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Europe’s Economy Picks Up, Raising Hopes Global Recession Threat Is Receding — Commodities Roundup

— Brent crude rose 0.3% to $88.42 a barrel.

— European benchmark natural gas fell 8.7% to €60.25 per MWh.

— Gold futures rose 0.5% to $1,938.40 per troy ounce.

— LME copper fell 0.1% to $9,344 per tonne.

— Wheat futures fell 0.6% to $7.25 per bushel.

Top story:

European economy picks up, hopes rise, threat of global recession recedes

Business activity in the eurozone rose in January after a series of declines in the second half of last year, economists said, raising the chances that the global economy could avoid a recession this year.

An unexpectedly upbeat finding suggests the global economy may slow this year from rising prices and interest rates, while the threat of energy shortages in Europe recedes and China resumes post-pandemic economic activity. This suggests that a recession is unlikely.

Until recently, most economists believed the eurozone was likely to slip into recession this quarter after rising energy prices contracted the economy in the last three months of 2022.

But the region’s economy is thriving, aided by mild winters, efforts by businesses and households to cut energy consumption, government moves to find new suppliers of natural gas, and hundreds of billions of euros in financial support. It has been proven to be more resilient.

On Tuesday, S&P Global announced that the eurozone’s headline production index, a survey that closely monitors business activity, rose to 50.2 in January from 49.3 in December. Readings above 50 indicate expansion of activity, while readings below that level indicate contraction.

Other stories:

As sustainability rules loom, companies scramble to track sprawling supply chains

Companies are scrambling to more closely track materials across sprawling supply chains ahead of expected new human rights and environmental laws.

Companies such as consumer goods company Unilever PLC, clothing retailer H&M Hennes & Mauritz AB, and sock supplier Polo Ralph Lauren’s Renfro LLC are using technology to help them collect data about their supply chains and track materials. said he was looking to

Last year, H&M started rolling out a traceability platform for recycled polyester and man-made cellulose fibers such as viscose, which can contribute to deforestation, from startup TextileGenesis. It uses blockchain technology to track and verify that sustainable fibers are used in clothing. The H&M Group has over 600 commercial product suppliers of his who manufacture products in his over 1,500 factories in Europe, Asia and Africa.

Market negotiation:

European natural gas prices fall after Freeport LNG calls for Texas plant to restart

1239 GMT – European natural gas prices fell sharply after Freeport LNG asked US regulators for permission to resume operations. European benchmark natural gas prices fell by more than 10% on Tuesday to €59.42 per MWh, the lowest level since September 2021. Freeport closed its Texas plant in June after the explosion. to obtain permission to resume operation. Approval has not yet been given. According to Kpler’s Laura Page, her LNG analyst, the reopening could allow her LNG exports to resume in February, giving European countries a lifeline as they look to replenish their gas stocks after the winter. there is. (william.horner@wsj.com)

Iron ore shipments rise, but Chinese real estate weakness keeps prices down

1106 GMT – Iron ore shipments are up, but UBS analysts say it remains uncertain how much prices will rise on rising demand after China’s economic reopening. Iron ore shipments hit five-year highs in December, Allsop said, but China’s pig iron output fell again in the first 10 days of January and rebar prices remained sluggish. “Demand signals for reopening remain modest, with cautious iron ore fundamentals and continued weakness in Chinese real estate,” said a Swiss bank analyst. We expect iron ore prices to fall as inventories build up.” Iron futures rose 0.7% on Tuesday to $122.82 per tonne. (yusuf.khan@wsj.com)

European natural gas prices fall as weather forecast points to warming

0939 GMT – Natural gas prices in Europe will fall as the cold spell passes and temperatures are expected to rise next week. His TTF gas futures on the benchmark fell 11% to €59 per MWh, while UK gas prices fell 10% to 150 Britishpence/Arm. Cold weather hits Western Europe, driving demand for natural gas for heating. However, prices remain low as inventories remain healthy and the cold weather is not expected to last long. Temperatures in London are expected to soar to 10 degrees Celsius on Monday, while temperatures in Paris are also expected to return to double digits, according to the British Met Office. (william.horner@wsj.com)

Oil mixed as traders look for clues to Chinese demand

0843 GMT – Crude oil prices hold steady as traders wait for a bigger signal on Chinese post-New Year demand. Brent crude fell 0.2% to $87.99 a barrel, while WTI remained flat at $81.60 a barrel. Traders hope Chinese demand will grow strong again as the country reopens, but many are still cautious about a possible flare-up of Covid-19 cases over the holiday period.SPI “China will need more oil to fuel its economic consumption and production engines,” Asset Management’s Steven Innes said in a note. “The oil market is still in a light position. .. so there should be more upside for this deal,” he says. (william.horner@wsj.com)

Metals Rise as Macro Sentiments Improve

0836 GMT – Metals prices are rising in early trading as macroeconomic conditions improve. Copper he rose 0.2% in the three-month contract to $9,368.50 a tonne, the highest level since mid-June 2022. Aluminum, on the other hand, rose 0.5% to $2,645. Meanwhile, gold rose 0.7% per troy ounce to $1,942, its highest level since April 2022. “The macro environment is bullish for commodity money flows,” said Dave Whitcombe, head of research at Peak Trading Research, in a note. Yesterday’s rise in oil prices, rising stock prices and a recovery in inflation expectations have all helped improve macroeconomic sentiment. His PMI data for the US and Eurozone, the next major macro data set for investors, will be released at a later date. (yusuf.khan@wsj.com)

Write to the Barcelona editors at barcelonaeditors@dowjones.com.



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