set up as a so-called scheme of arrangement which must be court-approved and where 75% of voting shareholders must also back the plan. The offer also included an off-market takeover option where SQM could go directly to shareholders if the scheme of arrangement should fail because an interloper accumulated 19% of the stock. This dual-pronged approach has only been done in Australia six times, said Richard Lustig, head of Australian M&A at law firm Baker McKenzie in Melbourne. "It started as a curiosity, now it's getting some kind of traction," he said. The dual offer is useful for firms that are open to holding less than a 100% stake. It offers a route for shareholders to accept a direct offer if an interloper appears, which can be faster than waiting months for the scheme of arrangement to complete. It becomes harder for an interloper to build a blocking stake, and they are faced with the prospect that a bidder can take control even if they block the scheme, potentially leaving them as a minority shareholder and eroding their influence over the target firm. "If there is a concern a scheme may get blocked by an existing shareholder or an interloper who has no intention of making an offer for the whole company then yes, this structure will be used more often," said a second banker involved in global lithium acquisitions. https://www.reuters.com/markets/commodities/aussie-magnates-gatecrash-lithium-deals-bankers-get-creative-2023-11-15/
2023-11-15 05:36
SINGAPORE/WASHINGTON, Nov 15 (Reuters) - The United States and China will back a new global renewables target and work together on methane and plastic pollution, they said in a joint statement on Wednesday after a meeting to find common ground ahead of COP28 talks in Dubai later this month. Climate envoys John Kerry and Xie Zhenhua, meeting in Sunnylands, California on Nov. 4-7, agreed to revive a bilateral climate working group that will discuss areas of cooperation between the two countries, the joint statement said, though differences remain on issues like phasing out fossil fuels. "The Sunnylands statement is a timely effort of aligning the United States and China ahead of COP28," said Li Shuo, incoming director of the China Climate Hub at the Asia Society. Li described the relationship between the world's two biggest greenhouse gas emitters as "a precondition for meaningful global progress" and said the Sunnylands agreement will help "stabilise the politics" ahead of Dubai talks. The re-launch of the working group marks the normalisation of the climate relationship between the two countries following a hiatus triggered in 2022 by the visit of former House of Representatives speaker Nancy Pelosi to Taiwan, a self-governing island that China claims. It will focus on key areas of cooperation, including abating methane and boosting efficiency and the "circular economy", and exchange information on policies and technologies to reduce emissions. The two sides also promised to work together to curb forest loss and plastic pollution. "WORK CUT OUT" China's efforts to cut its own carbon emissions will be in sharp focus at the COP28 talks, with the country still approving new coal-fired power plants in a bid to ensure energy security. The United States and China said they support a declaration by G20 leaders to triple global renewable energy capacity by 2030, and also agreed to "accelerate the substitution for coal, oil and gas generation". The joint statement said they anticipate "meaningful" reductions in emissions from the power sector this decade, but it fell short of calling for the phasing out of fossil fuels, a goal that China has described as "unrealistic". Both sides also agreed to include methane in their 2035 climate goals - the first time China has made such a pledge - and committed to advancing "at least five" large-scale cooperation projects in carbon capture, utilisation and storage by the end of the decade. Li said COP28 still "has its work cut out", particularly on fossil fuels. "China also needs to consider what further ambition can be brought to COP," he added. "Stopping the approval of new coal power projects is a good next step." https://www.reuters.com/business/environment/us-china-pledge-cooperation-climate-following-california-talks-2023-11-15/
2023-11-15 05:34
A look at the day ahead in European and global markets from Tom Westbrook Just one-tenth of a percentage point was enough to trigger big moves in global markets that were some of the sharpest we've seen this year. The U.S. CPI came in flat for last month, against consensus expectations of a 0.1% rise. The core rate, at 0.2%, also bettered forecasts for 0.3%. A high number would have amplified the Fed's recent hawkish tone, so the surprise move in the opposite direction has had a dramatic effect. Ten-year and two-year Treasury yields dropped 20 basis points and the dollar marked its steepest selloff in a year, highlighting how much markets' expectations - and cash - were riding on the data. A pivot from hikes to cuts is now priced for May in the interest rate futures markets, with a 30% chance it happens as soon as March. Next up is British inflation (GBCPXY=ECI) data, due at 0700 GMT. Expectations are for a big shift down for October, mainly due to falling energy prices, with annual headline inflation seen slipping below 5% for the first time since 2021. October's purchasing manager's index survey, however, showed services companies putting through their steepest price rises in three months. Sterling broke through its 200-day moving average on Tuesday as the dollar slumped, and a sticky inflation reading could propel further gains. But geopolitics could spoil things. In the Middle East, Israel raided the Al Shifa hospital in Gaza, health officials told Al Jazeera. Chinese President Xi Jinping is making his first visit to the United States in six years and is due to meet President Joe Biden on Wednesday morning, in what U.S. officials have billed as a chance to reduce friction in the powers' relations. Meanwhile, good news from China added to the broad cheer. Retail sales beat expectations, industrial output picked up and the central bank poured liquidity into the banking system, which together gave a boost to commodity prices. Iron ore scaled 2-1/2 year peaks, and Singapore futures are up almost 20% in just over a month. Chipmaker Infineon (IFXGn.DE) and troubled energy company Siemens Energy (ENR1n.DE) post earnings on Wednesday, although the latter's numbers are likely to be overshadowed by Tuesday's promise of an $8 billion government backstop from Germany. U.S. retail sales figures are due at 1330 GMT. A drop is forecast, while a strong reading could dampen the exuberance over rate cut expectations. Key developments that could influence markets on Wednesday: Earnings: Infineon, Siemens Energy, Alstom, Target Events: Xi-Biden meeting expected in San Francisco Bay Area Economics: UK CPI, U.S. retail sales https://www.reuters.com/markets/global-markets-view-europe-2023-11-15/
2023-11-15 05:29
Nov 15 (Reuters) - Denmark will be tasked with inspecting and potentially blocking tankers carrying Russian oil through its waters under new European Union plans, the Financial Times reported on Wednesday, citing three unidentified sources. Russia sends about a third of its seaborne oil exports, or 1.5% of global supply, through the Danish straits so any attempt to halt those supplies would send oil prices higher and trigger a confrontation with Russia. The FT said that Denmark would target tankers carrying Russian oil that did not have Western insurance, a step that would hit Russian oil export income hard while snarling up the entire Russian oil production and refinery business. Since Russia sent troops into Ukraine in February 2022, the West has tried to cripple the Russian economy, but Russia, the world's second-largest oil exporter, has continued to sell its oil to world markets using fleets of tankers based and insured outside the West. When asked about the FT report, Kremlin spokesman Dmitry Peskov said he did not have information contained in the report, but cautioned that shipping rules should be observed. "Everyone should be cautioned in advance about the need to comply with all the rules of international commercial shipping," Peskov told reporters. When asked whether or not Russia would consider sending warships to escort tankers carrying Russian oil if Denmark tried to block the route, Peskov said Russia did not take such serious decisions based merely on unconfirmed newspaper reports. "Are you proposing discussing such serious things based on the publication of a newspaper that does not even have a link to anyone specific?" Peskov said. "Let's wait for tangible information, and then we'll talk about what to do." Russia exports its flagship Urals oil grade via the ports of Primorsk and Ust-Luga. Tankers thread through the Danish straits and then on to world markets. Before the war in Ukraine, all Russian oil exports from the Baltic Sea were shipped to Europe. Since then, the bulk has gone to India, China, Egypt and Turkey. The FT cited a spokesman for the Danish defence command as saying: "In short, we don’t check paperwork or ships passing or sailing through the straits, unless it has to do with safety at sea." The Group of Seven countries, the European Union and Australia imposed a $60 per barrel cap last December on sea-borne exports of Russian crude due to the conflict in Ukraine, but a rally in global oil prices this year has meant much of Russian oil has traded above the cap. https://www.reuters.com/markets/commodities/denmark-could-block-russian-oil-tankers-reaching-markets-ft-2023-11-15/
2023-11-15 03:55
MUMBAI, Nov 15 (Reuters) - The Indian rupee is expected to rally at open on Wednesday after a softer-than-expected U.S. inflation print increased the odds of the Federal Reserve pivoting to rate cuts around the middle of next year. Non-deliverable forwards indicate the rupee will open at around 83.00 to the U.S. dollar compared with 83.3325 in the previous session. U.S. Treasury yields plummeted on Tuesday, the dollar index suffered its worst session in a year and U.S. equities jumped after data showed U.S. consumer prices were unchanged in October and the annual rise in underlying inflation was the smallest in two years. Asian currencies jumped with the Korean won climbing 2% and the Indonesian rupiah and the Malaysian ringgit surging 1.4% and 1.1%, respectively. There have been "huge moves across asset classes" and the rupee will reflect that at open, a forex spot dealer at a bank said. "The question will be what happens after that - will the dip (on USD/INR) near 83 sustain or this dip too will be lapped up." On the back of the inflation data, the already low probability of a Fed rate hike in December was fully priced out. What is more important for the rupee and other Asian currencies is the mounting probability of Fed rate cuts next year. ANZ noted the first Fed rate cut is priced for May earlier than before the data. "Increasingly it looks as if the level of monetary restraint is having the desired outcome on both inflation and the labour market," it said. Futures are pricing in a total of 100 basis points of rate cuts in 2024. India's retail inflation softened in October to a four-month low, with the annual retail inflation at 4.87%, down from 5.02% the previous month. KEY INDICATORS: ** One-month non-deliverable rupee forward at 83.06; onshore one-month forward premium at 4.5 paisa ** Dollar index at 104.14 ** Brent crude futures up 0.3% at $82.7 per barrel ** Ten-year U.S. note yield at 4.44% ** As per NSDL data, foreign investors bought a total of $639.2mln worth of Indian shares on Nov. 10 and Nov. 12 ** NSDL data shows foreign investors bought a net $378.5mln worth of Indian bonds on Nov. 10 https://www.reuters.com/markets/currencies/rupee-rally-growing-bets-fed-cut-rates-next-year-2023-11-15/
2023-11-15 00:35
U.S. headline, core CPI growth falls short of estimates Home Depot rises after beating profit estimates Indexes: Dow up 1.4%, S&P 500 up 1.9%, Nasdaq up 2.4% NEW YORK, Nov 14 (Reuters) - The S&P 500 and Nasdaq posted their biggest daily percentage gains since April 27 on Tuesday as softer-than-expected inflation data supported the view that the Federal Reserve may be done raising interest rates. The small-cap Russell 2000 index (.RUT) jumped 5.4%, outperforming the broader market, while the rate-sensitive S&P 500 real estate sector (.SPLRCR) gained 5.3% and utilities (.SPLRCU) rose 3.9%. All three registered their biggest daily percentage increases since Nov. 10, 2022. Data showed U.S. consumer prices were unchanged in October as Americans paid less for gasoline, and the annual rise in underlying inflation was the smallest in two years. In the 12 months through October, the CPI climbed 3.2% - below economists' estimates - after rising 3.7% in September. "The clear catalyst was the softer-than-expected inflation report," said Craig Fehr, head of investment strategy at Edward Jones. "Getting some softer inflation readings provided markets some additional comfort that the Fed isn't going to have to put in place a significant amount of additional restrictive policy to continue to bring consumer prices lower." Since March 2022, the Fed has hiked its policy rate 525 basis points to combat high inflation. The Dow Jones Industrial Average (.DJI) rose 489.83 points, or 1.43%, to 34,827.7; the S&P 500 (.SPX) gained 84.15 points, or 1.91%, at 4,495.7; and the Nasdaq Composite (.IXIC) added 326.64 points, or 2.37%, at 14,094.38. Also, the KBW regional banking index (.KRX) rose 7.5% in its biggest daily percentage rise since January 2021. "It's difficult with higher rates with the commercial real estate on their balance sheets," said Quincy Krosby, chief global strategist at LPL Financial in Charlotte, North Carolina. Expectations on the Fed cutting rates next year also shifted following the day's data. U.S. rate futures on Tuesday priced in a 65% chance of a rate cut in May, compared with 34% late on Monday, according to the CME's FedWatch tool. Investors also focused on negotiations by U.S. lawmakers over a funding bill as they face an end-of-week deadline to fund the federal government. Among individual stocks, Snap Inc shares (SNAP.N) jumped 7.5% following news that Amazon.com (AMZN.O) will allow Snapchat users in the United States to buy some products listed on the ecommerce company directly from the social media app. Home Depot (HD.N) gained 5.4% after the U.S. home improvement chain beat quarterly profit estimates. Volume on U.S. exchanges was 12.62 billion shares, compared with the 11.09 billion average for the full session over the last 20 trading days. Advancing issues outnumbered decliners on the NYSE by a 9.80-to-1 ratio; on Nasdaq, a 3.59-to-1 ratio favored advancers. The S&P 500 posted 45 new 52-week highs and no new lows; the Nasdaq Composite recorded 106 new highs and 139 new lows. https://www.reuters.com/markets/us/futures-edge-higher-ahead-inflation-data-2023-11-14/
