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European Stocks Climb With Asia Shares; Pound Weakens Before BOE

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European equities gained while Asian stocks advanced, rebounding from their worst day since the aftermath of the Brexit vote, as crude oil held onto a recovery. The pound retreated with the Bank of England expected to cut interest rates.

The Stoxx Europe 600 Index gained after U.S. shares advanced Wednesday. Mining shares and energy producers drove the Asian index up from its lowest level since June 24, the day when referendum results showed Britain had decided to leave the European Union. U.S. crude extended gains into a second session after the steepest drop in American gasoline supplies since April soothed concern over a glut. The greenback rose before Friday’s jobs data and metals declined amid concern about increased supply from China.

The global equity rebound that took hold in July started to falter as August opened, with oil descending into a bear market and data failing to bolster confidence in the world economy. While central banks and governments have signaled unprecedented support, Japan’s latest efforts — which include monetary and fiscal stimulus — haven’t had their intended effect amid concern the plans won’t be enough to revive price growth. The Bank of England is expected to cut benchmark interest rates on Thursday, while non-farm payrolls data in the U.S. Friday could provide clues for Federal Reserve policy.

“The theme remains dominant in markets that monetary policy has effectively done as much as it can and that reflation, if required, should come via other means,” Sharon Zollner, a senior economist in Auckland at ANZ Bank of New Zealand Ltd., said in a note to clients. “The reality is that interest rates remain at record-low levels and, in an environment of moderate growth and low inflation, that is supportive of higher-yielding assets and Asia-Pacific markets should continue to benefit, as long as the growth picture holds together.”

Stocks

The European index rose 0.5 percent as of 8:07 a.m. in London. The MSCI Asia Pacific Index gained 0.6 percent, following last session’s 1.9 percent slide. The index, which jumped 5.8 percent in July, is down about 1 percent this week.

The Topix index climbed 0.9 percent as the yen reversed some of its recent advance. The stocks gauge had also dropped by the most in more than five weeks on Wednesday.

India’s benchmark S&P BSE Sensex advanced 0.2 percent, led by automakers and logistics companies that benefit from the passage of a national sales tax bill on Wednesday. Tata Motors Ltd., owner of Jaguar Land Rover, jumped 4 percent to be the strongest performer.

Futures on the S&P 500 were little changed, following a 0.3 percent increase in the underlying index on Wednesday. The U.S. benchmark had fallen 0.8 percent over the previous two sessions.

“There’s slow movement in a market that’s looking for a reason to go up or go down — it just hasn’t found any,” said Jeff Carbone, managing partner of Cornerstone Financial Partners, which oversees almost $1.1 billion in assets in Charlotte, North Carolina. “We haven’t seen that breakout that would suggest the market is based on fundamentals, it’s still very tied to central banks.”

Currencies

The yen weakened 0.3 percent to 101.54 per dollar, adding to its 0.4 percent slide on Wednesday.

Japan’s currency has gained about 0.5 percent this week, as traders weigh the BOJ’s decision last Friday to only bolster purchases of exchange-traded funds, as well as a fiscal package flagged Tuesday by Prime Minister Shinzo Abe.

The Aussie added 0.1 percent and Malaysia’s ringgit bounced with oil, climbing 0.3 percent from a four-day low. The rupee rose 0.1 percent.

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, was up 0.1 percent after rising 0.3 percent on Wednesday, when emerging-market currencies led declines.

Chicago Fed President Charles Evans told reporters Wednesday that a rate hike “could be appropriate this year.” Odds on the Fed boosting benchmark borrowing costs in 2016 have dropped to 39 percent, with last week’s weaker-than-expected U.S. growth data damping expectations of tightening.

Sterling declined 0.2 percent to $1.3295. The BOE is expected to cut its benchmark from a record low of 0.5 percent and may boost an asset purchase program that stands at 375 billion pounds ($500 billion).

Bonds

Australian sovereign bonds retreated, with 10-year yields rising two basis points, or 0.02 percentage point, to 1.95 percent, building on Wednesday’s 11 basis-point jump. Similar maturity Japanese debt yielded minus 0.08 percent, up 1 1/2 basis points.

Treasuries were little changed, with yields on notes due in a decade steady at 1.55 percent. Ten-year rates jumped at the start of this week, as the record-setting rally in global bonds appeared to falter. Yields on German 10-year bunds were also steady, at minus 0.04 percent.

Commodities

West Texas Intermediate crude was little changed at $40.84 per barrel, after Wednesday’s 3.3 percent rebound that came when U.S. government data showed gasoline stockpiles fell by 3.26 million barrels last week, the most since April. Brent crude fell 0.2 percent to $43 a barrel.

WTI is still down more than 1 percent this week, after the commodity sold off on Monday and Tuesday amid resurgent concern over a global glut. Citigroup Inc. to Bank of America Merrill Lynch predicted the slump would be short-lived, while Societe Generale SA said the price correction would be limited due to a better balance between supply and demand.

“We’re seeing rebalancing,” Scott Darling, regional head of oil and gas at JPMorgan Chase & Co., said in a Bloomberg TV interview. “We think in the near-term, oil will be under pressure because demand is moderating.”

Gold for immediate delivery dropped 0.5 percent to $1,351.59 an ounce, after declining 0.4 percent on Wednesday. Last session’s retreat halted the precious metal’s longest rally in a month.

Copper dropped 2 percent to $10,525 a metric ton on the London Metal Exchange. Nickel also fell 2 percent, while Aluminum was down 0.4 percent.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Commodities

Increased Demand Paves The Way for Expansion of Africa’s Sugar Industry

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Sugar - Investors King

Africa, June 2021:  A new focus report produced by the Oxford Business Group (OBG), in partnership with the International Sugar Organization (ISO), explores the potential that Africa’s sugar industry holds for growth on the back of an anticipated rise in regional demand. The report was presented to ISO members during the MECAS meeting at the Organization’s 58th Council Session, on June 17th 2021.

Titled “Sugar in Africa”, the report highlights the opportunities for investors to contribute to the industry’s development by helping to bridge infrastructure gaps in segments such as farming and refining and port facilities.

The report considers the benefits that the African Continental Free Trade Area (AfCFTA) could deliver by supporting fair intra-African sugar trade efforts and bringing regulatory frameworks under a common umbrella, which will be key to improving competitiveness.

The increased international focus on ESG standards is another topical issue examined. Here, the report charts the initiatives already under way in Africa supported by green-focused investment with sustainability at their core, which will help to instil confidence in new investors keen to adhere to ESG principles in their decision-making.

In addition, subscribers will find coverage of the impact that Covid-19 had on the industry, with detailed analysis provided of the decrease in both worldwide sugar production and prices, as movement restrictions and social-distancing measures took their toll on operations.

The report shines a spotlight on sugar production in key markets across the continent, noting regional differences in terms of output and assessing individual countries’ roles as net exporters and importers.

It also includes an interview with José Orive, Executive Director, International Sugar Organisation, in which he maps out the particularities of the African sugar industry, while sharing his thoughts on what needs to be done to promote continental trade and sustainable development.

“The region is well advanced in terms of sugar production overall, but several challenges still hinder its full potential,” he said. “It is not enough to just produce sugar; producers must be able to move it to buyers efficiently. When all negotiations related to the AfCFTA have concluded, we expect greater investment across the continent and a clearer regulatory framework.”

Karine Loehman, OBG’s Managing Director for Africa, said that while the challenges faced by Africa’s sugar producers shouldn’t be underestimated, the new report produced with the ISO pointed to an industry primed for growth on the back of anticipated increased consumption across the continent and higher levels of output in sub-Saharan Africa.

“Regional demand for sugar is expected to rise in the coming years, driven up by Africa’s population growth and drawing a line under declines triggered by the Covid-19 pandemic,” she said. “With sub-Saharan Africa’s per capita sugar consumption currently standing at around half of the global average, the opportunities to help meet increasing domestic need by boosting production are considerable.”

The study on Africa’s sugar industry forms part of a series of tailored reports that OBG is currently producing with its partners, alongside other highly relevant, go-to research tools, including a range of country-specific Growth and Recovery Outlook articles and interviews.

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Gold

Global Demand for Investment Gold Plunged by 70% YoY to 161 Metric Tons in Q1 2021

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gold bars - Investors King

Last year, investors flocked to gold as stock markets crashed on a gloomy economic outlook due to the spread of the COVID-19 pandemic. In the second quarter of 2020, global demand for investment gold surged to over 591 metric tons, the second-highest level since 2016. However, the investors’ demand for gold has dropped significantly this year.

According to data compiled by AksjeBloggen, global demand for investment gold plunged by 70% year-over-year to 161 metric tons in the first quarter of 2021.

The Lowest Quarterly Figures after Record Gold Investments in 2020

In 2016, the global gold demand amounted to 4,309 metric tons, revealed Statista and the World Gold Council data. By the end of 2019, this figure rose to 4,356 metric tons. Investment gold accounted for 30% of that amount. Worldwide gold jewelry demand volumes reached 2,118 metric tons that year. Central banks and technology followed with 648 and 326 metric tons, respectively.

Statistics show the global demand for investment gold surged amid the COVID-19 outbreak, growing by 35% YoY to almost 1,800 metric tons in 2020. Demands for gold used in technology also rose by 17% to 383.4 metric tons, while central banks and other institutions bought 326.2 metric tons of gold in 2020, a 50% plunge in a year.

However, after record gold investments in 2020, the global demand for gold for investment purposes dropped to the lowest quarterly level in years.

The Price of Gold Dropped by 5% Since January

The average gold value tends to increase during a recession, making it an attractive investment in uncertain times. In February 2019, a troy ounce of gold cost $1,320.07, revealed the Statista and World Gold Council data. By the end of that year, the price of gold rose to $1,479.13.

The gold price continued growing throughout 2020, reaching an all-time high of over $2,000 in August. By the end of the year, the precious metal price slipped to $1,864 and then rose to over $1,950 in January 2021.

However, the first quarter of the year brought a negative trend, with the price of gold falling to $1,684 by the end of March. Statistics indicate the price of gold stood at around $1,860 last week, a 5% drop since the beginning of the year.

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Gold, Other Safe Haven Assets Plunge Ahead of Fed Rate Hikes

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Gold and Bitcoin - Investors King

Gold and other safe-haven assets plunged last week as the Federal Reserve signals the possibility of raising interest rates twice in 2023 given the ongoing economic recovery post-COVID-19.

The price of gold dropped by 6.04 percent last week as investors rushed to move their funds out of safe-haven assets including the new gold, cryptocurrency.

The entire crypto space sheds $898 billion in market value to hover around $1.625 trillion last week, down from $2.523 trillion recorded on Wednesday 12, 2021. Its highest market capitalisation till date.

The Federal Reserve raised inflation expectations to 3.4 percent and shifted the year it is expected to increase interest rates from near-zero to 2023 from the previously projected 2024.

The new hawkish stance of the central bank led to capital outflow from safe havens and subsequently boosted dollar attraction.

The United States Dollar gained across the board with the dollar index that tracks its performance against six major currencies, rising by 0.63 percent to 91.103 last week.

However, on Monday morning the gold showed signs of recovery, gaining 0.5 percent to $1,772.34 per ounce following the retreat in U.S. treasury yield that boosted the attraction of non-yielding metal.

Bitcoin, the most dominant cryptocurrency coin, pared losses to $33,245 per coin, up from the $32,658 decline it posted last week.

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