Commodities Update — Gold down; Soybeans rise, wheat falls; P&G raises sales forecast

Commodities Update — Gold down; Soybeans rise, wheat falls; P&G raises sales forecast
Wheat lost more ground, while corn eased. (Shutterstock)
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Updated 21 April 2022

Commodities Update — Gold down; Soybeans rise, wheat falls; P&G raises sales forecast

Commodities Update — Gold down; Soybeans rise, wheat falls; P&G raises sales forecast

RIYADH: Gold prices eased on Thursday as a rebound in US Treasury yields tempered bullion’s safe-haven demand stemming from the Ukraine crisis and its potential impact on the global economy.

Spot gold was down 0.4 percent at $1,950.61 per ounce, as of 0502 GMT. US gold futures were down 0.1 percent at $1,953.00.

Benchmark US 10-year Treasury yields firmed after they fell from three-year highs on Wednesday. 

Silver dips

Spot silver dipped 0.6 percent to $25.07 per ounce. 

Platinum dropped 0.7 percent to $980.00, while palladium slipped 0.8 percent to 2,431.81.

Soybean rise

Chicago soybean futures ticked higher on Thursday, holding on to gains made in recent sessions, as expectations of higher demand for US supplies underpinned the market.

Wheat lost more ground, while corn eased.

The most-active Chicago Board of Trade soybean contract added 0.1 percent to $17.19 a bushel, as of 0159 GMT.

Wheat lost 0.7 percent to $10.90 a bushel and corn gave up 0.3 percent to $8.07-3/4 a bushel.

P&G raises sales forecast


Procter & Gamble Co. raised its full-year sales forecast on Wednesday as consumer demand for cleaning and personal care products remained stronger than expected despite higher prices, sending its shares up more than 2 percent.

P&G’s sales growth is at its strongest in at least 15 years, according to analysts, but there are concerns that consumers will start to swap branded items for cheaper own-label products, as supply chain constraints and soaring commodity prices push inflation ever higher, squeezing household budgets.

P&G executives said, however, that for now, consumers were switching to better-value premium products such as single-dose detergents or higher-priced diapers, adding they would focus marketing efforts on such offerings.

Executives also announced fresh price hikes in US feminine, home and oral care from this summer, even though they expect consumer demand to soften as the higher prices feed through to shop shelves.

(With inputs from Reuters) 


Global stocks mixed after Eurozone inflation rises

Global stocks mixed after Eurozone inflation rises
Updated 16 sec ago

Global stocks mixed after Eurozone inflation rises

Global stocks mixed after Eurozone inflation rises

BEIJING: Global stocks were mixed Friday after inflation in 19 countries that use Europe’s euro currency spiked to a record and Chinese factory activity weakened.

London and Frankfurt opened higher, while Shanghai and Tokyo declined while Hong Kong advanced.

Wall Street futures rebounded after the benchmark S&P 500 index fell Thursday to its lowest level in almost two years. Oil prices edged higher.

Inflation in Germany, France and other euro zone countries accelerated to 10 percent in September from the previous month’s 9.1 percent, the statistics agency Eurostat reported. That was the highest since record keeping for the euro began in 1997.

Investors increasingly worry the global economy might tip into recession following aggressive interest rate hikes this year by the US Fed and central banks in Europe and Asia to cool inflation that is at multi-decade highs.

Markets slid this week after British Prime Minister Liz Truss announced plans for tax cuts that investors worry will push inflation higher. Meanwhile, global export demand is weakening and Russia’s attack on Ukraine has disrupted oil and gas markets.

“We’d be inclined to argue that we haven’t yet seen the bottom,” ING economists said in a report.

On Thursday, German Chancellor Olaf Scholz said the world’s fourth-biggest economy faces a “double whammy” from inflation and surging energy prices.

In early trading, the FTSE 100 in London rose 0.7 percent to 6,929.43 and Frankfurt’s DAX advanced 0.7 percent to 12,064.73. The CAC 40 in Paris added 0.6 percent to 5,708.42.

On Wall Street, the S&P 500 future was 0.6 percent higher. That for the Dow Jones Industrial Average was up 0.4 percent.

On Thursday, the S&P 500 fell 2.1 percent to its lowest level in almost two years after strong US jobs data reinforced expectations the Federal Reserve will stick to plans for more interest rate hikes.

The Dow slid 1.5 percent and the Nasdaq composite lost 2.8 percent.

In Asia, the Shanghai Composite Index fell 0.6 percent to 3,024.39 after surveys of manufacturers showed factory production, new export orders and manufacturing employment declined in September.

The Nikkei 225 in Tokyo fell 1.8 percent to 25,937.21 and the Hang Seng in Hong Kong gained 0.5 percent to 17,257.08. The Kospi in Seoul lost 0.7 percent to 2,155.49.

Sydney’s S&P ASX 200 sank 1.2 percent to 6,474.20 while India’s Sensex advanced 1.8 percent to 57,421.45. New Zealand and Southeast Asian markets declined.

Stock markets and the value of the British pound rebounded Wednesday after the Bank of England said it would buy government bonds to support their price. But markets resumed their slide Thursday after Truss shrugged off criticism and defended her tax-cut plan despite a plea from the International Monetary Fund to reverse course.

The S&P 500 is on track to end September with an 8 percent loss for the month. It is down more than 20 percent for the year as investors wait for a break in inflation that has prompted the Fed to raise interest rates five times.

The yield on a two-year US Treasury, or the difference between its market price and the payout at maturity, widened to 4.2 percent on Thursday from Wednesday’s 4.14 percent.

Stronger-than-expected US employment data Thursday reinforced expectations the Fed will feel comfortable sticking to plans to raise interest rates further and keep them elevated through next year.

In China, surveys of manufacturers by business news magazine Caixin and an official industry group found production and new export orders declined. That was in line with expectations that a Chinese manufacturing boom would fade due to weak global demand.

“The downturn in external demand looks set to deepen,” Zichun Huang of Capital Economics said in a report.

In energy markets, benchmark US crude lost 49 cents to $81.72 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 92 cents Thursday to $81.23. Brent crude, used to price international oils, shed 58 cents to $87.76 per barrel in London. It lost 83 cents the previous session to $88.49.

The dollar edged down to 144.40 yen from Thursday’s 144.43 yen. The euro rose to 98.16 cents from 97.90 cents.

European shares rise; set to end painful Sept quarter lower

European shares rise; set to end painful Sept quarter lower
Updated 57 min 48 sec ago

European shares rise; set to end painful Sept quarter lower

European shares rise; set to end painful Sept quarter lower

BENGALURU: European stock indexes climbed on Friday, the last trading session of a painful quarter, hit by worries about the impact of aggressive policy tightening measures by central banks on economic growth and corporate earnings, according to Reuters.

The region-wide STOXX 600 index was up 1 percent by 0810 GMT, led by bargain hunting in beaten-down shares of retailers, oil and gas companies, and banks, rising between 1.8 percent and 2 percent.

The index was down 5 percent for the July-September period and set to notch its third straight quarterly decline in what will be its longest such losing streak since 2011. For the month, it shed 6.8 percent.

The market has been under pressure since the Russia-Ukraine war earlier this year jolted the region and sent gas prices soaring, leading to rampant inflation, which sparked concerns about a recession due to central banks delivering hefty rate hikes.

“We have got a huge reevaluation of asset prices and the markets down at year lows, that is just pushing investors to take a look at some of these new levels on offer,” said John Woolfitt, director-trading, Atlantic Capital Markets.

“There’s a tug of war going on in the market at the moment. One side is bargain hunters looking at prices not seen for a while and the other side is just rebalancing portfolios to ensure that in this new sort of era, certain assets aren’t still being held.”

Data earlier in the day showed the Netherlands’ inflation jumped to 17 percent in September, its highest in decades on skyrocketing energy prices.

All eyes are on September eurozone inflation data due at 0900 GMT that will likely strengthen the case for another 75 basis point rate increase by the European Central Bank in October.

German inflation accelerated to 10.9 percent this month, exceeding market expectations.

EU countries on Friday will likely approve emergency levies on energy firms’ windfall profits and launch talks on their next move to tackle Europe’s energy crunch.

Russian President Vladimir Putin is set to host a Kremlin ceremony on Friday annexing four regions of Ukraine, after what Kyiv and Western countries said were sham votes staged at gunpoint.

Italy’s Webuild rose 1.9 percent after the builder said it expected its commercial results for the year to “significantly exceed” guidance.

Shares of German sportswear makers Puma and Adidas slid 5.1 percent and 4.1 percent, respectively, after US rival Nike Inc. cautioned that gross margins would remain under pressure through the year due to ramped up discounts and a rapidly strengthening dollar.

India hikes rates to tame stubbornly high inflation, analysts see more tightening

India hikes rates to tame stubbornly high inflation, analysts see more tightening
Updated 30 September 2022

India hikes rates to tame stubbornly high inflation, analysts see more tightening

India hikes rates to tame stubbornly high inflation, analysts see more tightening

MUMBAI: The Reserve Bank of India raised its benchmark repo rate by 50 basis points on Friday, the fourth straight increase, as policymakers extended their battle to tame stubbornly high inflation and analysts said further tightening is on the cards, according to Reuters.

The monetary policy committee, comprising of three members from the RBI and three external members, raised the key lending rate or the repo rate to 5.90 percent with five out of the six voting in favor of the hike.

The RBI has now raised rates by a total 190 basis points since its first unscheduled mid-meeting hike in May but inflation continues to remain stubbornly high — a phenomenon that is affecting much of the global economy.

“The inflation trajectory remains clouded with uncertainties arising from continuing geopolitical tensions and nervous global financial market sentiments,” Governor Shaktikanta Das said in his address accompanying the MPC’s decision.

“In this backdrop, MPC was of the view that persistence of high inflation, necessitates further calibrated withdrawal of monetary accommodation to restrain broadening of price pressures, anchor inflation expectations and contain the second round effects,” he said.

The MPC also was of the view the current policy rate, adjusted for inflation, was still below 2019 levels.

Most economists expect further tightening, and several predicted the terminal rate at 6.5 percent, suggesting another 60 bps of rate hikes.

That is well above this month’s median Reuters poll forecast at 6.00 percent in each quarter through end-2023.

“The market was positioned for peak policy rate near 6 percent, today’s 50 bps hike will raise expectations that the peak policy rate is higher than earlier believed. We see peak policy rate at 6.5 percent now,” said Prithviraj Srinivas, chief economist at Axis Capital.

Fed angst

The US Federal Reserve’s relentless and aggressive rate hikes over recent months to curb inflation have battered the rupee, and most other emerging and developed market currencies.

“Clearly, the fast-evolving world order and consistent repricing of Fed’s out-sized hikes are strong-arming the emerging markets,” said Madhavi Arora, lead economist at Emkay Global Financial Services.

Policymakers around the world are grappling with a sweeping shift away from their respective currencies and into the safe-haven dollar, raising worries of capital outflows and further damage to their economies.

Economists say the RBI too would need to focus on ensuring the interest rate differential is not too low.

The standing deposit facility rate and the marginal standing facility rate were also increased by the same quantum to 5.65 percent and 6.15 percent, respectively

The MPC lowered its GDP growth projection for financial year 2023 to 7 percent from 7.2 percent earlier, while its retail inflation forecast was held steady at 6.7 percent.

India’s annual retail inflation rate accelerated to 7 percent in August, driven by a surge in food prices, and has stayed above the RBI’s mandated 2-6 percent target band for eight consecutive months.

The benchmark 10-year bond yield eased marginally after the RBI’s decision to 7.3535 percent at 07335 GMT while the partially convertible rupee weakened briefly before bouncing to 81.58 per dollar versus 81.86 on Thursday.

The broader NSE Nifty 50 index recovered sharply after a brief fall to trade up 1.65 percent.


Europe’s biggest nuclear reactor reaches full power

Europe’s biggest nuclear reactor reaches full power
Updated 30 September 2022

Europe’s biggest nuclear reactor reaches full power

Europe’s biggest nuclear reactor reaches full power

HELSINKI: Finland’s long-delayed Olkiluoto 3 nuclear reactor has reached full power to become the most powerful electricity production facility in Europe, operator TVO said Friday, a boost amid a continent-wide energy crunch, according to AFP.

With a power level of 1,600 megawatts, the plant located on the Nordic country’s southwestern coast is also now the third most powerful electricity production facility globally, the company said.

OL3’s production is being closely followed in Finland, where the hope is that the plant could ease the coming winter’s challenges as European energy prices have soared following Russia’s invasion of Ukraine.

“The plant unit is now the most powerful electricity production facility in Europe,” TVO said in a statement, adding that regular operation is expected to start in December 2022.

Around 40 percent of Finland’s electricity production now comes from Olkiluoto, as the OL1 and OL2 reactors combined produce approximately 21 percent and the new OL3 alone around 19 percent.

The reactor, built by the French-led Areva-Siemens consortium, went online in March — 12 years behind schedule — after suffering a long string of setbacks.

The plant’s regular production was expected to start this summer but was postponed to December, after “foreign material” was observed in the turbine’s steam reheater.

Operator TVO said that the ten remaining sets of tests will impact the power levels in the coming months.

“In some of the upcoming tests, the plant unit’s production is either intentionally interrupted or the power level is lowered,” the company said.

The European Pressurised Reactor model was designed to relaunch nuclear power in Europe after the 1986 Chernobyl catastrophe, and was touted as offering higher power outputs and better safety.

Oil holds steady on prospect of OPEC+ output cut, weaker dollar

Oil holds steady on prospect of OPEC+ output cut, weaker dollar
Updated 30 September 2022

Oil holds steady on prospect of OPEC+ output cut, weaker dollar

Oil holds steady on prospect of OPEC+ output cut, weaker dollar

SINGAPORE: Oil prices were little changed during Asian trade on Friday, though were headed for their first weekly gain in five weeks, underpinned by a weaker US dollar and the possibility that OPEC+ may agree to cut crude output when it meets on Oct. 5.

Brent crude futures for November, which expire on Friday, inched down 10 cents or 0.1 percent to $88.39 a barrel by 0303 GMT, after losing 83 cents in the previous session. The more active December contract was unchanged at $87.18.

US West Texas Intermediate (WTI) crude futures for November delivery rose 0.1 percent or by 9 cents to $81.32 a barrel, after falling 92 cents in the previous session.

“A deteriorating crude demand outlook won’t allow oil to rally until energy traders are confident that OPEC+ will slash output at the October 5th meeting,” Edward Moya, senior analyst with OANDA, said in a client note.

“The weakness with crude prices is somewhat limited as the dollar softens going into quarter-end.”

Both Brent and WTI are however on track to rise by about 3 percent for the week, their first weekly rise since August, after hitting nine-month lows earlier in the week.

Oil prices were shored up by a drop in the dollar from 20-year highs earlier in the week. A weaker greenback makes dollar-denominated oil cheaper for buyers holding other currencies, improving demand for the commodity.

For all of September, Brent is set to drop by 8.4 percent, down for a fourth month. During the third quarter, Brent has plunged 23 percent, its first quarterly loss since the fourth quarter of 2021.

WTI is set to fall by 9.3 percent in September, also its fourth monthly decline, and it dropped by 23 percent during the quarter, the first quarterly slump since the period ending in March 2020 when COVID-19 slammed demand.

Analysts said the market appeared to have found a floor, with supply set to tighten as the European Union will ban Russian oil imports from Dec. 5. However, the key unknown is how much demand will drop as global growth slows in the face of aggressive interest rate hikes.

“Fundamentally, I still think prices are likely to move higher from here on tightening of Russian sanctions and with low global crude inventories, and the SPR (US Strategic Petroleum Reserve) supplies falling off,” said National Australia Bank commodities analyst Baden Moore.

“I expect OPEC is well positioned to manage supply to offset risks to demand,” he said.

Leading members of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together called OPEC+, have begun discussing an output cut ahead of their meeting on Wednesday, three people told Reuters.

Russia could suggest a cut of up to 1 million barrels per day, a person familiar with Russian thinking on the matter said earlier this week.

“In August, OPEC+ production was estimated at around 3.37 million barrels per day below target production levels. So in reality, any cut in supply will likely be smaller than whatever figure the group announces,” said ING Economics in a note.