2024-07-22 00:50

Oil prices settle at lowest levels in more than a month Biden drops reelection campaign, endorses VP Harris Morgan Stanley analysts see oil market in surplus in 2025 Yemen's Houthis say they will continue to attack Israel NEW YORK, July 22 (Reuters) - Oil prices fell for a second consecutive session on Monday to their lowest level in over a month, as investors looked past U.S. President Joe Biden's decision to end his reelection bid and focused on rising stockpiles and signs of weak demand. Brent crude futures fell 23 cents, or 0.3%, to settle at $82.40 per barrel, the lowest since June 11. U.S. West Texas Intermediate crude futures for August delivery expired on Monday after falling 35 cents to $79.78 a barrel, also a one-month low. Biden ended his campaign on Sunday and endorsed Vice President Kamala Harris as the Democrat who should face Republican Donald Trump in the November election. Traders took Biden's decision in stride while shrugging off escalating tensions in the Middle East, U.S. fuel distributor TACenergy's trading desk wrote on Monday. Market participants were focusing on a weak technical outlook, ample inventories and soft demand, they wrote. While the oil market is visibly tight, it is expected to reach a balance by the fourth quarter and a surplus by next year, dragging Brent prices down to the mid-to-high $70s range in 2025, according to analysts at Morgan Stanley. Global petroleum inventories rose last week, according to a StoneX analysis. Total oil and refined products stockpiles are trending higher in all major trading hubs except Europe, StoneX analyst Alex Hodes noted. Energy policy will likely be a core debating point between Harris and Trump, but Citi analysts believe neither will promote policies that have an extreme effect on oil and gas operations as core positions. In the Middle East, Israeli fighter jets struck Houthi military targets near Yemen's Hodeidah port on Saturday, killing at least six people. The Houthis on Sunday told media that they will continue to attack Israel and not abide by any rules of engagement. Israel also sent tanks back into the greater Khan Younis area of Gaza, and at least 70 Palestinians were reported killed by Israeli fire, Gaza medics said on Monday. Elsewhere, top oil importer China surprised markets by lowering a key short-term policy interest rate and benchmark lending rates to boost its economy, but the move failed to support oil prices. "The Chinese interest rate cut has been too small to lift overall sentiment for crude oil," said UBS analyst Giovanni Staunovo. The U.S. Federal Reserve will hold a policy meeting on July 30-31, with investors expecting it to keep rates steady, though there have been signs of a possible cut in September. "If we get an indication of a [near-term] rate cut, the Fed could be positive for risk sensitive assets like oil," Staunovo said. Sign up here. https://www.reuters.com/markets/commodities/oil-prices-rise-investors-look-signs-us-rate-cuts-begin-2024-07-22/

2024-07-22 00:48

With BOJ likely to raise rates, dollar falls versus yen Dollar rises versus yuan after China rate moves Investors brace for launch of ether ETFs NEW YORK, July 22 (Reuters) - The U.S. dollar was slightly higher on Monday in quiet trading overall, as investors digested U.S. President Joe Biden's decision to end his re-election campaign, a scenario which could inject more volatility into the currency market. Against the yen, however, the dollar weakened after two straight days of gains. Market participants also looked to next week's crucial Federal Reserve and Bank of Japan monetary policy meetings. The Fed could signal it is ready to start its easing cycle by its next meeting in September, while the BOJ, in contrast, could start to raise interest rates, giving the yen a bit of a boost. Investors, however, remained fixated on the U.S. presidential race. The dollar and Treasury yields fell slightly earlier on Monday, a day after Biden announced he was ending his re-election campaign, but that has since been unwound. Former President Donald Trump, the Republican nominee, sits well ahead in betting markets. "Overall, these moves still suggest investors are, for the most part, looking to (Donald) Trump's first term as the best available guide for what to expect from a potential second one," wrote Jonas Goltermann, deputy chief markets economist at Capital Economics. "In other words, higher Treasury yields, a stronger dollar, and a generally constructive environment for equities." Biden has endorsed Vice President Kamala Harris to replace him as the Democratic candidate in the Nov. 5 election. Harris quickly received the backing of many within the party, but several high-profile names stayed quiet, including former U.S. President Barack Obama. Former U.S. House of Representatives Speaker Nancy Pelosi on Monday afternoon officially endorsed Harris. The dollar index - a measure of its value relative to a basket of foreign currencies - rose 0.1% to 104.32. Amo Sahota, executive director of currency advisory firm Klarity FX in San Francisco said of all the currency pairs, the dollar/Mexican peso had the most tangible reaction to the Biden exit. The dollar was last down 0.6% at 17.925 pesos . "Even though the polls have narrowed only slightly and not significantly, the peso liked the news that there's another candidate other than Biden," Sahota said. The U.S. election aside, analysts noted that the yen could be at a turning point against the dollar after falling since the beginning of 2024, as the Fed is close to cutting rates and the BOJ is widely expected to tighten monetary policy soon. The U.S. central bank's rate-setting Federal Open Market Committee (FOMC) and the BOJ will hold two-day policy meetings on July 30-31. Money markets have nearly fully priced in a Fed rate cut by September. The greenback fell 0.3% versus the yen to 157.10. , while the euro was last flat against the dollar at $1.0886 . Analysts flagged that the European Central Bank offered no concerted pushback at its policy meeting last week on the heavy pricing for a rate cut in September, which remains a strong base case. The dollar firmed 0.1% to 7.29 yuan in offshore trading after the People's Bank of China unexpectedly cut the seven-day reverse repo rate to 1.7% from 1.8%, saying the move would improve open market operations and support the real economy. That was followed minutes later by surprise reductions to the one- and five-year loan prime rates. The Australian dollar, a proxy for China risks, sank 0.7% to U.S.$0.6640, giving up earlier gains following news of Biden's withdrawal. In cryptocurrencies, investors are bracing for the launch of exchange-traded funds tracking ether, the world's second-largest cryptocurrency, over the next few days. Market players, however, are not expecting the massive inflows that bitcoin ETFs garnered when they first launched in January. "The ether ETF launch is a sign of validation to the space," said Darius Tabai, the CEO of Vertex, a decentralized exchange. "Whether the ether ETF brings a lot of new money is unclear. Bitcoin itself has become this kind of isolated asset. And there's not much spillover from bitcoin into the rest of crypto." Ether was last down 0.3%% at $3,496 , while bitcoin rose 1.8% to $68,182 . Sign up here. https://www.reuters.com/markets/currencies/dollar-eases-biden-ends-reelection-bid-yuan-steady-after-rate-cut-2024-07-22/

2024-07-22 00:22

Wall Street stocks finish higher China trims key short-term rate Oil prices settle lower Earnings season to test lofty tech valuations Safe-haven gold drops LONDON/NEW YORK, July 22 (Reuters) - An index of global shares steadied on Monday as investors weighed President Joe Biden's decision to end his reelection bid over the weekend, while a surprise rate cut by China's central bank failed to boost Asian markets. Biden announced on Sunday he would drop out of the U.S. presidential election race and endorsed Vice President Kamala Harris for the Democratic ticket to challenge former President Donald Trump, who is the Republican nominee. Markets took the news in stride, with MSCI's gauge of stocks across the globe (.MIWD00000PUS) , opens new tab up 0.75% at 816.92. The index fell 2.1% last week in its worst weekly performance since April. "I think largely the Biden bailing out was priced in; we just needed definitiveness on that," said Lou Basenese, president and chief market strategist at MDB Capital in New York. "Now you're seeing the Trump trades, more risk taking, and small caps, going long oil and gas, and bitcoin really returning to the market," he added. The dollar was slightly higher against a basket of currencies, capturing some safe-haven flows, while bitcoin - which has tended to be a beneficiary of any growing chances of a return of Trump to the White House - steadied after having fallen on Sunday following Biden's announcement. The dollar index gained 0.1% to 104.32, with the euro up 0.07% at $1.0885. Bitcoin , which hit six-week highs last week in its strongest weekly rally since February, traded on a more even keel on Monday, up 1.76% at $68,158. On Wall Street, all three major indexes finished higher, led by gains in technology and communication services stocks. Nvidia (NVDA.O) , opens new tab ended up nearly 5%, buoyed by news it is working on a new AI chip for the Chinese market. The Dow Jones Industrial Average (.DJI) , opens new tab rose 0.32% to 40,415.44, the S&P 500 (.SPX) , opens new tab gained 1.08% to 5,564.41 and the Nasdaq Composite (.IXIC) , opens new tab gained 1.58% to 18,007.57. Investors will be eying a packed week of corporate earnings. Tesla (TSLA.O) , opens new tab and Google parent Alphabet (GOOGL.O) , opens new tab kick off the season for the "Magnificent Seven" megacap group of stocks. U.S. Treasuries were little changed as markets assessed the uncertainly surrounding the race for the White House, with yields on benchmark U.S. 10-year notes adding 1.7 basis points to 4.256%. Markets are fully pricing in the prospect of a rate cut by the Federal Reserve in September, which has helped underpin risk appetite. "The withdrawal of President Biden from the race, I don't think is going to have any impact on the market because whether it's Kamala Harris or somebody else, the policies are going to be the same," said David Spika, chief markets strategist at Turtle Creek Wealth Advisors in Dallas. "The market's growing today because big tech is back. We saw a couple of weeks in a row where there was a rotation out of the big tech names into small caps and values and cyclicals, which actually was very healthy," he added. Europe's biggest banks also report this week, with eyes on whether the gains from higher interest rates have run out of steam and if recent political drama is weighing on sentiment. The STOXX 600 (.STOXX) , opens new tab finished up 0.93%. The People's Bank of China cut short-term rates by 10 basis points, which pulled down long-term borrowing costs and bond yields. The move follows Beijing's release of a policy document on Sunday outlining its ambitions for the economy. MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) , opens new tab lost 0.61%. Oil prices fell for a second consecutive session amid rising stockpiles and signs of weak demand. Brent crude futures fell 0.3% to settle at $82.40 per barrel, the lowest since June 11. U.S. West Texas Intermediate crude futures for August delivery expired on Monday after falling 35 cents to $79.78 a barrel, also a one-month low. Gold prices fell to more than a one-week low. Spot gold lost 0.07% to $2,398.32 an ounce. U.S. gold futures gained 0.28% to $2,402.10 an ounce. Sign up here. https://www.reuters.com/markets/global-markets-wrapup-1-2024-07-22/

2024-07-21 23:58

July 22 (Reuters) - Energy producer Woodside Energy (WDS.AX) , opens new tab has agreed to buy U.S. liquefied natural gas developer Tellurian (TELL.A) , opens new tab, including its U.S. Gulf Coast Driftwood LNG export project, for $1.2 billion including debt, the Australian company said on Monday. The agreement could strengthen the position of the U.S. as the world's largest producer of the superchilled gas by securing the completion of Tellurian's 27.6 million metric ton per annum facility in Lake Charles, Louisiana. The transaction includes the $900 million cash purchase of outstanding Tellurian common stock at $1 per share, Woodside said in a statement, representing more than a 75% premium to Tellurian's last closing price. The buyout is expected to be completed by the end of the year, Tellurian said in a filing to the U.S. Securities and Exchange Commission on Monday. The deal gives the Australian firm access to a fully authorized project in the U.S. amid difficulties for other LNG developers to advance proposals due to President Joe Biden administration's pause on approvals for new LNG exports to countries that do not have free trade agreements with the U.S. The acquisition "positions Woodside to be a global LNG powerhouse," Meg O'Neill, the company's CEO said. The transaction adds a scalable U.S. LNG development opportunity to Woodside's existing 10 million metric tons a year of equity LNG in Australia, she added. Tellurian's stock went up to 96 cents a share on Monday, the highest level since March 11. FINANCIAL EASE The agreement could also help solve Tellurian's financial woes. The U.S. company has been searching for financial partners to fund the Driftwood LNG facility. In May, it said it would sell its upstream assets to pay off some of its debt. As part of the agreement, Woodside is providing Tellurian with a bridging loan of up to $230 million at a 12% interest rate to secure uninterrupted operations and continue the construction of the Driftwood LNG plant, the U.S. company said in a separate filing. The Driftwood LNG project has had many setbacks, including the cancellation of some LNG supply deals amid concerns over the company's ability to finish the project. In a letter on Sunday urging shareholders to accept the offer, Tellurian Executive Chairman Martin Houston said the deal was in the company's best interests because it would be difficult to raise the billions required to build the plant without a commitment from long-term customers for all the LNG produced. Houston said the board's decision to recommend the sale of the Driftwood project was unanimous as it was felt that cash in hand was better than the uncertainty posed by the project. As part of the agreement, several executives have agreed to significant reductions in their proposed bonus payments should they get the project over the line. Tellurian's President Daniel Belhumeur would see his bonus package fall from $15 million to $4.5 million. Belhumeur and a number of executives are to remain in place at least until the expected change of control of the company. Tellurian told employees it is not planning any layoffs. "Many of you will be asked to work with them during a post-closing transition period, and could be offered long-term employment," Tellurian told employees, also promising to honor end-of-2024 performance bonuses, one of the filings showed. CLOSER TO COMPLETION Woodside said it was aiming for the project to be ready for a final investment decision for phase 1 from the first quarter of 2025. Saul Kavonic, an energy analyst at MST Marquee, said the deal is the right kind of acquisition that Woodside should be pursuing, versus an earlier attempt to merge with Australian firm Santos (STO.AX) , opens new tab. "It is leveraging Woodside's LNG expertise to access financially distressed yet otherwise advantaged LNG assets at a good price, which Woodside can add real value to," he said. Woodside can remedy marketing, funding and operational capability deficits Tellurian suffered from to add value here, Kavonic added. Woodside and Santos were in merger talks earlier this year, but discussions fell apart after the two companies could not agree on a valuation level. Sign up here. https://www.reuters.com/markets/deals/australias-woodside-energy-buy-us-based-tellurian-12-bln-2024-07-21/

2024-07-21 23:07

LONDON, July 22 (Reuters) - Geopolitical rivalries, including brewing trade battles between the United States and China, now trump inflation as the biggest worry for sovereign wealth funds and central banks managing some $22 trillion in assets, an Invesco survey published on Monday showed. The ratcheting up of conflict - from Russia's war in Ukraine to trade restrictions - has loomed over global investors for several years, but with the inflation tide ebbing, and as nearly half the world's population votes on new leaders, the tensions are now centre stage. "This of course is the year of elections," said Rod Ringrow, Invesco's head of official institutions, adding: "Geopolitics has trumped (inflation) on both the short term and the long term outlook." Some 83% of the survey respondents listed geopolitical tensions as their top near-term concern, surpassing the 73% who listed inflation. Geopolitical fragmentation and protectionism also topped the list of worries for the coming decade for 86% of respondents. Over the long term, respondents listed climate change as the second-biggest risk. "Climate is mainstream now and the investment processes for the sovereign funds and the central banks...are beginning to allocate capital to look at that and see how that impacts," Ringrow said. The Invesco Global Sovereign Asset Management Study, in its 12th year, polled 83 sovereign wealth funds and 53 central banks in the first quarter of 2024. OPPORTUNITY IN GOLD The strains - specifically the West's confiscation of more than $300 billion worth of Russia's assets in response to Moscow's ongoing invasion of Ukraine - also spooked central banks. A total of 56% of them said the "potential weaponisation" of reserves boosted the appeal of gold. "We have seen more central banks buying gold, buying physical gold...and an increasing demand to try and hold the gold, or some of it, locally," Ringrow said. Central banks traditionally stored gold in centres like London and New York - where, as Venezuela found in recent years, it can be effectively seized. EMERGING OPTIMISM More than half of respondents said that emerging markets are likely to benefit from the increasing multipolarity, while 67% of sovereign wealth funds expect emerging markets to match or outperform developed markets. India was the most attractive market, partly because its bonds are becoming part of easy-to-access global investment indices. But Ringrow said a constellation of other emerging economies, including Mexico, Brazil, Indonesia and South Korea, can "take advantage of the dislocation in trade and economic activity". Sign up here. https://www.reuters.com/business/finance/geopolitics-overtakes-inflation-top-sovereign-wealth-fund-worry-list-2024-07-21/

2024-07-21 22:50

MELBOURNE, July 22 (Reuters) - A consortium led by Singapore's Golden Energy and Resources has secured $850 million to buy South32's (S32.AX) , opens new tab Australian coking coal assets, two sources told Reuters, as private credit continues to fill a funding gap for the largely debanked sector. A syndicate of five private credit lenders and one global investment bank will lend $600 million to GEAR M Illawarra Met Coal for its purchase of South 32's Illawarra metallurgical coal business, two sources familiar with the matter said on Sunday. South32 said in February it had agreed to sell the business in New South Wales state for $1.65 billion, exiting coal to focus on expanding in copper and zinc. GEAR is majority owned by Indonesia's Widjaja family, and will hold 70% of the consortium while privately held Australian coal company M Resources will own the rest. The funding round contains an additional $150 million in working capital and A$150 million ($100 million) in guaranteed facilities provided by banks and insurers, said the sources. The facility is for five years, with a coupon at 850 basis points above benchmark U.S. overnight financing rate SOFR. Grant Samuel was mandated advisor. Grant Samuel and GEAR did not respond to emailed requests for comment outside of normal business hours. M Resources declined to comment. Sign up here. https://www.reuters.com/markets/deals/singapores-gear-secures-850-mln-south32s-australian-coking-coal-sources-2024-07-21/