NEW YORK (Reuters) – Investors are closely watching events in Israel as a geopolitical risk to markets, with some expectation the violence could prompt a move into safe haven assets.
Gunmen from the Palestinian group Hamas entered Israel in an unprecedented attack on Saturday. Western countries, led by the United States, denounced the attack and pledged support for Israel.
Rising geopolitical risk could see buying in assets like gold and the dollar and potentially boost demand for U.S. Treasuries, which have been sold off aggressively, analysts said.
“This is a good example of why people need gold in their portfolios. It is a perfect hedge against international turmoil,” said Peter Cardillo, chief market economist at Spartan Capital Securities, who predicted the dollar would also benefit.
“Anytime there is international turmoil, the dollar strengthens,” said Cardillo.
Markets have been reacting in recent weeks to an expectation that U.S. interest rates will stay higher for longer. Bond yields have soared while the U.S. dollar has been on a streak of gains. Stocks meanwhile had sharp losses for the third quarter but stabilized in the last week.
“Whether this is a massive market moment or not depends on how long it lasts and whether others are sucked into the conflict,” said Brian Jacobsen, chief economist at Annex Wealth Management, of the situation in Israel. Jacobsen questioned how much impact it would have on the oil price despite Iran having been boosting output.
The Hamas attack was openly praised by Iran and by Hezbollah, Iran’s Lebanese allies.
“Iranian oil production has been increasing, but any progress they’ve been making behind the scenes with the U.S. will be dramatically undermined by Iran’s celebrating Hamas’s actions,” said Jacobsen, adding that “the possible output loss matters, but it won’t be earth shattering.”
“It’s most critical to see how Saudi Arabia reacts,” said Jacobsen. Washington has been trying to strike a deal that would normalise ties between Israel and Saudi Arabia.
David Kotok, chair and chief investment officer at Cumberland Advisors in Sarasota, Florida, said that the situation was concerning as the U.S. is weakened by dysfunction in Washington. Republicans are looking for a successor to ousted Speaker Kevin McCarthy of the House of Representatives, and a budget showdown looms.
“I am very worried about more explosive situations that require U.S. determination and U.S. defense capability which is being injured,” by the situation in Washington, Kotok said.
(Reporting by Megan Davies; Editing by Lisa Shumaker)
https://www.shorenewsnetwork.com/2023/10/08/attack-on-israel-could/
Oil prices jumped and stock markets around the world mostly slumped after deadly attacks by Hamas from the Gaza Strip prompted Israel to declare war.
The price of a barrel of West Texas Intermediate oil jumped by almost $5 to more than $86 US a barrel on Monday, mostly on concerns that the volatile situation could ensnare more countries in the region.
Israel is a marginal oil producer, but nearby nations in the Middle East are major suppliers, and if they get involved in the fighting, global supplies will be significantly impacted.
"While oil fundamentals have not changed since these attacks, it does not mean they won't," said Warren Patterson, head of commodities strategy at Dutch bank ING. "There are reports that Iran helped Hamas plan the attacks and gave them the green light. If this is proven to be true, we could see the U.S., an ally of Israel, taking a tougher stance against Iran, which could ultimately lead to a reduction in oil supply."
The Toronto Stock Exchange was closed for the Thanksgiving holiday on Monday, and most major Asian markets are also closed. But the New York Stock Exchange was open and benchmarks like the Dow Jones Industrial Average and the S&P 500 were both lower.
Traders assess geopolitical risk
Shares in weapons makers and military contractors surged: Northrop Grumman and RTX each rose 3.6 per cent while Lockheed Martin jumped 4.6 per cent.
Shares in travel and leisure companies, such as airlines and cruise ships, tumbled. American, United and Delta suspended service to Israel as the U.S. State Department issued travel advisories for the region, citing potential for terrorism and civil unrest. American Airlines sank 5.6 per cent, and Norwegian Cruse Line fell 4.5 per cent.
Tel Aviv's main stock benchmark was down 0.4 per cent. It closed 6.5 per cent lower Sunday, after the attacks. Early Monday, Israel's Central Bank said it will sell up to $30 billion US in foreign exchange to prop up the shekel, which fell to a near 8-year low.
Edward Moya, an analyst with foreign exchange firm Oanda, said: "It was supposed to be a quiet Monday morning given the Columbus Day holiday," but following the unexpected Hamas attack, "traders are struggling to assess how this latest geopolitical risk will unfold and potentially impact inflation and growth trends."
https://www.cbc.ca/news/business/israel-markets-oil-1.6990831
Exxon Mobil is negotiating to acquire Pioneer Natural Resources in a deal valued at around USD 60 billion. The megadeal would allow ExxonMobil to enjoy a market leader position in shale oil production in the Permian Basin of Texas and New Mexico. Pioneer, with an enterprise value of around USD 56 billion has a dominant position in the basin that has powered America's journey to becoming one of the leading oil-producing nations in the world. Once completed, the M&A will turbocharger Exxon's already established unrivaled position in America's oil and gas industry.
The acquisition would be Exxon's biggest since its USD 81 billion deal with Mobil in 1998. As per shale analysts, this merger could also open other potential mergers and acquisitions as other oils major companies would find avenues to match ExxonMobil's scale of expansion.
ExxonMobil
ExxonMobil is one of the 10 largest oil and gas companies in the world. With a market value of USD 436 billion, it is the largest US oil-producing company. The company primarily focuses on the exploration, production, refining, and marketing of petroleum products, ranging from crude oil to natural gas and lubricants to petrochemicals. The company took its current name in 1999 when Exxon Corporation and Mobil Corporation merged to become one entity. ExxonMobil operates worldwide with a vast network of facilities, subsidiaries, and joint ventures. It is known for its extensive upstream and downstream operations.
What the acquisition of Pioneer Natural Resources will bring for ExxonMobil?
ExxonMobil has been a leader in traditional oil production. However, the advancement of shale oil production technology has challenged its unrivaled position in the American oil and gas industry. Pioneer Natural Resources, on the other hand, is a Texas-based shale oil company. Pioneer is the third-largest producer of oil in the Permian basin after Chevron Corp. and ConocoPhillips. The relatively low cost of oil extraction is one of the key reasons why Exxon Mobil is eyeing acquiring Pioneer Natural Resources.
Acquiring Pioneer will give Exxon added leverage to increase shale production when a requirement arises. Exxon produced about 620,000 BOED (barrels of oil equivalent per day) in the Permian Basin during the second quarter. Comparatively, it was dwarfed by Pioneers' output in the basin, which was around 711,000 BOED (barrels of oil equivalent per day).
China’s September copper cathode output jumped 13% from a year earlier to a monthly record, state-backed research house Antaike said on Wednesday.
Production at 22 smelters surveyed by Antaike, accounting for 82% of China’s copper capacity at 11.18 million metric tons, was at 911,800 tons last month, Antaike said.
September output was 0.7% higher compared with August.
The strong production came with high copper charges smelters receive and relatively good prices for sulfuric acid, a by-product in copper production.
Copper concentrate treatment charges AM-CN-CUCONC in China’s spot market have stood at $93.50 a ton since mid-September, the highest since at least 2019.
China’s copper output reached 7.75 million tons in the first nine months, up 12.7% from the same period in 2022.
Antaike expects a slight decline in October output to 902,000 tons, due to some producers lowering operation during the Golden Week holiday.
https://www.hellenicshippingnews.com/chinas-sept-copper-output-at-a-record-monthly-high-antaike/
China Iron and Steel Association Prepares for Green and Low-Carbon Transformation in Steel Industry
In a recent statement, He Wenbo, Secretary of the Party Committee and Executive Chairman of the China Iron and Steel Industry Association, highlighted the ongoing efforts of the steel industry to undergo a comprehensive green and low-carbon transformation. Speaking at the “12th China International Iron and Steel Conference and 2023 Global Low-Carbon Metallurgy Innovation Forum,” Wenbo discussed the fundamental changes that have taken place in the industry’s overall development, with a focus on embracing a sustainable and environmentally friendly path.
The steel industry in China has made substantial progress toward a greener future, with the implementation of a future-oriented green and low-carbon transformation plan. The sector has recognized the need for change and has been actively working on cleaner production methods. China aims to complete the ultra-low emission transformation plan, accounting for 80% of the existing steel production capacity, by 2025. This ambitious goal will result in a high-standard green production capacity that will sufficiently meet the country’s steel material demands in the years to come.
By adopting this plan, China Steel is aspiring to elevate its environmental standards, environmental performance, and environmental technology to new heights. The transformation will also lead to the development of garden factories in the industry, creating a more sustainable and aesthetically pleasing manufacturing environment.
The shift towards a green and low-carbon steel industry is a systematic project that requires the engagement and collaboration of all stakeholders. The China Iron and Steel Industry Association is actively working with its members and industry partners to ensure a smooth transition. This comprehensive transformation plan reflects China‘s commitment to sustainable development and aligns with global efforts to combat climate change and reduce carbon emissions.
It is important to note that the Securities Times, which reported on He Wenbo’s statement, strives to provide accurate and truthful information. The content mentioned in the article should be used as a reference and does not constitute investment advice. Investors are advised to exercise caution and make informed decisions based on their own analysis.
To stay updated on stock market trends, policy information, and wealth opportunities, readers are encouraged to download the official Securities Times app or follow their official WeChat account.
Iron ore futures rose Monday following the most recent stimulus moves by China's government, outweighing downward pressure from production cuts among some steel mills due to shrinking margins.
According to Reuters, the most-traded January iron ore (SCO:COM) on China's Dalian Commodity Exchange ended daytime trading +2.8% at 862 yuan/metric ton ($117.93), the highest since September 25, and benchmark November iron ore on the Singapore Exchange recently was +2.4% at $117.10/ton, its best level since October 3.
Rio Tinto (NYSE:RIO) +1.3%, Vale (VALE) +1% and BHP (NYSE:BHP) +0.6% pre-market; other potentially relevant stocks include Fortescue (OTCQX:FSUMF), Glencore (OTCPK:GLCNF) (OTCPK:GLNCY) and Anglo American (OTCQX:AAUKF) (OTCQX:NGLOY).
China's central bank added liquidity support to the banking system by conducting medium-term lending facility operations worth 789B yuan, and iron ore inventories fell for the fifth consecutive week to 105.2 million tons as of October 13, the lowest since June 2020, according to data from the Steelhome consultancy.
But the continued crisis in China's property sector, the world's largest steel consumer, likely will keep demand restrained despite further stimulus, ANZ bank said.
Posted on 17 Oct 2023
China's HRC output slips, fundamentals stay weak
Production of hot-rolled coil (HRC) among the 37 Chinese flat steelmakers Mysteel regularly monitors reversed down from the previous week's gain and lost 31,000 tonnes or 1% on week to 3.17 million tonnes during October 5-11.
Survey respondents attributed the on-week drop to the fact that some steel mills in North China trimmed their HRC production due to fewer orders or commenced maintenance works on their blast furnaces because of negative steel margins.
Mysteel's survey found that the hot-rolling capacity utilization rate among the 37 mills had moved lower by 0.79 percentage point on week to 80.97% over the survey week.
Although October is a traditional peak month for steel consumption in China, the country's hot coils market remained tepid in overall, sources commented.
For their part, downstream HRC users generally held a cautious stance and only purchased the flat product for immediate needs during the survey period, market sources noted, adding that the contradiction between high output and weak demand continued to widen.
HRC stocks at commercial warehouses Mysteel follows in the 33 Chinese cities mounted further by another 13,600 tonnes or 0.4% on week to hit an eight-month high of 3.06 million tonnes as of October 12.
The weak market fundamentals also weighed on HRC prices in both the spot and futures markets during the survey period, Mysteel Global noted.
For example, as of October 13, China's national price of Q235 4.75mm HRC came in at Yuan 3,843/tonne ($525.6/t) including the 13% VAT, down by Yuan 61/t from October 7, a make-up working day after China's Mid-Autumn Festival and National Day holidays (over September 29-October 6).
Meanwhile, on the Shanghai Futures Exchange, the most-traded HRC contract for January 2024 delivery closed at Yuan 3,727/t when the daytime trading session ended on October 13, losing Yuan 21/t from the settlement price on October 9, the exchange's first trading day after the long holiday break.
Source:Mysteel Global
US energy giant Chevron will buy its rival Hess for $53 billion in an all-stock deal - Copyright AFP Robyn Beck
US energy giant Chevron will buy its rival Hess for $53 billion in an all-stock deal, the companies announced in a joint statement on Monday.
The mega-acquisition is the latest consolidation in the US energy sector, coming less than two weeks after the announcement that ExxonMobil would acquire Texas shale producer Pioneer for about $60 billion.
Chevron’s deal values Hess’s equity at $53 billion, while the total enterprise value of the transaction, including debt, is $60 billion, according to the statement.
The acquisition will further diversify Chevron’s interests, with Hess’s assets including an offshore exploration scheme in oil-rich Guyana and a major shale project in North Dakota, along with assets in the Gulf of Mexico and Gulf of Thailand.
The deal “positions Chevron to strengthen our long-term performance and further enhance our advantaged portfolio by adding world-class assets,” Chevron chairman and CEO Mike Wirth said.
Hess CEO John Hess also welcomed the deal.
“This strategic combination brings together two strong companies to create a premier integrated energy company,” said Hess, who is expected to join Chevron’s board of directors.
“I am proud of our people and what we have achieved as a company, which has one of the industry’s best growth portfolios including Guyana, the world’s largest oil discovery in the last 10 years, and the Bakken shale, where we are a leading oil and gas producer,” he added.
With the deal, Chevron will acquire 30 percent ownership in more than 11 billion barrels of oil equivalent expected from the block in Guyana, along with holdings in the North Dakota Bakken shale field, according to the statement.
The deal comes at a time when crude is trading above $87 per barrel, a historically high level, which is boosting the profits of oil majors.
Chevron last year posted a record profit of $35.5 billion. Hess posted a net profit of $2.2 billion for 2022.
In electronic trading before the opening of the New York Stock Exchange, Chevron stock was down 3.4 percent at $161.1 while Hess was up 1.15 percent at $164.9.
https://www.digitaljournal.com/business/us-oil-giant-chevron-to-buy-rival-hess-for-53-bn/article
