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Economy

Recession fear stalks oil, copper and stocks

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© Reuters. FILE PHOTO: People wearing protective masks are reflected on an electronic board displaying Japan’s stock prices outside a brokerage in Tokyo, Japan, October 5, 2021. REUTERS/Kim Kyung-Hoon

By Huw Jones

LONDON (Reuters) – Global markets fell on Thursday as investors worried that further rises in interest rates to quell decades-high inflation would tip economies into recession.

The German economy, Europe’s largest, suffered a sharp loss of momentum at the end of the second quarter, according to the latest Purchasing Managers’ Index, while corresponding figures for France also showed weaker activity.

The STOXX share index of 600 European companies fell 1.3% to a new low for the year.

Prices of copper and crude oil sank on prospects of less demand for fuel and building materials as consumers limit spending.

“Copper has always been the lead indicator commodity for economic growth,” said Patrick Spencer, vice chairman of equities at Baird Investment Bank.

U.S. Treasury yields eased after Federal Reserve Chair Jerome Powell, in testimony to the U.S. Senate Banking Committee, underlined the central bank’s commitment to cutting inflation at all costs and acknowledged a recession was “certainly a possibility”.

A Reuters poll showed the Fed is expected to deliver another 75-basis-point interest rate hike in July, followed by a half-percentage-point rise in September, and will not scale back to quarter-percentage-point moves until November, at the earliest.

The MSCI all-country share index was down 0.35%, adding to its slide of more than 20% for the year. Both Nasdaq futures and S&P500 futures eased about 0.4%.

“We are seeing a little bit of lower yields, a bit of haven buying, which suggests that perhaps markets are starting to become concerned about some form of slowdown,” said Michael Hewson, chief markets analyst at CMC Markets.

Such concerns were reflected in the prices of copper and oil, causing a little weakness in equity markets, he added.

“A slowdown is coming and it’s really about degree.”

Powell is set to give his second day of congressional testimony later on Thursday.

Baird’s Spencer said there has been so much damage to stock markets that they had largely discounted a recession already.

“If you look at the data, I think at worst what you are looking at is, maybe, a mild recession. I believe the markets are in a bottoming process, and maybe you’ve only got another 5% downside.”

GRAPHIC: Copper/gold (https://fingfx.thomsonreuters.com/gfx/mkt/egvbkgjlrpq/Pasted%20image%201655967735976.png)

CHINA FINTECH

Stocks in Asia were mixed, with South Korea down 1.2% while China’s blue chips rose 1.7%, and Japan’s Nikkei was flat.

Chinese tech shares in Hong Kong staged a strong rebound, rising 2.8%, after Chinese President Xi Jinping chaired a top-level meeting that approved a plan for further development of large payment firms and the fintech sector.

U.S. stocks rallied on Wednesday after Powell’s remarks, which some analysts said did not break any new ground, before giving up gains. The Dow Jones Industrial Average fell 0.15%, the S&P 500 lost 0.13%, and the Nasdaq Composite dropped 0.15%.

Concerns about the demand outlook have sapped commodity prices, with oil tumbling on Thursday to the lowest in more than a month. Brent crude was down 1.7% at $109.83 a barrel and U.S. crude declined 2% to $104.10 a barrel.

Iron ore was already at six-month lows, having lost more than 20% in recent weeks, while copper struck a 15-month trough overnight.

The yield on benchmark 10-year Treasury notes was down slightly, at 3.0926%. The two-year yield, which rises with traders’ expectations of higher Fed fund rates, eased to 3.00%, compared with a U.S. close of 3.056%.

In foreign exchange markets, the dollar rose 0.365%against a basket of major currencies. The index was up more than 8% this year, reflecting the broad risk-off sentiment and the dollar’s Fed-driven yield advantage.

Gold was slightly lower, with spot prices traded at $1,837 per ounce, little changed on the day. [GOL/]

Economy

U.S. stocks fall after recent big gains; oil, yields rise

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2/2

© Reuters. FILE PHOTO: Pedestrians wearing protective masks are reflected on an electronic board displaying various company’s stock prices outside a brokerage in Tokyo, Japan, February 25, 2022. REUTERS/Kim Kyung-Hoon

2/2

By Caroline Valetkevitch

NEW YORK (Reuters) – U.S. stocks ended a volatile trading session slightly lower on Monday after posting sharp gains the week before, while oil prices and Treasury yields rose.

Oil climbed following last week’s rout, as the Group of Seven nations promised to tighten the squeeze on Russia’s finances with new sanctions that include a plan to cap the price of Russian oil.

Investors have been hoping oil’s slide from three-month peaks hit earlier in June could ease overall inflation concerns and allow the U.S. Federal Reserve to tighten policy less aggressively than initially feared.

Still, data on Monday showed new orders for U.S.-made capital goods and shipments increased solidly in May, pointing to sustained strength in business spending on equipment in the second quarter.

Stocks moved between gains and losses during the session on Wall Street, with big growth shares leading the way down.

“It’s not shocking given we’re in a bear market that last week was a good week and this week is turning out to be a bad week,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma, which has about $50 million in assets under management.

But given recent strong selloffs, “flat to down a little is progress,” he said.

The S&P 500 earlier this month confirmed it is in a bear market.

The Dow Jones Industrial Average fell 62.42 points, or 0.2%, to 31,438.26, the S&P 500 lost 11.63 points, or 0.30%, to 3,900.11 and the Nasdaq Composite dropped 83.07 points, or 0.72%, to 11,524.55.

The pan-European STOXX 600 index rose 0.52% and MSCI’s gauge of stocks across the globe gained 0.31%.

A further easing of COVID-19 restrictions in China helped to support global indexes.

Treasury yields climbed after the capital and durable goods orders surprised to the upside, but the sale of two- and five-year notes was weak.

The 10-year note rose 7 basis points to 3.194% and the two-year’s yield, which can herald rate expectations, gained 6.9 basis points to 3.126%.

Brent crude futures settled up $1.97, or 1.7%, at $115.09 a barrel, while U.S. West Texas Intermediate crude closed up $1.95, or 1.8%, at $109.57.

In foreign exchange, Russia’s rouble was volatile as Russia defaulted on its international bonds for the first time in more than a century, the White House and Moody’s (NYSE:MCO) credit agency said.

Also, the U.S. dollar edged lower versus its major rivals as investors weighed expectations on inflation and rate hikes. The euro was helped by expectations that the European Central Bank will soon raise interest rates for the first time in more than a decade.

The dollar index fell 0.058%, with the euro up 0.23% to $1.0578.

Cryptocurrencies stumbled. Bitcoin last fell 0.59% to $20,905.04.

Spot gold dropped 0.2% to $1,822.89 an ounce.

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Economy

Wall Street ends down, pulled lower by growth stocks

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© Reuters. FILE PHOTO: A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., June 22, 2022. REUTERS/Brendan McDermid

By Stephen Culp

NEW YORK (Reuters) – U.S. stocks closed lower on Monday, with few catalysts to sway investor sentiment as they approach the half-way point of a year in which the equity markets have been slammed by heightened inflation worries and tightening Fed policy.

The major U.S. stock indexes lost ground after oscillating earlier in the session, with weakness in interest rate sensitive megacaps such as Amazon.com (NASDAQ:AMZN), Microsoft Corp (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) Inc providing the heaviest drag.

“The reason for lack of direction this week and next week is investors are looking for what’s going to happen in the second quarter reporting period,” said Sam Stovall, chief investment strategist of CFRA Research in New York.

All three indexes are on course to notch two straight quarterly declines for the first time since 2015. They also appear set to post losses for June, which would mark three consecutive down months for the tech-heavy Nasdaq, its longest losing streak since 2015.

The S&P was on track to report its fifth worst year-to-date price decline since 1962 as of Friday, Stovall said.

“Every time the SPX rose by more than 20% in a year it fell by an average of 11% starting relatively early in the new year. And all years where the decline started in the first half got back to break even before the year was out.”

“No guarantee that’s going to happen this year, but the market could surprise us to the upside,” Stovall said.

Rising oil prices helped put energy stocks out front, with economically sensitive smallcaps and semiconductors and transports also outperforming the broader market. [O/R]

Economic data surprised to the upside, with new orders for durable goods and pending home sales beating expectations and adding credence to U.S. Federal Reserve Chairman Jerome Powell’s assertion that the economy is robust enough to withstand the central bank’s attempts to rein in decades-high inflation without sliding into recession.

The Dow Jones Industrial Average fell 62.42 points, or 0.2%, to 31,438.26, the S&P 500 lost 11.63 points, or 0.3%, to 3,900.11 and the Nasdaq Composite dropped 93.05 points, or 0.8%, to 11,514.57.

Among the 11 major sectors of the S&P 500, eight ended the session in negative territory, with consumer discretionary suffering the largest percentage loss. Energy stocks were the clear winners, gaining 2.8% on the day.

With several weeks to go until second-quarter reporting commences, 130 S&P 500 companies have pre-announced. Of those, 45 have been positive and 77 have been negative, resulting in a negative/positive ratio of 1.7 stronger than the first quarter but weaker than a year ago, according to Refinitiv data.

Shares of retail stock trading platform Robinhood (NASDAQ:HOOD) Markets rose 14.0% after media reports said Goldman Sachs (NYSE:GS) changed the stock to “neutral” from “sell”.

But the broker double downgrade of cryptocurrency exchange Coinbase (NASDAQ:COIN) Global Inc’s shares to “sell” from “buy”, sent its stock sliding 10.8%.

Advancing issues outnumbered declining ones on the NYSE by a 1.17-to-1 ratio; on Nasdaq, a 1.02-to-1 ratio favored decliners.

The S&P 500 posted one new 52-week high and 29 new lows; the Nasdaq Composite recorded 24 new highs and 84 new lows.

Volume on U.S. exchanges was 10.91 billion shares, compared with the 12.95 billion average over the last 20 trading days.

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Economy

Albemarle plans major U.S. lithium processing plant

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© Reuters. FILE PHOTO: A sign at the approach road leads to Albemarle’s lithium evaporation ponds at its facility in Silver Peak, Nevada, U.S., January 9, 2019. REUTERS/Ernest Scheyder/File Photo

By Ernest Scheyder

PHOENIX, Ariz. (Reuters) -Albemarle Corp plans to build a lithium processing plant in the United States that would produce as much of the electric vehicle battery metal as the entire company produces today, a bullish bet on America’s all-electric future, an executive said on Monday.

The plan reflects Albemarle (NYSE:ALB)’s emerging strategy to lead the U.S. lithium renaissance, from mine development to processing to manufacturing types of the metal used to make high-end EV batteries.

Eric Norris, head of Albemarle’s lithium division, said the company has seen a major shift in the last nine months in the United States with an “unprecedented” number of EV manufacturing plants announced, a harbinger the company believes will fuel a surge in lithium demand.

The company as a result aims to build a processing plant with 100,000 tonnes of annual capacity in the U.S. Southeast somewhere within rail access of a major port, Norris said.

“There isn’t enough (lithium) supply yet to supply the ambitions of the U.S.,” Norris told the Fastmarkets Lithium Supply and Battery Raw Materials conference in Phoenix, Arizona. “This (processing plant) will be essential for our success in the future.”

Albemarle is in active discussions with automakers on buying supply from the facility, Norris said. Albemarle already supplies Tesla (NASDAQ:TSLA) Inc, as well as several other major automakers.

While Albemarle had spoken vaguely in the past about building a U.S processing plant, it used Monday’s conference to announce the specific plan and said it will be key as the company aims to boost its overall lithium production capacity fivefold to 500,000 tonnes annually by 2030.

The U.S. plant would be of a similar design to a processing plant Albemarle recently opened in Kemerton, Western Australia, though it would need to cost less than Kemerton, whose costs ballooned far above its initial target of $1.2 billion, Norris said.

Albemarle plans to self-fund the facility, though it could apply for U.S. Department of Energy loans, he said.

The plant would be supplied from lithium extracted from the company’s Kings Mountain mine in North Carolina, which is currently mothballed but may reopen as soon as 2027.

The Kings Mountain facility would likely compete with a planned lithium mine and processing complex in a nearby North Carolina county from Piedmont Lithium Inc (O:PLL), which faces regulatory and local pushback.

Unlike Piedmont’s mine, Kings Mountain would be a reopening of a facility that closed in the 1980s, a distinction that Norris said he expects to work in Albemarle’s favor.

“This is an existing mine in a town that is very mining oriented,” Norris said. “We’re very present in the community.”

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