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Tag: Copper (Mar'23)

  • CNBC Daily Open: Oil joined the July stocks rally

    CNBC Daily Open: Oil joined the July stocks rally

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    Pumpjack near school buses, Arvin, Kern County, California, USA.

    Citizens Of The Planet | Universal Images Group | Getty Images

    This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    What you need to know today

    Digesting data
    U.S. markets     traded higher Monday as all three major indexes edged up. Asia-Pacific markets were mostly higher Tuesday. Hong Kong’s Hang Seng Index was near flat as advance estimates showed the city’s second-quarter gross domestic product contracting 1.3% quarter on quarter. Meanwhile, Australia’s S&P/ASX 200 rose around 0.7% as the central bank kept interest rates unchanged at 4.1% for the second straight month.

    Intrigue in India
    Investors are growing interested in India as the country’s economy expands and stock market rallies — even amid high inflation. “Whatever the world is grappling with, it’s business as usual for India,” said Feroze Azeez, deputy CEO of Anand Rathi Wealth. Here are four sectors analysts think are the most appealing for investors.

    HSBC’s humongous profit
    HSBC reported second-quarter earnings that easily beat analysts’ expectations. Pre-tax profit of the largest bank in U.K. jumped 89% year-on-year to $8.77 billion, while revenue surged 38% to $16.71 billion. In light of those sterling results, HSBC’s board announced they’re planning to initiate a share buyback of up to $2 billion.

    New filing against JPMorgan Chase
    JPMorgan Chase handled more than $1.1 million in payments from Jeffrey Epstein to “girls or women” even after the bank says it removed the sex offender as a client in 2013, a lawyer for the U.S. Virgin Islands told a judge Monday. The Virgin Islands alleges that JPMorgan facilitated and financially benefited from Epstein’s sex trafficking of young women.

    [PRO] Benefiting from bankruptcies
    Corporate insolvencies in the U.K. have been rising in recent months. While it’s bad news, obviously, for those bankrupt firms, two global stocks stand to gain from the trend — analysts expect one of them to pop 31% over the next 12 months.

    The bottom line

    A soft landing — where inflation cools while the U.S. economy, labor market and corporate earnings continue growing — is, of course, good news for markets.

    Traders think that scenario is looking increasingly likely. Stocks inched up Monday. The S&P 500 added 0.15%, the Dow Jones Industrial Average rose 0.28% and the Nasdaq Composite advanced 0.21%.

    That gave all indexes a rosy July. For the month, the S&P climbed 3.1%, its fifth consecutive month of gains. The Dow jumped 3.4% after experiencing a 13-day rally, its longest since 1987. The Nasdaq Composite popped 4.1%, its first five-month streak in more than two years.

    The optimism extended to the commodities market. The promise of higher economic activity, after all, raises demand for the raw input needed to keep the world moving, literally.

    Oil prices had their best month since January 2022, when both Brent crude and West Texas Intermediate crude added more than 17.2%. As of publication time, October Brent futures were trading at $85.19 per barrel and the September WTI contract at $81.6 per barrel.

    Metal prices are climbing as well. Prices for aluminum and zinc rose 2.7%. Copper — typically seen as an indicator of economic activity because it’s used in most parts of the economy — is at its highest since May 1, putting it on track to have its best month since January.

    Rocketing stock prices might not necessarily, or directly, have effects on the cost of eggs in grocery stores, for example. But a hot commodities market nudges up prices in the real world.

    That’s the difficult balancing act the Federal Reserve has to contend with: As a soft-landing scenario becomes more plausible, renewed economic activity might, ironically, make inflation harder to suppress.

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  • CNBC Daily Open: July was great for stocks — and oil

    CNBC Daily Open: July was great for stocks — and oil

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    Oil pump jack on Great Plains, southeastern Wyoming.

    Marli Miller | Universal Images Group | Getty Images

    This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    What you need to know today

    Tepid markets
    U.S. markets     traded higher Monday as all three major indexes edged up slightly after a winning week. Europe’s regional Stoxx 600 index eked out a 0.12% increase on the back of a dip in inflation and higher-than-expected economic growth in the euro zone.

    Upbeat euro zone figures
    The euro zone reported positive economic data Monday. Inflation in July was 5.3%, 20 basis points lower than June’s reading. Separate data showed that the continent’s gross domestic product grew 0.3% in the second quarter, higher than the 0.2% forecast. That figure was mostly boosted by Ireland’s economy, which expanded 3.3% during the period.

    Tighter lending conditions
    For the second half of 2023, U.S. banks expect to tighten standards for all loan categories, according to the Federal Reserve’s Senior Loan Officer Opinion Survey. That means credit limits might lower, and auto loans might be harder to get. In the commercial and industrial lending segment, banks are already seeing less demand for loans.

    New filing against JPMorgan Chase
    JPMorgan Chase handled more than $1.1 million in payments from Jeffrey Epstein to “girls or women” even after the bank says it removed the sex offender as a client in 2013, a lawyer for the U.S. Virgin Islands told a judge Monday. The Virgin Islands alleges that JPMorgan facilitated and financially benefited from Epstein’s sex trafficking of young women.

    [PRO] Where’s the S&P 500 going?
    The S&P 500 has rallied a remarkable 20% in seven months and is only around 200 points away from its all-time high. CNBC Pro’s Bob Pisani explains what drove the S&P to such heights, and where the index is going for the final five months of the year.

    The bottom line

    A soft landing — where inflation cools while the U.S. economy, labor market and corporate earnings continue growing — is, of course, good news for markets.

    Traders think that scenario is looking increasingly likely. Stocks inched up Monday. The S&P 500 added 0.15%, the Dow Jones Industrial Average rose 0.28% and the Nasdaq Composite advanced 0.21%.

    That gave all indexes a rosy July. For the month, the S&P climbed 3.1%, its fifth consecutive month of gains. The Dow jumped 3.4% after experiencing a 13-day rally, its longest since 1987. The Nasdaq Composite popped 4.1%, its first five-month streak in more than two years.

    The optimism extended to the commodities market. The promise of higher economic activity, after all, raises demand for the raw input needed to keep the world moving, literally.

    Oil prices are poised to have their best month since January 2022, when both Brent crude and West Texas Intermediate crude added more than 17.2%. At publication time, Brent’s up 14.23% and WTI’s 15.8% for the month. (It’s still the last day of July in the U.S. because of time zone differences.)

    Metal prices are climbing as well. Prices for aluminum and zinc rose 2.7%. Copper — typically seen as an indicator of economic activity because it’s used in most parts of the economy — is at its highest since May 1, putting it on track to have its best month since January.

    Rocketing stock prices might not necessarily, or directly, have effects on the cost of eggs in grocery stores, for example. But a hot commodities market nudges up prices in the real world.

    That’s the difficult balancing act the Federal Reserve has to contend with: As a soft-landing scenario becomes more plausible, renewed economic activity might, ironically, make inflation harder to suppress.

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  • China’s recovery may mean the Fed will have to hike rates longer

    China’s recovery may mean the Fed will have to hike rates longer

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    SHANGHAI, CHINA – Tourists pose for a photo at the Shanghai Disney Resort as the resort kicked off a month of festivities from January 13 to February 10 to celebrate the upcoming Chinese New Year.

    China News Service | China News Service | Getty Images

    As the end of China’s stringent Covid restrictions quickens the country’s economic recovery, concerns about pent-up Chinese demand — and the inflation that may follow — could mean bad news for the U.S. Federal Reserve.

    Economic data indicates that the Fed’s aggressive rate hikes are pulling down U.S. inflation, but China’s demand could make commodity prices return to levels from early 2022, before the U.S. central bank embarked on its journey of hiking rates to bring down inflationary pressures.

    “In our view … a stronger China increases the chances of a stubbornly hawkish Fed,” Tavis McCourt, institutional equity strategist at Raymond James, said in his 2023 Outlook.

    “With China, we do need more of everything – if that drives enough demand to get commodity prices back up closer to where they were in the spring of last year, then that puts the progress we’ve seen on inflation in a much more tenuous position,” he said.

    With activity expected to pick up from China, demand for a variety of commodities will drive , McCourt said.

    “As consumers are allowed out of their apartments, and start becoming more mobile, there’s going to be more gasoline demand and more jet fuel demand,” he said. “Demand is going to come back really quickly.”

    Commodity prices have indeed seen significant gains since December, when China announced plans to lift some of its strictest Covid measures.

    Three-month copper futures on the London Metal Exchange traded at $9,436 on Thursday morning – up around 12.5% month-to-date. Aluminum prices also rose 11.7% in January, FactSet Data showed.

    In fact, Fed officials have voiced concern over China’s economy as a factor that could reverse its efforts to tame inflationary pressures in the U.S. economy.

    SHANGHAI, CHINA – JANUARY 15: Travellers crowd at the gates and wait for trains at the Shanghai Hongqiao Railway Station during the peak travel rush for the upcoming Chinese New Year holiday on January 15, 2023 in Shanghai, China.

    Kevin Frayer | Getty Images News | Getty Images

    St. Louis Fed President James Bullard said China’s reopening, paired with a lower chance of a recession in Europe, may cause inflation to reaccelerate.

    “They’ve abandoned their Covid-zero policy and are moving toward reopening of China sooner than was previous expected, so that sounds like renewed upward pressure on the margin on global commodity markets,” Bullard said during a roundtable talk hosted by the Wall Street Journal on Wednesday.

    “I’m nervous that will lead to upward pressure on inflation more generally – that’s a risk that we have to factor in when making in monetary policy,” he said. “Some of the factors that went in favor of the transitory story of 2022 may be reversing here,” he said.

    ‘Limited spill-overs’

    China’s reopening may bring inflation worries, but the spillover effects onto the global economy could be limited, according to Morgan Stanley.

    “As the recovery [in China] is driven more by consumption and not investment, we see limited spill-overs to inflation in the rest of the region,” the firm’s economists, led by Chief Asia Economist Chetan Ahya, said in a Wednesday report.

    “Global goods demand/supply balances matter more, and with global goods demand still deflating, it will further limit any spillover effects to the region’s inflation,” they said.

    One analyst said commodity prices may have “exploded” but questioned whether that would continue.

    “Aluminum prices have exploded really in the past several months, on the same speculation … regarding China reopening,” Wolfe Research’s managing director Timna Tanners said on CNBC’s “Street Signs Asia.

    “We definitely question whether or not it’s sustainable or supported by the data, but it is hard to fight some of this momentum into the reopening trade,” she said.

    “We don’t necessarily think that there will be this huge spurt of activity in consumption or aluminum, but again, if the market thinks that, and inventories are low and there is some restocking before Chinese New Year, the momentum has really been powerful.”

    Read more about China from CNBC Pro

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