Forex News

Prices for iron ore cargoes with a 62% iron ore content were at the $117 per tonne mark, trading in a relatively tight range since hitting the two-month high of $120 on May 6th amid strong demand for input materials from Chinese steel mills. Despite the pessimistic outlook for domestic construction, foreign demand for cheap Chinese steel allowed mills to allocate their metal to foreign markets and keep production elevated. The developments extended calls from foreign governments that overcapacity in China’s steel production leads to dumping and anti-competitive export practices, underscoring the elevated steel output out of the world’s top producer. Recent data showed that Chinese steel export volumes surged by nearly 30% for the second straight month in April, underpinning demand for iron ore input. On the supply front, Fortescue noted that shipments for the year should be at the lower range of its guidance due to problems in key mines, limiting supply out of Australia.

Portugal's trade deficit narrowed to €1.621 billion in March 2024 from €2.092 billion in the same month last year. Exports tumbled by 13.6% year-on-year to €6.768 billion, driven by lower sales of capital goods (-20.4%); transport equipment (-18.8%); processed industrial supplies (-15.7%); and processed fuels & lubricants except motor spirit (-14.8%). Among major trade partners, exports fell to the UK (-18.3%), France (-16.2%), Spain (-15.8%), the US (-15.8%), and the Netherlands (-15.1%). Imports went down at a steeper 15.5% to €8.389 billion, mainly due to lower purchases of primary fuels & lubricants (-38.9%), processed industrial supplies (-27.2%), and capital goods (-13%). Imports fell from Spain (-16.2%), the Netherlands (-15.9%), and Italy (-11.8%).

The National Bank of Serbia maintained its benchmark interest rate at 6.5% in May 2024in line with expectations. The deposit and lending rates were also kept at 5.25% and 7.75%, respectively. The lender cited the following factors contributing to its decision: the medium-term inflation projection, elevated global price pressures, and uncertainty regarding the movements in the cost of energy and other primary products. In Serbia, inflation continued to slow down faster than expected to 5% in March. It is anticipated to reach the target range in May 2024 and the target itself by the end of the year. Meanwhile, the country's growth is estimated to have reached 4.6% year-on-year in Q1 of 2024. Its future decisions the central bank will base on the speed of disinflation processes.

Industrial sales in Italy increased by 2 percent from the previous month in February 2024, the most since August 2022, reversing a downwardly revised 3.2 percent fall in the prior month. Demand for industrial goods rose both in the foreign market (4 percent) and the domestic market (1.1 percent). Sales increased for capital goods (4.9 percent), intermediate goods (1.3 percent), energy (0.6 percent), and consumer goods (0.2 percent). On a yearly basis, industrial sales fell by 1.7 percent, following a 3.9 percent decline in January.

Producer prices in Macedonia fell for the tenth consecutive month by 1.5% year-on-year in March 2024, after a 2.2% decline in February, mainly due to continued price reductions in mining & quarrying (-8.4% vs -12.2% in February) and manufacturing (-1.3% vs -1.6%). In contrast, prices increased for electricity, gas, steam & air conditioning supply (0.1% vs -6.3%) and maintained the same increase pace for water supply, sewerage, waste management & remediation services (1.6%). On a monthly basis, prices increased by 0.5% compared to February.

FR40 increased to an all-time high of 8258.00 Index Points. Over the past 4 weeks, France Stock Market Index (FR40) gained 2.9%, and in the last 12 months, it increased 11.85%.

Annual inflation rate in Latvia accelerated to 1.1% in April 2024 from 0.9% in March, driven by a higher cost of goods & services related to transport (3.2% vs 2.1%) and alcoholic beverages & tobacco (5.9% vs 4.7%). Also, prices fell less for housing & utilities (-6.1% vs -6.9%). On the other hand, inflation softened for food & non-alcoholic beverages (0.6% vs 0.7%) and health (6.4% vs 6.5%). On a monthly basis, consumer prices rose by 0.5%, slowing from a 1.2% gain in March.

Government bond yields are trading lower on Friday. Top losers are Greece 10Y (-4.40bps), Russia 10Y (-3.50bps) and Italy 10Y (-3.30bps). Gains are led by Switzerland 10Y (2.15bps).

The trade deficit in Cyprus decreased to EUR 549 million in March 2024 from EUR 640 million in the same month of the previous year, preliminary estimates showed. Imports fell by 20.1% to EUR 810 million, with arrivals from the EU dropping by 13.7% to EUR 549 million and from third countries by 30.9% to EUR 261 million. Meanwhile, exports plunged by 30.4% to EUR 261 million as sales to outside the EU plummeted by 50.3% to EUR 147 million, while those from the EU increased by 44.4% to EUR 114 million.

Industrial production in Greece shrank by 0.6% year-on-year in March 2024 from an increase of 1.6% in the previous month. It marks the first contraction after 6 consecutive months of expanding. Output declined for mining & quarrying (-2.5%) and manufacturing (-2.3%) and in contrast, output grew for water supply (+1.6%) and electricity (+8.2%). On a seasonally adjusted monthly basis, industrial activity fell by 1.3%, after a 1.7% decline in the previous month.

Greece’s trade deficit narrowed to EUR 2.4 billion in March of 2024 from EUR 2.6 billion in the corresponding month from the previous year. Imports fell by 10.1% from the previous year to EUR 6.7 billion in the period. In the meantime, exports declined by 11.7% to EUR 4.3 billion. Both categories fell sharply due to the gradual stabilization of shipping and energy prices. Considering the first three months of the year, the country's trade shortfall widened to EUR 8 billion from EUR 7.3 billion in the same period of 2023. Exports declined 11% to EUR 12.3 billion, while imports fell by a slower 4.2% to EUR 20.3 billion.

Steel rebar futures were below CNY 3,500 per tonne in May, their lowest level in nearly one month, and holding a 10% slump year-to-date as poor construction demand in China drove the world’s top steel producer to flood foreign markets with their supply. China’s Politburo acknowledged the gravity of the country’s property crisis, an unexpected change in rhetoric, and pledged to deliver measures against the oversupply of housing, limiting the outlook of future construction. The signals were delivered shortly after private data showed that new home sales from China’s 100 biggest developers slumped by 45% annually in April. The already-low domestic demand and overcapacity for steel mills drove producers to allocate sales to foreign clients, making export turnover fall by 10% annually in April, despite the near 30% surge in volume of sales. This aligned with Brazil and Turkey's launch of probes against Chinese steel dumping, while the US extended tariffs against the country.

Top currency losers are Polish Zloty (-0.32%) and New Zealand Dollar (-0.31%). In addition, there was a slight change on British Pound (0.06%), Dollar Index (0.03%), Japanese Yen (-0.21%) and Euro (-0.01%).

Siemens increased to an all-time high of 187.00 EUR. Over the past 4 weeks, Siemens gained 7.71%, and in the last 12 months, it increased 25.6%.

The CPI index in Rwanda edged down by 0.5% year-on-year in April 2024, after a 0.6% increase in the prior month, marking the first month of deflation since December 2021. Downward pressure came from prices of food & non-alcoholic beverages (-6.6% vs -4.1% in March), of which vegetables (-15.3%) and bread & cereals (-6.1%). Additionally, prices slowed down for some CPI categories, including alcoholic beverages & tobacco (7.7% vs 8.6%); clothing & footwear (5.6% vs 5.9%); furnishings & household equipment (3.2% vs 3.4%); health (1.6% vs 2.1%); restaurants & hotels (3.6% vs 5.4%) and miscellaneous goods & services (4.5% vs 6.9%). On the other hand, prices accelerated sharply for transportation (23.9% vs 13.8%). On a monthly basis, consumer prices rose by 0.6% in April, following a 0.7% increase in the previous month.

Copper futures surged above $4.71 for the first time in over two years, ahead of the $10,000 per tonne threshold, as markets continued to gauge the extent of supply deficits against bullish near and long-term demand. China’s Politburo changed its rhetoric to signal a deeper concern with the country’s property crisis, triggering expectations of rate cuts and speculation of quantitative easing. This aligned with a jump in copper ore imports and expansionary manufacturing PMIs, indicating that the world’s top producer of refined copper took in large volumes of inputs despite the sharp increase in prices. In turn, the pessimistic availability of copper ore due to setbacks in key mines hampered margins for smelters in China, responsible for over half of global supply, resulting in a potential 10% output cut this year. High costs of committing to new mines drove giant miners toward M&A activity instead of starting new projects, recently headlined by BHP’s attempt to buy Anglo American.

The IBEX 35 increased to 11,110 on Friday, mirroring the improved sentiment on global markets, as investors raised their bets on interest rate cuts by the Fed this year and welcomed fresh corporate results. The largest wins came from Fluidra (5.8%), Melia Hotels (3.7%), and Acerinox (2.9%). Fluidra advanced after receiving an upgrade in recommendation from neutral to overweight by JP Morgan analysts, while Melia Hotels benefited from positive accounts, having returned to profits of 7.5 million euros in the first quarter of 2024. Also, heavyweights Iberdrola and BBVA added 1.5% and 1% respectively, and IAG grew by 1.4%, having lowered its net losses to 4 million euros in the first three months of the year compared to losses of 87 million in the previous period. Weekly, the index was poised for more than a 2% gain, despite the hostile takeover bid by BBVA.

The FTSE MIB added nearly 1% to trade above the 34,600 threshold on Friday, in line with its European peers to reach a fresh 5-week high, driven by strong corporate results and lower interest rate prospects worldwide. The spotlight was on Iveco Group, experiencing a remarkable 7% increase, fueled by a strong first-quarter operating profit and improved margins across its business segments. Enel also experienced a significant uptick of over 3%, despite a dip in revenue, thanks to a notable boost in profitability as highlighted in its quarterly report. Meanwhile, Mediobanca and Pirelli joined the positive momentum, each climbing almost 3% upon releasing their first-quarter financial results as well. For the week, the FTSE is poised to record a 3% surge, marking its best weekly performance since February.

The CAC 40 rose 0.6% to reach a new historic high of 8,240 on Friday, maintaining its winning streak for the sixth consecutive session. Investor sentiment soared on the back of optimistic outlooks, fueled by the anticipation of major central banks moving towards reducing borrowing costs and upbeat corporate updates. Most sectors witnessed gains, spearheaded by Legrand, with shares climbing nearly 3% to the index, following a noteworthy report from Citi, which double-upgraded the French electrical equipment giant from "sell" to "buy." Citi's upgrade was underpinned by expectations of robust growth in IT server shipments and promising signs of recovery in the office construction and renovation markets. Several other notable gainers contributed to the market's upbeat sentiment, including Axa, Accor, Engie, Carrefour, ArcelorMittal, and Societe Generale, all posting increases ranging from 1.3% to 2.2%.

The JSE index rose over 1% to surpass 78,500 on Friday, its highest since August last year, extending gains for the sixth straight session. Market sentiment continued to be driven by ongoing optimism around interest rate cuts by the Federal Reserve and also positive earnings. On the corporate front, heavyweight resource-linked stocks (+3%) and financials (+1.3%) were the top performers. In business news, Sibanye-Stillwater's CEO, Neal Froneman, has stated that the company is actively working with lenders to temporarily adjust its lending covenants in response to the continued impact of weak platinum group metal (PGM) prices on the company's performance. For the week, the JSE is set to book a gain of nearly 3%.