Major Global Powers Ordered To Stop Trading Oil And Gold Assets With The Venezuela


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Venezuela crisis – Major global powers ordered to stop trading oil and gold assets with Maduro


By Andry Roskyeva | StockMarketNews.Today | roskyeva7andry@gmail.com

A coalition group of Latin American countries and Canada has urged the Venezuelan military to sever ties with President Nicolas Maduro.

In a statement published Monday, 11 of the 14 members of the Lima Group called for a “peaceful transition through political and diplomatic means without the use of force.”

The group also underscored the need for an urgent delivery of humanitarian aid and insisted international governments “take measures to prevent the Maduro regime … from doing business in oil, gold and other assets.”

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Major global powers, including the U.S., have publicly recognized opposition leader Juan Guaido as Venezuela’s legitimate interim president.

Guaido’s declaration as the rightful leader of the South American country takes Venezuela into uncharted territory. That’s because there is now an internationally recognized opposition — without control over state functions — running a parallel government to Maduro.

At the start of January, Maduro was sworn in for a second term. It followed an election marred by an opposition boycott and claims of vote-rigging. The result prompted a fresh wave of anti-government demonstrations in the capital city of Caracas, with thousands of protestors seen marching in support of Guaido over the weekend.

The Lima Group was set up in 2017 with the aim of finding a peaceful solution to Venezuela’s deepening economic and humanitarian crisis. On Monday, it published a 17-point declaration following a meeting in Ottawa, Canada.


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The document says the governments of Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Honduras, Panama, Paraguay and Peru “reiterate their recognition and support for Juan Guaido.”

In addition to condemning the “persistent and serious violations of human rights in the country,” they also “called upon the National Armed Forces of Venezuela to demonstrate their loyalty to the interim president in his constitutional functions as their Commander in Chief.”

Canadian Prime Minister Justin Trudeau also announced $53 million in new funding to support people in Venezuela. The aid package is designed to help the three million refugees who have fled the crisis in recent years. Mexico, Guyana and Saint Lucia were the only Lima Group members not to be included on the statement.

Speaking to Spanish television on Sunday, Maduro — who maintains the backing of China and Russia, amongst others — claimed interference in domestic affairs from overseas could lead to civil war. “Everything depends on the level of madness and aggressiveness of the northern empire (the U.S.) and its Western allies.”


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“We ask that nobody intervenes in our internal affairs … And we prepare ourselves to defend our country,” he said, in an interview broadcast on the channel La Sexta. Growing unrest in Venezuela follows years of economic mismanagement, repression and corruption.

Millions of people have been driven out of the country amid hyperinflation, power cuts and severe shortages of basic items — such as food and medicine.



 

Impacts of climate change in Antarctica. What’s Happening Beneath Antarctica’s Ice?… Businesses and investors are keenly interested


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{ By Daniela Hernandez } . They call it the Dreamcatcher. Its job is to help answer one of the most important and perplexing questions facing climate scientists today. Dangling from a helicopter over Antarctica’s frozen landscape, the giant hexagonal instrument sends out electromagnetic waves that penetrate the sheets of ice below, giving scientists something like an X-ray of an ancient body.

The scientists gathered here in Antarctica’s Dry Valleys—a rocky ecosystem dotted with frozen lakes and glaciers, some flowing into the sea—want to know what lies beneath the ice. Is it rock? Or is it salty water?

The answer will have implications for communities, infrastructure and investments all over the world. Glaciers sitting atop briny water can be more prone to sliding off the land and into the ocean, potentially contributing to rising sea levels. Yet chief among the blind spots in climate models is the stability of the ice at the bottom of the world.

Scientists are confident that as the planet warms, Antarctic ice sheets will shrink, shedding the water they store. But how much of this continent’s ice could end up in the ocean, and how quickly that might happen, are unknown. That in turn matters for the financial-services firms, asset managers and consultants that have been turning to climate models to assess risk and guide investment.

“The biggest question when it comes to sea-level rise is: How will the Antarctic ice sheets react to ongoing climate change?” says Ricarda Winkelmann, an ice-sheet modeler in Germany’s Potsdam Institute for Climate Impact Research. When Dr. Winkelmann talks to policy makers and business people, they want to know what is the worst-case scenario, and how fast will climate-related changes occur, she says.


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The answers will come from the work of scientists like Jill Mikucki, Slawek Tulaczyk and Peter Doran, who spent weeks using the Dreamcatcher to map the underbelly of Antarctica’s Dry Valleys. They are part of an ecosystem of polar researchers whose data provide the foundation for global climate models. Such data, which takes years to incorporate into models, is necessary for making the kind of predictions that governments and investors need.

Antarctic scientists are gathering “some of the most high-priority data that needs to be taken,” says Richard Rood, a professor of climate at the University of Michigan in Ann Arbor.

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Climate models use measurements of the Earth’s oceans, atmosphere, land and ice, sometimes going back more than 100 years, both to understand the climate’s history and to predict its future. Scientists use mathematical equations that rely on these data to simulate physical phenomena such as rainfall and ocean currents.

They test how good these simulations are at mimicking reality by doing “hind-casting.” If the outputs match historical records, the model is considered accurate, and scientists can use it to study how the planet might react to future conditions.

If models’ calculations don’t match past observations or they fail to predict a future event, as they did with the sudden disintegration of Antarctica’s Larsen B ice shelf in 2002, it is possible scientists are misunderstanding some crucial physical process or just don’t have enough data. That is what makes more and better measurements, such as the information being gathered in Antarctica, so valuable.

Financial firms, including banks and insurance companies, are hiring climatologists and modelers and contracting with data-analysis firms specializing in climate science to help them apply climate data to business decisions.


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Better ice dynamics data will help with “understanding the overall picture on climate change and the pace of change that’s taking place,” says Francis Condon, who focuses on sustainable investing for the global investment-management arm of Swiss bank UBS Group AG . “If there is an indication that the [sea] level is rising faster than previously indicated, that is an issue that needs to be considered from an investment perspective.”

At the Asian Development Bank, which lends to governments and companies in Asia’s developing markets, Jay Roop is part of a team that oversees the construction of wharves, ports and roads around the Pacific region. To predict how projects might fare in future climate conditions, he and his team use 24 different climate models. The data they incorporate include melting rates of glaciers, historical ocean temperatures and rainfall, and information on local geography and water dynamics, which can affect storm surges. Most models don’t have data on the stability of Antarctic ice.

Mr. Roop consulted climate models to assess a wharf the Papua New Guinea government wanted to build. Many models suggested that, without climate-proofing, the wharf would be underwater within a few decades. The design was reconfigured so the wharf could be easily raised. That increased the cost by roughly 17%. Construction will begin in late 2019.

A better sense of how the ice in polar regions is changing would narrow the “range of possible climate futures… which would give us more confidence in how we manage the risks that are being presented to us,” says Mr. Roop, a senior climate specialist in ADB’s Pacific department.

Those who make investment decisions rely on proprietary climate data and publicly funded ice-sheet and global climate models. Some of the data incorporated into models is from large surveys that show what is happening across continents or the world’s oceans.

Model builders using large-scale data can do no more than generalize about smaller-scale processes such as the effect of water on glaciers’ stability. Smaller surveys like the one in the Dry Valleys are “absolutely necessary” to understanding what is happening on the smaller scale and to improve the accuracy of models decision makers use, says Mathieu Morlighem, an ice-sheet modeler at the University of California, Irvine.

Drs. Mikucki, Tulaczyk and Doran are using the Dreamcatcher and on-the-ground measurements of the chemical properties of subglacial water to gain knowledge about ice-sheet behavior and Antarctic habitats never before gleaned from the continent’s ice.

Dr. Mikucki, a microbiologist from the University of Tennessee in Knoxville, and her students collected samples from the outflows of saltwater at the Taylor Glacier. The water’s high iron content washes the ice in red. They call it Blood Falls.


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Dr. Mikucki wants to know what organisms live in the ferrous flows, which will help her understand the ecology of hidden briny water. When such water flows into the ocean, it can change water density, which in turn affects global weather patterns.

At Marble Point, a camp in the Dry Valleys, the three researchers took turns overseeing work with the Dreamcatcher. For weeks, they planned experiments and analyzed data from tents surrounded by glaciers, seals and scavenging birds called skuas. Helicopters came and went.

To use the Dreamcatcher—its formal name is SkyTEM—a helicopter must fly it over the glaciers the researchers want to study. Each mission can survey 150 miles.

The tool discriminates between different materials based on something called resistivity—a measure of how easily electrical current can flow. Substances such as ice have high resistivity, meaning electricity doesn’t flow through them easily. Water conducts electricity better. The saltier the water, the lower its resistivity.

Those differences allow the scientists to map subglacial topography. “It’s transformative,” says Dr. Mikucki. The work done in November, says team member and glaciologist Dr. Tulaczyk, provided “positive evidence” there is a lot of water beneath Antarctica’s ice and land surface, including along the coast. Typically, such pockets of water act as a lubricant, making the ice more prone to sliding into the sea.

One surprise: Because of the way some glaciers evolved, especially in valleys below sea level, their undersides might be coated by ancient seawater whose chemistry has changed through interactions with rock and sediment over millennia. How much lubrication that provides has yet to be determined, Dr. Tulaczyk says.

He wants to study, he says, whether the “transformed seawater” has “the same capacity to impact the dynamics, the motion of the glaciers, as water that’s generated by melting those glaciers themselves.” Combined with ice-flow data and climate archives contained in ice cores drilled from other areas of the continent, the information could yield new insights into the stability of Antarctic ice deposits, according to glaciologists and climate scientists.

After the Dry Valleys team wrapped up their experiments in late November, another group of scientists headed to Hercules Dome, roughly 250 miles from the South Pole, to look for 125,000-year-old ice. Their goal is to use that frozen record, which will take five to six years to unearth, to understand how the fragile West Antarctic Ice Sheet has reacted to past changes in climate, and at what rate. Roughly 125,000 years ago, it was much smaller than it is today, and sea levels were much higher.


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The ice core this team is after should provide glaciologists and modelers critical clues about how sensitive this area is to changes in climate, according to Eric Steig, a University of Washington glaciologist who is part of the Hercules Dome expedition. “The largest uncertainty in future sea-level rise is this problem,” he says. “I can’t imagine that won’t affect insurance companies…if we narrow that one way or another.”

U.S. oil major Exxon Mobil Corp has withdrawn its WCC liquefied natural gas (LNG) export project in Canada from an environmental assessment, it said on Thursday, signaling that the project has been shelved


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U.S. oil major Exxon Mobil Corp has withdrawn its WCC liquefied natural gas (LNG) export project in Canada from an environmental assessment, it said on Thursday, signaling that the project has been shelved.

The decision to pare its LNG project portfolio follows the decision by a Royal Dutch Shell-led group to build a giant LNG project in British Columbia to supply Asian customers, and Exxon’s focus on LNG projects in Asia, the Middle East and the United States.


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Exxon’s West Coast Canada (WCC) LNG export project in British Columbia was expected to produce around 15 million tonnes per year of LNG, with plans for further expansion up to 30 million tonnes per year.

British Columbia rules require large projects to obtain an Environmental Assessment Certificate before they can be developed. An examination of the project by the Canadian Environmental Assessment Agency has been going on since February 2015.

“After careful review, ExxonMobil and Imperial (Oil Resources Ltd) have withdrawn the WCC LNG project from the environmental assessment process,” a spokeswoman for ExxonMobil said in an email.

Exxon’s decision signaled it is concentrating on LNG projects with Qatar Petroleum and a proposed expansion of its chilled-gas operation in Papua New Guinea, said Jason Feer, head of business intelligence at Poten & Partners, LNG tanker brokers and consultants.

“They have got a pretty robust pipeline of liquefaction projects globally. It would be natural to review that and see which would be competitive,” he said.

Exxon has been “taking advantage of opportunities as they become available to invest, restructure or divest assets to strengthen our long-term competitive position and provide the highest return to shareholders,” said spokeswoman Julie King.



LNG demand is growing but environmental groups say exports will boost carbon emissions in Canada, both through gas extraction and the liquefaction process. The WCC LNG export project planned to have liquefaction and storage facilities for natural gas, loading facilities and third-party pipeline facilities.

Coffee prices have been stuck below the cost of production for the longest stretch since the global financial crisis, leading some producers to abandon crops and some to migrate for new jobs


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Low Coffee-Bean Prices Brew Trouble for Farmers. Even as gourmet-coffee consumption is on the rise, most producers get only a dollar per pound of beans.

Coffee prices have been stuck below the cost of production for the longest stretch since the global financial crisis, leading some producers to abandon crops and some to migrate for new jobs. The shift is being driven by currency fluctuations that are encouraging sales and production in Brazil, the world’s largest coffee producer, spurring a record crop that is driving down prices for other coffee-growing nations.

“We’re now back in real terms to where we were 20 years ago, when farmers abandoned land because they couldn’t make ends meet,” said Paul Rice, president and chief executive of Fair Trade USA, which works with 1 million coffee producers in 42 countries.

A 2017 study by Cornell University for Fair Trade USA placed the average cost of coffee production at $1.40 a pound. Coffee prices have been below that price for 20 straight months, the longest stretch since 2008, according to FactSet data.

Prices now hover around $1 a pound, poised to notch a 20% drop in 2018. It is a situation many expect to persist: The number of speculators betting on coffee prices has hit a record high in recent weeks, according to the U.S. Commodity Futures Trading Commission.

Analysts say the trouble started in Brazil, where the real has weakened 18% against the dollar, boosting that country’s exports even as coffee producers from Colombia to Honduras suffer from less-favorable exchange rates. Coffee is sold in dollars, allowing Brazilian producers to recoup more of their local currency when sales are converted.

Brazil exported 3.7 million 132-pound bags of coffee in November, an increase of roughly 24% from the same month a year earlier, according to the Brazilian coffee exporters group Cecafe, with year-to-date exports up 12% at 31.4 million bags. And all signs point to a very high Brazilian coffee crop next year, too, according to Commerzbank.

Currencies in other coffee-producing nations in Latin America have held up better—between 3% and 7% lower against the dollar this year.

In Nicaragua, the number of producers waiting to join the 38 cooperatives that make up PRODECOOP, an organization that provides financial and technical support to coffee growers, has increased by 10 times above what is typical when prices are higher, according to Merling Preza, the group’s director.

Many similar cooperatives that deal in fair-trade coffee face waiting lists, flooded by producers because they guarantee a minimum price of $1.40 a pound for coffee and there isn’t enough demand for fair-trade coffee among coffee-consuming nations. Only about 5% of coffee imports to the U.S. are fair-trade certified, even though roughly one-third of the harvest goes to fair-trade buyers.

The situation in Latin America stands in contrast to an industry that is moving upscale.

According to a 2018 study by the National Coffee Association, 48% of millennials drink gourmet coffee beverages every day. The Specialty Coffee Retail Index, which tracks the price of specialty coffee purchased at retail, rose 5.6% in the third quarter to $23.87 per pound, even as the composite price for green coffee purchased from farmers fell 11.1% to 99 cents a pound.



At the recent opening for Starbucks ’ new Reserve Roastery in the Chelsea section of New York City, specialty coffee from the far-flung Galapagos sold for $104 a pound in a three-story space that includes a working coffee roaster connected to some of the five coffee bars by a network of bronze tubes. Starbucks said that commodity prices are a fraction of the chain’s overall costs to sell coffee at retail.

Russia is seeking to boost its power in Europe and grip over Ukraine with the proposed Nord Stream 2 natural gas pipeline

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Russia is seeking to boost its power in Europe and grip over Ukraine with the proposed Nord Stream 2 natural gas pipeline, the top U.S. energy diplomat said on Monday, in a step-up of Washington’s rhetoric against the pipeline.

“Through Nord Stream 2, Russia seeks to increase its leverage of the West while severing Ukraine from Europe,” Francis Fannon, the U.S. assistant secretary for energy resources at the State Department, told reporters in a teleconference.

The pipeline has been opposed both by President Donald Trump, a Republican, and his Democratic predecessor Barack Obama as a political tool for Russia to consolidate power over Europe.

Much of the gas that Europe currently gets from Russia via pipeline goes through Ukraine, which collects billions of dollars in transit charges making up to 3 percent of its gross domestic product.



If Nord Stream 2, which aims to bring Russian gas to Western Europe via the Baltic Sea, and TurkStream, a pipeline to bring gas from Russia to Turkey, are completed it would mean transit revenues would evaporate,

“It’s kind of just what’s left over that would be transited, potentially transited, through Ukraine,” Fannon said. “Even then that’s only based on whether we can trust (Russia President Vladimir) Putin, I don’t think the record should indicate anyone should.”

Putin has said that Nord Stream 2, a consortium of Russia’s state-controlled Gazprom (MCX:GAZP) and five European companies, is purely economic and not directed against other countries. Russian gas could continue to go through Ukraine if the pipeline is completed, Putin has said.

But Russia has stopped shipments of gas to Ukraine in winter in recent years over a series of pricing disputes. Critics of Nord Stream 2 say it could increase Russia’s ability to manipulate European energy markets. In an increase in tensions, Russia last month seized three Ukrainian naval ships off the coast of Russia-annexed Crimea in the Sea of Azov after opening fire on them.

Germany’s foreign minister, Heiko Maas, said this month that Berlin will not withdraw its political support for Nord Stream 2 and that German Chancellor Angela Merkel had secured a pledge from Putin in August allowing gas shipments across Ukraine’s territory.

Fannon made his comments after traveling to Eastern Europe to discuss projects that could offer Europe a more diverse natural gas supply. Those included a floating liquefied natural gas terminal on the Adriatic island of Krk that could one day receive gas imports from the United States, which is increasing its exports of the fuel, or the eastern Mediterranean.



Fannon said he expected Russia’s aggression in the Sea of Azov to boost support for several bills in the U.S. Congress that include new sanctions on Russia’s energy sector, though he refrained from commenting on any particular legislation.

China’s commodities imports falls highlighting economic weakness


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China’s imports of key commodities from copper to iron ore and soyabeans fell in November, in the latest sign of a slowdown in the world’s second-largest economy as it grapples with the impact of a trade war with the US.


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China’s imports of soyabeans fell to their lowest level in two years, down 38 per cent from a year earlier, following China’s impositions of tariffs on US imports in June.

Soyabeans have become a key battleground in trade discussions between the US and China. They were the largest US agricultural export to China until Beijing raised tariffs by 25 percentage points in a tit-for-tat retaliation against duties that US president Donald Trump imposed on its goods.

The White House said this month that China had agreed to start purchasing agricultural products from the US immediately following talks between President Donald Trump and President Xi Jinping in Buenos Aires.

The lower copper imports point to a more worrying trend and reflect the slowdown in key consumer sectors in China such as air conditioning, housing and autos, according to analysts at Citi.

China’s imports of copper fell by 3 per cent from a year earlier in November, data released on Monday show. Copper prices have fallen 15 per cent this year to trade at $6,122 a tonne.

“The growth of Chinese copper end-use demand in 2019 hinges heavily on Chinese fiscal stimulus that aims to support infrastructure growth and income tax cuts to boost consumption,” Citi said.


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China said that iron ore imports also fell by 8.8 per cent in November from a year earlier. China’s steel rebar prices have fallen by 12 per cent over the past month, following a surge in steel production this year.

A month since raising crude forecasts, banks reduce expectations for both the global and U.S. oil benchmarks


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Banks Reverse Course to Lower Oil-Price Projections. A month since raising crude forecasts, banks reduce expectations for both the global and U.S. oil benchmarks.

Brent crude, the global oil benchmark, is now expected to average $76.98 a barrel next year, down from prior forecasts of $77.58, according to a poll of 11 investment banks by The Wall Street Journal. Expected prices for West Texas Intermediate, the U.S. standard, experienced a bigger drop, to $69.98 a barrel in 2019 from earlier forecasts of $70.81.

The latest poll results come just a month after banks had raised forecasts for crude prices on expectations that reimposed U.S. sanctions on Iran’s oil industry starting in November would significantly reduce global supplies, tightening the market.

But supply outages from Iran have so far proved less consequential than feared, in part because the Trump administration decided to grant temporary waivers to the world’s main buyers of Iranian crude.

At the same time, crude output has risen to record levels from the world’s largest producers—the U.S., Russia and Saudi Arabia—triggering a massive selloff that has plunged both crude benchmarks into bear territory and brought them to their lowest levels in over a year.

Brent and WTI have each lost more than 30% since climbing to four-year highs at the start of October. On Thursday, Brent was trading at $59.90 a barrel, while WTI was trading at $51.53 a barrel.

“The negative price reaction is as severe as the 2008 financial crisis and the aftermath of the November 2015 OPEC meeting, when the group decided not to act in the face of a very oversupplied market,” said Jason Gammel, oil analyst at Jefferies. But he added that the “oil price rout has been driven by accelerating oversupply, which should moderate over the coming months as Iranian exports drop and Saudi production moderates.”


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The Organization of the Petroleum Exporting Countries, de facto led by Saudi Arabia, and its allies outside the cartel, led by Russia, are facing growing pressure to engineer a new agreement to curb output to rebalance the market and bolster prices. The group is set to convene in Vienna next week.

Saudi Arabia said earlier this month it would cut exports by 500,000 barrels a day in December. But it is uncertain whether Saudi Arabia will significantly reduce production in coordination with its partners while the Trump administration pressures the kingdom to keep output high and prices low.

There is also a lack of clarity from Russia—currently the world’s largest producer of crude—which has alternately signaled willingness to cut output while indicating it is content with crude price around $60 a barrel.

Still, Martijn Rats, an oil analyst at Morgan Stanley, predicts OPEC will likely reach an agreement to cut production and “manage the market in 2019.” In that case, “Brent prices are likely to recover into the $70s,” he said.

OPEC and 10 producers outside the cartel, including Russia, agreed in late June to begin gradually ramping up production after more than a year of holding back output. The group had agreed in late 2016 to implement coordinated cuts to rein in a supply glut that had weighed on prices since the oil price crash of 2014.


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The initial deal had helped to bolster crude prices by more than 50% since the start of last year, until the recent selloff wiped away many of those gains.

Toronto’s commodity-linked stock market set for rebound if oil prices recover


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Investors see value in Toronto’s commodity-linked stock market and expect it to rebound in 2019 as the global economy continues to grow and on hopes for the price of Canadian heavy crude to recover, a Reuters poll shows.

The median forecast of 28 portfolio managers and strategists polled was for a more than 9 percent increase in the S&P/TSX composite index from its Monday close to 16,425 by the end of 2019. The TSE dipped 0.3 percent to 14,967 on Tuesday. Of 10 investors who answered a separate question on the index’s valuation, six said it was cheap and four said it was fairly valued. None said it was expensive.

“We view the equity market in Canada to be attractively valued not only against its own history but also relative to the S&P 500 Index,” said Philip Petursson, chief investment strategist at Manulife Investments. The price-earnings ratio, a measure of valuation, for the TSX is 14.2, according to Refinitiv Eikon data, much less than the 18.6 price multiple for the S&P 500.

Toronto’s index has declined 9.5 percent since it notched a record high of 16,586.46 in July as a slump in oil prices, rising global trade tensions and higher bond yields offset a boost to sentiment from a deal to revamp the North American Free Trade Agreement. Since the start of the year, the index is down more than 7 percent.



Investors expect economic growth to remain strong enough for companies to continue to increase profits even if some expect earnings growth to be slower.

“We are staying quite positive for the coming quarters,” said Mathieu D’Anjou, a senior economist at Desjardins Securities. “Profit levels are high and we are expecting a generally positive economic context next year and a rebound in Canadian and international oil prices.”

The price of oil has slumped more than 30 percent since October while a large discount for Canadian heavy crude has added to the headwinds for Canada’s energy sector. Western Canadian Select (WCS) traded last month as much as $52.50 per barrel below West Texas Intermediate light oil, the biggest differential in data going back to 2010, according to Shorcan Energy Brokers. The discount has since narrowed to about $37.

“If energy differentials can narrow we could see another move higher in the energy group,” said Greg Taylor, a portfolio manager at Purpose Investments. “Energy stocks look attractive at these levels as the companies continue to improve their operations in the low price environment.”

The energy sector has fallen 22 percent since the start of the year, while financials, which account for about one-third of the weight of the TSX, have declined 7 percent. U.S. crude was up 0.7 percent to $52.03 on Tuesday.

Competition for deposits among Canada’s biggest banks is heating up for the first time since the global financial crisis, leading to higher funding costs that could crimp profit growth in their domestic businesses over the next two years, analysts said.

The Bank of Canada has been raising interest rates to help cool the domestic economy, which has been operating near capacity. But auto production, one of the country’s biggest industries, could be hurt after General Motors Co (NYSE:GM) said on Monday it would close its plant in Oshawa, Ontario, east of Toronto.

Still, Canada’s housing market has not had the hard landing some investors have feared and the federal government announced measures last week that could help make businesses more competitive at a time when the United States is aggressively cutting taxes. Ottawa will reduce the average overall tax rate in Canada on new business investment to 13.8 percent from 17.0 percent, the lowest level in the Group of Seven large industrialized nations.


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U.S. Department of Agriculture has paid out nearly $840 million to farmers to date


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U.S. Department of Agriculture has paid out nearly $840 million to farmers to date as part of a promised $12 billion aid program rolled out by President Donald Trump last July to offset losses from the imposition of tariffs on American exports.

A total of $837.8 million to date has been paid out with the top five commodities being soybeans, wheat, corn, dairy and hogs, USDA told Reuters. The five states that received the highest amount of aid were Illinois, Iowa, Kansas, Indiana and Minnesota.



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The aid delivered remains a fraction of the promised amount at a time when the American farmers are struggling with loss of export markets from trade wars. Several trade groups such as dairy farmers have complained that the amount they received was far below their losses.

The Trump administration in late May announced tariffs of 25 percent on steel imports and 10 percent on aluminum imports, prompting retaliation from top trading partners that have spilled into agriculture.


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Washington has also slapped tariffs on $250 billion worth of Chinese goods earlier this year as part of Trump’s vow to cut the U.S. trade deficit with China. Beijing retaliated by hitting $110 billion of U.S. products, including the agriculture sector, prompting the USDA to offer compensation to farmers of soybeans, sorghum, corn, wheat, cotton, dairy and hogs.



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China, traditionally the biggest buyer of U.S. soybeans, has been largely out of the market, leaving farmers struggling with a supply overhang. The aid package includes cash payments for farmers of soybeans, sorghum, corn, wheat, cotton, dairy and hogs. The USDA had already outlined the allocations for the first $6 billion at the end of August.

Secretary of Agriculture Sonny Perdue said the second $6 billion was set to be outlined in December. He added that there were no plans for now to extend the aid into 2019. The United States has clinched a new trade deal with Canada and Mexico, key export markets for agricultural commodities, dubbed as the new NAFTA, in October but American farmers are yet to see the benefits.

Today’s Stock Market News – Caught smack in the middle of the U.S.-China trade war, America’s soybean farmers Refuse to Sell Their Soy


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Frozen Out of China, American Farmers Refuse to Sell Their Soy. Caught smack in the middle of the U.S.-China trade war, America’s soybean farmers Refuse to Sell Their Soy. Rather than selling the crop right away as they pull it out of the ground — as they do almost every harvest season to pay the bills — they are instead stashing it in silos, containers, bins, bags, whatever they can get their hands on to keep it safe and dry.



The hope is that over the next few months, trade tensions will ease, and China, the top market for the oilseed, will start buying from American farmers again, lifting depressed prices in the process. A bushel of soybeans fetched just $8.87 on Friday. Eight months ago, before trade tensions led to tariffs, it was about $2 more.

The risks are great. While futures trading indicates higher prices next year, that could change depending on trade negotiations and rising supplies. Moreover, the crop could go bad on them. Soybeans are not corn. They don’t store nearly as well. If not kept super dry, they can take on moisture fast. Rot quickly follows, making them worthless — and gross.

“It smells like road kill,” said Wayne Humphreys, a farmer in Iowa. “It has the consistency of mashed potato, slick and mushy.” Still, Humphreys is going to put as much of his harvest in silos as he possibly can because he likes to time his sales to the market. “It gives you a certain amount of control,” he said.



The scramble for storage comes just as soy production is reaching a record. American growers are trying to recover as overall farm income is projected to fall for the fourth time in five years. Chinese appetite for soybeans, used in everything from hog feed to cooking oil, had once been a bright spot. But with the onset of tariffs, the country’s imports of the oilseed from the U.S. have plunged, falling almost 90 percent in September from last year.

For some farmers, there is little choice but to keep their harvest. Millions of bushels have nowhere to go. Terminals in Portland, a key outlet in the Pacific Northwest to ship to China, are rarely offering bids. Supplies are backed up at terminals and elevators, even as cold, wet weather in North Dakota has left many acres unharvested. The country’s soybean inventories are expected to more than double to about 955 million bushels by the end of this crop year, according to the USDA.

Iowa grower Robb Ewoldt, who’s been farming since 1996, is storing most of his soy for the first time in about 15 years. His crop usually floats down the Mississippi River, about a half mile from his fields, on barges for export through the Gulf of Mexico to China and other countries. This year he’s stashing beans in his silos, making room for them by selling or storing his corn in commercial storage, to await higher prices. “It’s probably more advantageous to store this year than any year in the past,” he said.

Soybean futures for delivery next July were about $9.27 as of Friday, indicating selling later may bring in more money. And traders are speculating that China-U.S. trade tensions may ease as the countries discuss a deal heading into the Group of 20 meeting in Argentina this month.



The tariffs have particularly hit exports from North Dakota, where the expansion of oilseed acreage was a direct result of the growth of Chinese demand. The state plants the fourth-highest number of soybeans in the U.S. and about 70 percent go to Asia, largely because of its geographic accessibility to western ports.

Stock Market News – Struggling commodity prices signal more trouble could be ahead for the stock market


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Stocks prices have bounced back nicely since entering a correction in October. But several commodities have failed to recover along with them, suggesting more trouble may lie ahead for investors. Struggling commodity prices signal more trouble could be ahead for the stock market.

The S&P 500 is up more than 6 percent since entering a correction, but commodities like oil and copper are still well below their 52-week highs. Commodities are typically seen as leading indicators for global growth as they are used for everything from homebuilding to powering cities.


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Stocks prices have bounced back nicely since entering a correction in October. But several commodities have failed to recover along with them, suggesting more trouble may lie ahead for investors. The S&P 500 is up more than 6 percent since Oct. 29, when it closed down more than 10 percent from its all-time high reached in late September. But commodities like oil, gasoline, copper and platinum are still in a correction or in a bear market — down at least 20 percent from their 52-week highs.



Commodities are typically seen as leading indicators for global growth as they are used for everything from homebuilding to powering cities. A decline in commodity prices can signal slower economic growth moving forward.

“The question is does this mean the global economy is slowing? I think yes,” said Komal Sri-Kumar, president of Sri-Kumar Global Strategies. “I can’t see this continuing. When you get these signals, it’s hard to see equities continue to move up on their own.”

Commodities have been hit by a slew of factors, including higher rates, a stronger dollar, weakness in overseas markets and increasing friction in global trade relations. The yield on the benchmark 10-year Treasury note is trading around 3.23 percent, near its highest levels since 2011. The 2-year yield, meanwhile, is trading at a level not seen in more than a decade.

Yields have risen this year as risen this year as the Federal Reserve continues to unwind historically accommodative monetary policy. The Fed has increased the overnight rate three times this year and is expected to hike once more before year-end.

Higher rates hurt commodities because they make it more expensive to store them for a prolonged period. Meanwhile, the stronger dollar has also hit commodities which are priced in the U.S. currency. The greenback is up more than 5 percent against a basket of currencies.

“A lot of that is a function of negative performance overseas relative to the U.S. and strength in the U.S. dollar,” said Ilya Feygin, senior strategist at WallachBeth Capital. “The metals especially have been suffering from that combination.”

The U.S. economy grew at a 3.5 percent annualized pace in the third quarter, topping expectations. In China — the world’s second-largest economy — economic growth slowed to 6.5 percent in the third quarter, missing estimates. Meanwhile, euro zone GDP growth decelerated to 0.2 percent in the third quarter from 0.4 percent in the second quarter.

On top of that, continuous trade tensions between the U.S. and China have also depressed commodity prices. Washington and Beijing have exchanged tariffs on billions of dollars worth of each other’s goods this year, sparking fears that tighter trading conditions could slow down global growth.


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“What’s happening in the commodity markets has to do with trade,” said Tim Courtney, chief investment officer at Exencial Wealth Advisors. He added, however, that he does not think the commodity complex’s broad decline is signaling an economic contraction ahead.

The decline in commodities has been especially hard on emerging markets as most are net commodity exporters. The iShares MSCI Emerging Markets ETF (EEM) — which tracks a broad basket of emerging market stocks — is down nearly 14 percent for 2018 through Thursday’s close. The iShares ETFs that track Mexican and Chinese stocks are also down 13.6 percent and 11.2 percent, respectively.

Emerging markets will need to recover for the global economy to recover, Sri-Kumar said, noting: “EM now accounts for 60 percent of the global economy.” But Matt Lloyd, chief investment strategist at Advisors Asset Management, said the sharp losses in commodities could be a buying opportunity for investors as we get closer to the end of the current economic cycle.



“We’re late into the cycle and usually value outperforms growth at these stages,” Lloyd said. Commodities have been in a depressed market for some time and that has to do with the fact that we’ve had an anemic recovery from the global recession.”

Stock Market News – US technology stocks suffered renewed losses with the Nasdaq Composite index falling back into correction territory


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US technology stocks suffered renewed losses with the Nasdaq Composite index falling back into correction territory as Apple extended its fall over the past two sessions to more than 8 per cent following reports the company had asked suppliers of its new iPhone model not to increase production. Dimming hopes of a U.S.-China trade agreement, a lackluster reading on the Chinese economy and a tech-led selloff on Wall Street on Friday contributed to Monday’s subdued trading, after stocks last week mostly rebounded from an October rout.

While S&P 500 companies have broadly reported more positive earnings surprises than they would in an average quarter, corporate comments about rising costs, the impact of tariffs and next year’s growth outlook have unnerved some investors, contributing to recent market swings. The Nasdaq Composite lost 0.8% Monday, hurt by a slide in everything from social media companies to chip makers and software developers. The S&P 500 added 0.3% and the Dow Jones Industrial Average rose 153 points, or 0.6%, to 25427, boosted by gains in Chevron Corp. and International Business Machines Corp.

Apple, whose guidance for the holiday quarter disappointed investors last week, extended a rout that has shaved tens of billions of dollars off its market capitalization. Shares were last down 3.1% to $201.11, bringing their monthly losses to 8.1%. Other technology firms also retreated, with Amazon.com Inc. down 3.2%, Alphabet Inc. losing 2.5% and Nvidia Corp. falling 2.7%.



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Meanwhile, shares of financial companies rallied, with Class A shares of Berkshire Hathaway Inc. adding 5.2% after the firm said over the weekend that it had repurchased its own shares for the first time since 2012. As the week progresses, analysts say they will be keeping an eye on the midterm elections, which could spark fresh volatility as investors parse through the implications for U.S. fiscal and trade policy, as well as the Federal Reserve’s meeting.

Broader equity indices on Wall Street made a steadier start to the week — helped by gains in the energy and financial sectors — although the mood remained cautious against a backdrop of impending midterm elections and uncertainty over the US-China trade dispute. Energy stocks pushed higher as crude prices rallied after last week’s steep falls when the US formally imposed sanctions on Iran but gave eight countries temporary waivers allowing them to continue buying oil from Tehran. Across the Atlantic, Italian bank stocks came under pressure after Goldman Sachs downgraded some of the country’s biggest lenders.

The sector was also hit by an early sell-off for Italian bonds as the row over the country’s proposed 2019 budget. EU finance ministers urged Rome to bow to calls from Brussels to revise the draft budget plans, which breach spending rules. It has until November 13 to submit a fresh proposal. There was some broadly encouraging news on the US economy with the Institute for Supply Management’s October non-manufacturing index easing from a 21-year high but still coming in slightly ahead of expectations.

Andrew Hunter at Capital Economics noted that recent ISM data had increasingly been at odds with other survey evidence. “With the boost from fiscal stimulus now fading, we . . . expect a further slowdown in GDP growth in the fourth quarter,” he said.

The data failed to lift either the dollar or Treasury yields. Sterling held above the $1.30 level against the dollar — well off last week’s low just above $1.27 — as the markets took heart from reports that the UK was near to reaching a deal to leave the EU, which would include an all-UK customs arrangement.

Equities. By midday in New York, the Nasdaq Composite was down 1.1 per cent — leaving it more than 10 per cent down from the record high it reached in late August, the usual definition of a correction. Apple shares were down 3.5 per cent, for a two day drop of 8,5 per cent. The stock briefly fell below $200 for the first time in three months. The S&P 500 was up 0.1 per cent at 2,726, with the energy sector up 1 per cent and financials 1.4 per cent higher. The Dow Jones Industrial Average was up 0.4 per cent. In Europe, the pan-regional Stoxx 600 index and the Xetra Dax in Frankfurt both shed 0.2 per cent, although London’s FTSE 100 inched 0.1 per cent higher, even as the pound rose against the dollar.

Forex and fixed income. The dollar index was down 0.1 per cent at 96.43 as the euro inched 0.1 per cent higher to $1.1402 and the greenback traded flat against the yen at ¥113.19. Sterling was up 0.4 per cent at $1.3025, after earlier hitting a two-week high of $1.3062. The yield on Italy’s 2-year debt rose as high as 1.23 per cent before closing at 1.13 per cent, up 2 basis points on the day. The 10-year yield ended 1bp higher at 3.32 per cent after touching 3.39 per cent. The 10-year US Treasury yield was down 2bp at 3.20 per cent, with the two year yield flat at 2.91 per cent.

Commodities. Oil prices rebounded from last week’s tumble, with Brent crude, the international benchmark, up 0.7 per cent at $73.37 a barrel and US West Texas Intermediate regained 0.5 per cent higher to $63.45. Gold was down $2 at $1,230 per ounce.

Stock Market News – Saudi Arabia readies to boost supplies over Iran oil sanctions.


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Saudi Arabia readies to boost supplies over Iran oil sanctions. Analysts expect Iranian exports of some 2.5 million barrels per day to plunge by 1-2 million bpd when US sanctions take effect November 5. With Washington poised to curtail Iran’s oil exports, OPEC heavyweight Saudi Arabia and its partners stand ready to ramp up supplies even as market conditions remain uncertain, analysts say.

The renewal of sanctions on the Islamic republic comes at a time of major supply disruptions in several producer nations and as US President Donald Trump aims to prevent an oil price hike. Analysts expect that Iran’s oil exports, which reach around 2.5 million barrels per day in normal times, to plunge by one million to two million bpd when sanctions take effect on November 5.

That is expected to strain an already tight market. Outages in Libya, Venezuela, Nigeria, Mexico, Angola and others forced OPEC and non-OPEC producers in June to abandon an agreed cut in output and boost supplies. “We are entering a very crucial period for the oil market,” the International Energy Agency said in a September report. “Things are tightening up.”

Saudi Arabia is the only producer with significant spare capacity of around two million bpd that can be tapped into to compensate for the loss of Iranian supplies. Even as relations soured between the West and Riyadh over the murder of the Washington Post contributor, Saudi Arabia said it had no plans to wage a retaliatory oil embargo.

Saudi Energy Minister Khalid al-Falih said his country, which raised output by 700,000 bpd to 10.7 million bpd in October, was prepared to further bump up production to 12 million bpd. “We have sanctions on Iran and nobody has a clue what Iranian exports will be,” he told the Russian news agency Tass last week.


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In addition, there are potential declines in Libya, Nigeria, Mexico and Venezuela, he said, also pointing to uncertainty over US shale oil production. Falih said the kingdom could turn to its huge strategic reserves of around 300 billion barrels to meet global demand. Anas al-Hajji, a Houston-based oil expert, said the fall in Iranian exports was tough to assess but he expected “less than what most analysts are talking about.”

“The Iranians have perfected their game working under sanctions. There will be a black market for Iranian crude, Hajji told AFP. Saudi Arabia’s neighbors the United Arab Emirates and Kuwait can also raise their output by up to 300,000 bpd if needed. ‘It’s unsustainableKuwaiti oil expert Kamel al-Harami said he doubts Riyadh can sustain production of 12 million bpd for a prolonged period.

OPEC is constrained by low spare capacity in a tight market under threat from unplanned outages, low investment and unpredictable geopolitical unrest. Iranian officials are betting on the unstable market conditions to beat US sanctions.

Mr. Trump both tries to decrease Iran’s oil exports significantly and also wants prices not to go up. These two can’t happen together,” Iranian Oil Minister Bijan Namdar Zanganeh said late September. Tehran sold oil to private buyers through its energy exchange for the first time on October 28, as part of efforts to counter the imminent return of sanctions.

Some estimates show Iran’s crude exports have already dropped by a third since May with even companies from traditional clients China and India abandoning purchases. Oil prices which rebounded from under $30 a barrel in early 2016 to a four-year high of over $86 a barrel in early October have fallen to around $75 due to fears of weaker global demand.


More News On Crude Oil Markets – Thousands of Iranians chanting “Death to America” rallied on Sunday to mark the anniversary of the seizure of the U.S. Embassy during the 1979 Islamic Revolution. Students attending the government-organized rally in the capital Tehran, broadcast live by state television, burned the Stars and Stripes, an effigy of Uncle Sam and pictures of President Donald Trump outside the former embassy compound.


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Hardline students stormed the embassy on Nov. 4, 1979, soon after the fall of the U.S.-backed shah, and 52 Americans were held hostage there for 444 days. The two countries have been enemies ever since. State media said millions turned out for rallies in towns and cities, swearing allegiance to the clerical establishment and Supreme Leader Ayatollah Ali Khamenei. The figure could not be independently confirmed by Reuters.

Rallies are staged on the embassy takeover anniversary every year. But rancour is especially strong this time following Trump’s decision in May to withdraw from world powers’ 2015 nuclear deal with Iran and reimpose sanctions on Tehran. The deal brought about the lifting of most international financial and economic sanctions in return for Tehran curbing its disputed nuclear activity under U.N. surveillance.

Trump said the deal was weak and favored Iran. The other signatories – Britain, France, Germany, Russia and China – remain committed to the accord. U.S. Secretary of State Mike Pompeo said the penalties set to return on Monday “are the toughest sanctions ever put in place on the Islamic Republic of Iran.”

Interviewed on “Fox News Sunday,” Pompeo said, “There’s a handful of places where countries already have made significant reductions in their crude oil exports and need a little more time to get to zero. And we’re going to provide that to them.” He did not elaborate. Pompeo noted that oil sanctions would be coupled with financial sanctions involving “over 600 designations of individuals and companies in Iran.”

The Iranian military said it would launch two days of air defense drills on Monday and assured Iranians that it could neutralize any threats, the state news agency IRNA reported. “We can assure our people that the enemy will not be able to carry out its threats against our country,” IRNA quoted Habibollah Sayyari, the coordinating officer, as saying.


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Among the anniversary events was an exhibition of cartoons in Tehran called “Donald Salman” – a reference to the close ties between the U.S. president and King Salman, ruler of Iran’s regional rival, Saudi Arabia. “It’s black humor, but the audience can also be brought to reflect on the contradictions in the behavior of Trump and (the royal house of) Al Saud,” artist Masoud Shojaei Tabatabai told state television in Tehran.

The restoration of U.S. sanctions on Monday targeting Iran’s oil sales and banking sector is part of an effort by Trump to force Iran to halt its nuclear and ballistic missile programs outright, as well as its support for proxy forces in conflicts across the Middle East.

Today’s Stock Market News – The United States will become a key source of energy supplies to meet growing demand globally.


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U.S. government official says country to become key source of global energy supplies. The United States will become a key source of energy supplies to meet growing demand globally, with innovation in technology and financing set to boost U.S. oil and gas production in the next decade, the country’s top energy diplomat said.


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“In the next 5-10 years, we expect to see improved recovery rates and even a doubling in some of our most prolific (gas) basins,” said Frank Fannon, assistant secretary in the energy bureau of the U.S. state department. “What this means in the near-term is that the United States may double production, double export capacity and introduce new market innovation,” he said at an industry conference in Singapore.

Fatih Birol, executive director of the International Energy Agency (IEA), said at the same event that the United States would become the “undisputed leader” of global oil and gas production. In oil, the United States crude production overtook that of Arabia earlier this year, recently hitting a record 11 million barrels per day (bpd), putting the United States within reach of top producer Russia.

Largely thanks to the U.S. increase, crude output from the world’s top 3 producers reached 33 million bpd for the first time in September, Refinitiv Eikon data showed. That’s an increase of 10 million bpd since the start of the decade and means that these three producers alone now meet a third of global crude demand.

In gas, the IEA’s Birol said the United States, together with Australia and Qatar would supply 60 percent of global liquefied natural gas (LNG) by 2023. The U.S. currently only has two LNG export projects operational, although several are waiting for financial approval.


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More News On LNG.

Next-wave LNG race hits hurdles in U.S.-China trade war. The delay of a U.S. Gulf Coast liquefied natural gas (LNG) export project has crystallized fears that the U.S. trade battle with China is hampering efforts to line up buyers needed to move ahead with multi-billion-dollar builds.

The United States is positioning itself as the dominant provider of the supercooled fuel as Asian nations shift away from dirtier power sources like coal, and this month’s approval of a giant Canadian project led by Royal Dutch Shell bolstered enthusiasm for the sector overall in North America. That optimism took a hit on Monday, when Australia’s LNG Ltd delayed until next year a planned decision on whether to build its Louisiana-based Magnolia LNG plant due to problems lining up Chinese customers. And it comes when bankers and analysts in the sector had already questioned whether the next wave of projects in the pipeline would pass muster with investors.

“Chinese LNG demand growth is the largest piece of demand growth out there, and Chinese buyers have got to feel reluctant to commit to U.S. capacity when the U.S. government sees trade as a means of exerting political leverage,” said Bob Ineson, managing director of North American natural gas at IHS Markit. China set a 10 percent tariff on U.S. LNG imports last month, extending a trade scuffle in which U.S. President Donald Trump imposed tariffs on $250 billion worth of imported Chinese goods and China retaliated with duties on $110 billion worth of U.S. goods.

China’s LNG demand has skyrocketed in recent years on Beijing’s pollution crackdown, with imports nearly tripling since 2015. Last year it overtook South Korea as the world’s No. 2 importer of LNG.

U.S. crude oil inventories rose more than expected last week, the Energy Information Administration said in its weekly report on Wednesday.

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U.S. crude oil inventories rose more than expected last week, the Energy Information Administration said in its weekly report on Wednesday. The EIA data showed that crude oil inventories rose by 6.35 million barrels in the week to October 19. That was compared to forecasts for a stockpile build of just 3.69 million barrels, after a build of 6.5 million barrels in the previous week.

The EIA report also showed that gasoline inventories fell by 4.83 million barrels, compared to expectations for a draw of 1.88 million barrels, while distillate stockpiles decreased by 2.26 million barrels, compared to forecasts for a drop of 1.93 million.

London-traded Brent crude futures were up 0.22% to $76.61 a barrel by 10:36 AM ET (14:36 GMT) from their last close, compared to $76.52 ahead of the release.

U.S. crude prices were trading up 0.69% to $66.89 a barrel, compared to $66.83 prior to the publication. Prior to the release, oil was headed higher as prices rebounded after plunging as much as 5% in the previous session as Saudi Arabia said it would keep markets supplied despite the upcoming U.S. sanctions against Iran.

Saudi Oil Minister Khalid al-Falih said on Tuesday that the kingdom has no intention of unleashing a 1973-style oil embargo on Western consumers, despite its worsening crisis from allegations that it murdered journalist Jamal Khashoggi. Instead of restricting supplies, Saudi Arabia would step up to “meet any demand that materializes to ensure customers are satisfied.” In early September, OPEC and industry sources said Saudi Arabia was trying to keep oil at between $70 and $80 per barrel, partly to maximize revenue.

U.S. sanctions due on Nov. 4 are expected to reduce oil exports from Iran and has boosted oil prices by as much as 25% initially this year. Commercial crude inventories rose by 9.9 million barrels in the week to Oct. 19 to 418.4 million, industry group the American Petroleum Institute said on Tuesday. In other news, China’s state planner said on Wednesday it would offer more financial support for companies affected by the trade dispute between U.S. and China.


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Last week, President Xi Jinping offered support to the country’s private sector, while the State Council also said on Monday that it would support bond financing by private firms, adding that the People’s Bank of China will provide funding to facilitate this, although the central bank did not provide any details of the size of the plan or a timeline at the moment.  Earlier this year, Washington imposed $200 billion taxes on Chinese goods, while Beijing targetted $60 billion of U.S. goods.

The WTI crude oil futures contract has stalled at major resistance and could reverse in the coming weeks, ending the uptrend that started in 2016.


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The WTI crude oil futures contract has stalled at major resistance and could reverse in the coming weeks, ending the uptrend that started in 2016. That would surprise market watchers, given steady buying interest generated by supply disruption fears in reaction to renewed Iranian sanctions. A downturn may also indicate that growing supply is finally exceeding demand at the same time that many economists are forecasting a worldwide slowdown.

Initial downside won’t cause much pain, with the contract trading above long-term moving averages for the first time since 2014. Those support levels suggest that a decline will be mild at first, ending in the low $60s. However, major sell signals will go off if crude oil drops into the upper $50s, opening the door to a bear market impulse that could eventually test the 2016 low in the mid-$20s.

The commodity tested 1986 support near $10 in 1998 and turned higher, entering a secular uptrend that carved an Elliott five-wave rally sequence into 2008. The fifth and final wave posted parabolic action between January 2007 and July 2008, nearly tripling in price into an all-time high at $147.27. The contract plunged during the economic crisis, piercing the parabolic bubble in a six-month 115-point death spiral.

The subsequent bounce mounted the .618 Fibonacci sell-off retracement level in March 2011 and topped out at $115 two months later, marking the highest high in the past seven years. It then eased into a broad symmetrical triangle pattern, finally breaking down in August 2014. Crude oil and other commodities then entered severe declines, losing ground into the first quarter of 2016. The contract undercut the 2008 low by six points at that time, bottoming out at $26.05.

Price action since 2016 has carved a healthy advance that could mark the first four waves of an Elliott five-wave rally pattern. However, the contract has now stalled at major resistance generated by the intersection of a 10-year trendline and two Fibonacci retracement patterns. The larger Fibonacci grid (red) encompasses the entire trading range between 2008 and 2016, while the smaller grid (blue) encloses the Elliott five-wave decline between September 2013 and January 2016.

Those grids intersect at the $70 level, with the .382 retracement of the larger range narrowly aligned with the .50 retracement of the smaller range. Meanwhile, price action reached the trendline of lower highs since 2008 for the fourth time this month, setting off a minor reversal. This falling trendline will come into perfect alignment with the Fibonacci levels in May 2019, setting an expiration date on the current technical set-up.

The contract has consolidated around the $70 level for the past six months while the monthly stochastics oscillator has entered a sell cycle that could last through the first quarter of 2019. The conjoined 50- and 200-month exponential moving averages (EMAs) at $62 should be watched closely while this bearish signal is in force, with a bounce and bullish crossover signaling the start of a potential fifth-wave rally that breaks resistance, or a breakdown into the $50s that could spread contagion through the commodity complex like it did three years ago. Crude oil has stalled at major resistance in the low $70s and could sell off into the low $60s in the coming months. Price action at that level could dictate the contract’s direction well into the next decade.

In times of market turmoil, investors often embrace gold. And when that happens, gold-mining stocks tend to do even better.

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In times of market turmoil, investors often embrace gold. And when that happens, gold-mining stocks tend to do even better. That has certainly been the case so far this month. New York gold futures are up 2.7% so far in October versus a 3.6% decline for the S&P 500. Shares of many of the world’s biggest gold miners, meanwhile, have notched double-digit gains.

Companies like Toronto’s Barrick Gold Corp ABX +3.42% , South Africa’s AngloGold Ashanti AU +3.66% and Acacia Mining are all up around 15% to 18% after a bruising summer. The VanEck Vectors Gold Miners exchange-traded fund and the iShares MSCI Global Gold Miners fund—which track indexes of global gold-mining firms—are up around 8% to 9% this month.

Gold-miner stocks allow investors to double down on bets the gold price will rise. These companies have higher fixed-investment costs and can become much more profitable when gold prices climb. Many of these companies pay out hefty dividends, too.

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Hopes for further consolidation are adding to the momentum after Barrick Gold in September agreed to buy Randgold Resources Ltd. for $6 billion. Gold miners’ rapid ascent during the selloff marks a turnaround from other recent episodes of market turbulence. While gold and related assets have historically been used as a safe place to invest during times of economic or political stress, they found few fans during a selloff at the start of the year or during the summer turmoil in emerging markets.

Because concerns at the time largely centered around the prospect of rising U.S. interest rates, investors sought shelter in the U.S. dollar instead, in turn making gold less attractive to overseas buyers. The ICE Dollar Index rose about 9% between February and the middle of August, while New York gold futures fell about 12% and the VanEck gold miner fund fell about 20%. Rising rates also make assets like gold less attractive, because they don’t offer a yield. And both gold and miners haven’t fared so well in recent years. From highs in 2011, prices of the metal and the VanEck ETF are down around 35% and 70%, respectively. Meanwhile, the iShares fund has also tumbled 70% since its inception in 2012.

This time is different. The ICE Dollar Index has barely budged during this month’s selloff, the Federal Reserve’s plans for interest rates are well telegraphed and investors have turned skeptical that the dollar has much further room to rise.

“Given the strength of the U.S. dollar we’ve seen and slight concern now about the fiscal position in the U.S. following stimulus measures and tax reform, there’s some concerns around the U.S. dollar as an ultimate safe haven,” said Roger Jones, head of equities at London & Capital.

The U.S. government ran its largest budget deficit in six years during the fiscal year that ended last month, totaling $779 billion.

Meanwhile, “this [selloff] is more about a growth scare than February-March, when it was more about a rate hike scare,” Mr. Jones said. “If there’s another slowdown in growth, goldmining stocks will be at the forefront of investors’ minds.”

Oil Price News: Regional crude prices have diverged from global benchmarks even as fears over Iran sanctions intensify.


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Crude prices had their biggest two-day retreat since April in percentage terms through Thursday’s close. This came despite a fairly significant 700,000 barrel a day impact during the peak of the recent storm to U.S. Gulf of Mexico production. The interest-rate worries that dinged the Dow Jones Industrials for 1,377 points didn’t spare the world’s most important industrial commodity.

Yet Fed Chairman Jerome Powell’s long-term zeal for normalizing interest rates is no match at the moment for President Trump’s determination to punish major crude producer Iran. The shortfall of Iranian barrels has led some to predict that Brent crude, now just above $80 a barrel, could top $100 before the end of 2018.

The market isn’t tight everywhere, though. As evidenced by prices, there are localized gluts and producers who would gladly put more supply on the market if logistics would oblige. U.S. benchmark crude futures, priced at Cushing, Okla., are $9.00 a barrel below Brent and cash prices in the prolific Permian Basin are even cheaper. A lack of pipeline capacity is to blame.

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None of that holds a candle to western Canada at the moment. Western Canada Select crude cash prices are now $46 a barrel below Brent. Pipeline and rail capacity already was stretched and, according to JBC Energy, a gas pipeline incident in the Pacific Northwest has worsened the situation significantly. Refineries in the region have had to scale back operations and thus crude purchases.

Economics of Offshore Drilling.

The economics of offshore drilling have deteriorated not just because oil prices remain lower than their previous peak, but because onshore shale production has become much more efficient, attracting more capital. At the same time, the offshore drilling-rig market remains oversupplied, particularly when it comes to less modern rigs. Utilization globally went from nearly 90% in 2014 to barely half last year and is a little over 60% now.

The U.S. said it would ensure crude markets are well supplied before sanctions are re-imposed on Iran and as President Donald Trump criticized high prices.


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Brent oil edged further away from a four-year high on Wednesday and U.S. crude fell, after the U.S. said it would ensure crude markets are well supplied before sanctions are re-imposed on Iran and as President Donald Trump criticized high prices. Brent crude futures were down 43 cents, or 0.5 percent, at $81.44 a barrel by 0041 GMT, after gaining nearly 1 percent the previous session. Earlier on Tuesday, Brent hit its highest since November 2014 at $82.55 per barrel.

U.S. crude oil futures were down 40 cents, or 0.6 percent at $71.88 a barrel. They rose 0.3 percent on Tuesday to close at their highest level since mid-July. However, Brent is on course for its fifth consecutive quarterly increase, the longest such stretch for the global benchmark since early 2007, when a six-quarter run led to a record-high of $147.50 a barrel.

“We will ensure prior to the reimposition of our sanctions that we have a well supplied oil market,” Washington’s special envoy for Iran, Brian Hook, told a news conference at the United Nations General Assembly. In a speech at the UN, Trump reiterated calls on the Organization of the Petroleum Exporting Countries to pump more oil and stop raising prices.

He also accused Iran of sowing chaos and promised further sanctions on the OPEC member after restrictions on its oil exports are imposed from early November.

The so-called ‘OPEC+’ group, which includes Russia, Oman and Kazakhstan, met over the weekend to discuss a possible increase in crude output, but the group was in no rush to do so. Mohammad Barkindo, OPEC secretary general, said in Madrid on Tuesday that OPEC and its partners should cooperate to ensure they do not “fall from one crisis to another”.

Also weighing on sentiment was an industry report showing U.S. crude stocks unexpectedly climbed last week. Crude inventories rose by 2.9 million barrels in the week to Sept. 21 to 400 million, compared with analyst expectations for a decrease of 1.3 million barrels, the American Petroleum Institute said. [API/S]

OPEC and its allies reduced oil output in August as a drop in Iranian supply due to U.S. sanctions derailed their attempts to raise production to agreed levels, delegates said on Saturday as the energy producers prepared to hold talks in Algiers.


 


COMMODITIES

OPEC and allies struggle to pump more oil as Iran supply falls. OPEC and its allies reduced oil output in August as a drop in Iranian supply due to U.S. sanctions derailed their attempts to raise production to agreed levels, delegates said on Saturday as the energy producers prepared to hold talks in Algiers. The development further raises pressure on the Organization of the Petroleum Exporting Countries to boost supply amid calls from U.S. President Donald Trump to lower oil prices.

On Friday, a source familiar with the discussions told Reuters OPEC and its allies led by Russia were considering the possibility of raising crude supplies by a further 500,000 barrels per day (bpd) as U.S. sanctions on OPEC‘s third-largest producer, Iran, bite into Tehran’s exports. “If an increase in production is proposed there will be plenty of market counter-argument that it reduces even further the available spare capacity,” Olivier Jakob from consultancy Petromatrix said.

Saudi Arabia has made the mistake of trying to compensate for the loss of Iranian supplies with just-in-time replacement; but the oil market is looking for greater supply security than that. As a result, the strength of oil prices is now putting oil demand growth at risk,” he added. An OPEC and non-OPEC monitoring committee gathering in the Algerian capital this weekend found that oil producers’ compliance with a supply-reduction agreement reached 129 percent in August, two committee delegates said.

This compares with a compliance level of 109 percent for July, indicating that the group over-achieved on its agreed cut. Seeking to reverse a downturn in oil prices that began in 2014, OPEC, Russia and other allies decided in late 2016 to reduce supply by some 1.8 million bpd.

In June this year, however, after months of cutting by more than their pact had called for amid involuntary reductions from Venezuela and other producers, they agreed to boost output by returning to 100 percent compliance. That equates to an increase of about 1 million bpd, but the latest figures show they are some way from achieving that target.

Oil (LCOc1) reached $80 a barrel this month, prompting Trump to demand again that OPEC bring down prices. “We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!” he wrote on Twitter. Higher gasoline prices for U.S. consumers could create a political headache for Trump before November mid-term congressional elections.

OPEC sources said any official action to raise output would require OPEC to hold what it calls an extraordinary meeting – a proposal that is not on the table yet. But the joint OPEC and non-OPEC ministerial committee known as the JMMC, which meets on Sunday, can still recommend a further increase in output if needed, the sources said.

Metal prices were in rally mode Friday as copper hit 12-week highs, shrugging off a strong dollar on easing trade war fears.

Stock Market News Today
2018/09/21


COMMODITIES

Metal prices were in rally mode Friday as copper hit 12-week highs, shrugging off a strong dollar on easing trade war fears, though analysts warned downside momentum could resume. Copper prices gained 3.87% to $2.85, zinc prices rose 2.61% to 2,524.75 and nickel futures rose 4.76% to 13,262.50.

The United States and China, earlier this week, announced tariffs at a lower rate than many had feared, helping lift sentiment on trade, easing fears escalating trade tensions would dent China’s appetite for metals. Not everyone is convinced, however, that the U.S.-China trade spat will be resolved sooner rather than later. Goldman Sachs (NYSE:GS) said the trade dispute between the two nations is in its infancy, warning that Washington may take further action against Beijing in “the next couple of weeks.”

“Additional tariffs (from the United States) are the most likely outcome, as the policy issues underlying the dispute will be difficult to resolve, the bilateral trade deficit at the heart of the dispute is unlikely to narrow substantially regardless of policy actions, and the White House will have greater political flexibility to increase tariffs after the midterm election,” Goldman Sachs said in a note.

Some analysts, meanwhile, warned against reading too much into the surge in copper prices Friday, warning that the prevailing trend was more bearish than bullish“For now we can characterise it as a relatively small correction following a big downtrend.”The rise in metals comes despite a resurgent dollar as traders reined in bets on emerging-market currencies, while a slump in the pound also bolstered the greenback.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose 0.41% to 93.85.

Dollar-denominated assets such as commodities are sensitive to moves in the dollar. A fall in the dollar makes them cheaper for holders of foreign currency, raising demand.

In precious metals, gold prices fell on fears that the yellow metal would come under pressure ahead of a widely expected Federal Reserve interest rate hike due next week. Gold futures for December delivery on the Comex division of the New York Mercantile Exchange fell by $10.60, or 0.88%, to $1,200.70 troy ounce. Silver futures were flat at $14.31 a troy ounce, while platinum futures rose 0.75% to $828.10.

Japan takes title of world’s second-largest stock market from China. Chinese equities have seen $2.29tn in valuation wiped off since January.

Stock Market News Today
2018/08/03

Japan Stock Market News Today. For first time China has ceded the title since it overtook Japan for the number two spot in November 2014. The fall also underscores how the ongoing trade spat with the US, Beijing’s campaign to temper debt-fueled growth and signs of slowing domestic demand have combined to dampen investor sentiment for Chinese assets.

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The CSI 300 index of major stocks listed on the Shanghai and Shenzhen exchanges is down by more than 17 per cent year to date, while the onshore renminbi exchange rate has weakened 5.3 per cent against the dollar.

By comparison, Tokyo’s Topix index has fallen just 4 per cent in 2018, while Japan’s yen has gained nearly 1 per cent on the greenback.

Apple News Today. Apple won the race to become the first company to reach a trillion-dollar market capitalisation, beating Microsoft, Amazon and Alphabet to the finish line. Here’s a great interactive chart on how Apple’s worth stacks up against other companies and entire industries (add Disney and Bank of America and you’re only halfway there).

Brexit News Today. The Bank of England’s decision to raise interest rates on Thursday was seen in some quarters as a welcome step on the road to post-financial crisis normality. For others, it was a reckless misjudgment, given the growing risks of a no-deal Brexit. The FT editorial calls it a “false step”. Our FT Money reporters have also broken down what a no-deal outcome would mean for your finances.

Trump News Today. Top US intelligence chiefs issued a stark warning about ongoing Russian efforts to interfere in upcoming US elections. Donald Trump is focusing elsewhere: on China. Barely a week after the US president agreed to a ceasefire in his trade war with Europe, he has dramatically upped the ante in his battle with Beijing.

China News Today. Has China lost its ranking as the world’s number two stock market? After a Thursday slump, Chinese equities were worth $6.09tn, according to data compiled by Bloomberg. That compared with $6.17tn in Japan. Chinese equities and the nation’s currency have taken a beating this year amid a trade spat with the Trump administration.

US Jobs Report News Today. The US jobs report for July is expected to be positive, but what many observers will be looking at is wage growth. Are companies paying workers more because of the tight labour market? So far, not as much as past economic good times.

Stocks to Watch News Today. JPMorgan Cazenove raised Elementis, the chemical maker to “overweight” from “neutral” with a 290p target. Its upgrade follows Elementis last month announcing the $600m acquisition of Mondo, then saying earlier this week that it was exploring options for the deal after major shareholders expressed concerns.

Either a significant price cut or a deal termination “should be incrementally positive” for Elementis, JPMorgan said. “We believe an acquisition price of $450m to $500m versus the $600m proposed currently might make the deal more palatable to investors [and] substantially improve deal economics,” it said. And on a standalone basis, Elementis has priced in “a material deal-related discount” to its long-term valuation average of about 17 times earnings even allowing for an $18m termination fee.

In brief: Biffa upgraded to “buy” at Peel Hunt; Royal Dutch Shell cut to “equal-weight” at Morgan Stanley; Asos and Zalando rated new “outperform”, Boohoo rated new “market perform” at Wells Fargo; Scor upgraded to “buy” at HSBC; Sodexo downgraded to “market perform” at Bernstein; Lloyds Banking Group upgraded to “neutral” at Citigroup; Sabadell raised to “sector perform” at RBC.

Commodities News Today. Gold has touched its lowest level in over a year at $1,205.95 per troy ounce, after slipping on dollar strength.

Oil prices are mixed. Brent crude is down 0.1 per cent at $73.40 a barrel while West Texas Intermediate is up 0.1 per cent at $69.04.

The US-China trade war looks set to escalate. Donald Trump wants to more than double the proposed tariffs on $200bn of annual imports from China — from 10 per cent to 25 per cent.

Stock Market News Today
2018/08/02

Trade War News Today. President Donald Trump wants increase the proposed tariffs on some $200bn in annual imports from China to 25 per cent from the 10 per cent announced last month, senior administration officials told reporters on Wednesday.

That move prompted falls for equities markets in Asia with Hong Kong’s Hang Seng among the worst performers, down 2.3 per cent to its lowest intraday level in 10 months. Within this, financials fell 2.3 per cent, the technology sector dropped 3.6 per cent and consumer cyclical stocks shed 4.8 per cent. Mainland Chinese stocks also fell with the CSI 300 index of Shanghai and Shenzhen stocks down 2.6 per cent to a one-month low.

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The US government’s approach stands in contrast to the softening approach from Google, one of its biggest companies. The tech company is considering a relaunch of its search engine in China— a dramatic reversal for a company that pulled out in 2010 over censorship concerns.

Separately, the Germany, another country exposed to Trump’s America First approach, wants to avoid a trade war at all costs. But will it succeed given the nation has become Mr Trump’s European punching bag?

Brexit News Today. Is Michael Gove, the Eurosceptic UK environment minister, betraying the Brexit cause?. At a recent dinner he privately discussed a scenario in which the UK would remain “parked” in the European Economic Area, like Norway. In other Brexit news, Credit Suisse has picked Frankfurt as a key post-Brexit centre. The UK is less ready for life after the divorce. As the FT’s deputy editor points out, the debate on food stockpiling shows Britain is not even prepared for the preparations to leave the EU.

Fidelity News Today. Taking things to a new level. The asset management industry crossed a Rubicon on Wednesday. Fidelity launched the first zero-cost index funds in the US, ratcheting up the passive investing price war to a new level and sending rivals’ shares lower. If the aim was to trigger stock drops in its rivals, such as BlackRock, then it worked.

Trump News Today. “Fighting back, not obstructing.” That was the White House’s response to criticism of Donald Trump after the US president used a Twitter offensive to urge the attorney-general to end the Russia probe “now”. The Trump administration also escalated a row with Turkey over the detainment of an American pastor by imposing sanctions on two Turkish ministers. The lira weakened to a record low against the dollar in response.

Tesla News Today. Tesla beat Wall Street revenue expectations with its latest earnings and made a confident prediction about the rest of the year. Elon Musk, chief executive, also tried to rebuild relations with analysts after a testy earnings call last quarter. Tesla’s shares had already risen on news of the company’s latest earnings, but jumped higher on Mr Musk’s attempts to apologise.

Federal Reserve News Today. A day after India lifted interest rates and the US Federal Reserve signalled another rate rise ahead, the Bank of England is widely expected to raise its interest rates from crisis-era lows. But in times of uncertainty, a UK rate rise would be premature, writes Patience Wheatcroft.

Pompeo News Today. Mike Pompeo, US secretary of state, will begin his visit to Malaysia and Singapore with a stop in Kuala Lumpur. The trip comes after this week’s announcement that the US would spend just $113m in Indo-Pacific investments to counter China’s $1tn.

Stocks to Watch News Today. Citigroup downgraded Pearson, the textbook publisher, from “buy” to “neutral” on valuation grounds.Citigroup’s team remained positive on Pearson’s prospects in the US and argued that investors have exaggerated risks in the core business while underestimating growth potential elsewhere in the group. But with Pearson outperforming by 26 per cent year to date, its earnings multiple has expended to a 20 per cent premium to the market, said Citi. “We expect the price-to-earnings ratio to contract fast as the group continues to grow (and see absolute fair value at 975p per share), but we acknowledge it may be 12 months until we get a clear line of sight on 2019 trends, a critical year in confirming our view,” it said.

Stifel downgraded Rentokil Initial to “hold” from “buy” with an unchanged 360p target.

“Whilst there is little to fault the company, trading is going to script after the business was successfully re-tuned to the pest control and hygiene segments, none of this is likely to come as much of a surprise to investors. Our view is that the share price now fully incorporates the upside from continued strong strategic delivery, limiting the scope for further material outperformance. Our view of value, which makes some allowance for continued M&A activity, remains at 360p, which is no longer sufficient to warrant a continued positive recommendation.”

In brief: Standard Chartered raised to “hold” at HSBC; SSP upgraded to “hold” at Canaccord; Hammerson cut to “underperform” at Jefferies; IMI downgraded to “hold” at Liberum; Rightmove downgraded to “sell” at Berenberg; 4 Imprint raised to “hold” at Berenberg; Petra Diamonds downgraded to “sell” at Investec; DNO upgraded to “outperform” at RBC; Enel cut to “neutral” at Goldman Sachs; EDF raised to “equal-weight” at Morgan Stanley; Proximus upgraded to “hold” at Deutsche Bank; Aéroports de Paris upgraded to “equal-weight” at Barclays; Peugeot raised to “buy” at Citigroup; Maersk cut to “neutral” at Goldman Sachs.

Commodities News Today. Oil prices bounced back following Wednesday’s fall. Crude was knocked back in US trading yesterday after the Energy Information Administration figures showed crude inventories climbed by 3.8m barrels in the week to July 27, confounding expectations for a fall of 2.8m barrels. Brent crude was 0.6 per cent higher at $72.80 a barrel while West Texas Intermediate rose 0.2 per cent to $67.80 a barrel.

Gold is up 0.2 per cent to $1,218.50 an ounce after closing at its lowest point in more than a year on Wednesday.