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Market Expertise: M. Holland offers a host of resources to clients, prospects and suppliers across nine strategic markets.
Supply
Oil prices fell over 2% on Thursday, settling at their lowest since Russia’s invasion of Ukraine. WTI futures are down 10% this week.
In mid-morning trading today, WTI futures were up 0.2% at $88.73/bbl, Brent was up 0.2% at $94.28/bbl, and U.S. natural gas was down 0.3% at $8.10/MMBtu.
The average U.S. gasoline price fell to $4.139 a gallon Thursday, the 51st consecutive day of declines.
Cheniere Energy, the U.S.’s largest LNG exporter, saw record second-quarter profit as Russia’s war fueled a scramble for supplies from the U.S.
The head of the International Atomic Energy Agency warned that Europe’s largest nuclear plant in Ukraine, occupied by Russia’s military since March, “is completely out of control” and sought Russian and Ukrainian cooperation to allow an international assessment of the situation.
Countries across Europe are imposing new limits on lighting and air-conditioner use to comply with the EU’s plan to trim energy use by 15% through next spring.
German lawmakers will propose a new levy on gas consumers starting in October to help suppliers hit by soaring gas import prices.
German power supplier Uniper may have to cut output at two key coal plants as the firm struggles to transport supplies on low water levels in the Rhine River.
Russia says oil exports from its massive Sakhalin-1 project north of Japan have been halted since mid-May after Western producers pulled their involvement.
OPEC heavyweights Saudi Arabia and the UAE are prepared to boost oil output should the world face a severe supply crisis this winter, according to reports.
Calgary’s TC Energy Corp struck a deal with Mexico’s state utility to develop a $4.5 billion natural gas pipeline through Mexico’s central and southeast regions.
Saudi Arabia’s budget surplus grew 35% to $21 billion in the second quarter on a rise in oil revenues.
India, the world’s third-largest carbon polluter, approved stricter targets for cutting emissions on Thursday, including a 45% reduction from 2005 levels by 2029.
Supply Chain
On Thursday, fire crews made their first progress against northern California’s McKinney Fire, which is now roughly 10% contained after burning more than 58,000 acres.
America’s largest warehouse market east of Los Angeles is full and major retailers such as Best Buy and Target are warning of slowing sales as consumer spending declines.
Bangladesh’s garment exporters say orders have declined as more Western retailers report excessive apparel inventories.
Canadian National’s quarterly revenue jumped 21% and net profit expanded 28% to about $1.77 billion on continuing strong demand.
Norfolk Southern’s second-quarter profit was flat at about $819 million as rising costs narrowed the railroad’s margins.
Italy is close to clinching a deal worth $5 billion with Intel to build an advanced semiconductor packaging and assembly plant in the country.
Tire-maker Pirelli posted a 21% rise in adjusted second-quarter earnings on strong pricing power and cost savings.
Tesla will likely need a dozen factories to reach its goal of selling 20 million vehicles per year by 2030, paving the way for significant new investment over the coming years. The automaker’s commodity and component costs have started trending downward, its chief executive said.
Airfreight company Atlas Air will be sold to a group of investors led by Apollo Global Management in an all-cash deal worth around $5.2 billion.
G7 nations pledged to invest $600 billion in funding for emerging market infrastructure over the next five years, led by $200 billion from the U.S.
Domestic Markets
The U.S. reported 117,350 new COVID-19 infections and 377 virus fatalities Thursday. The pace of fatalities has remained steady since May, with more than 12,500 Americans passing from the virus in July.
Non-farm payrolls jumped by a higher-than-expected 528,000 last month and the unemployment rate fell to 3.5%. Average hourly wages were up 5.2% from a year ago.
The U.S. trade deficit narrowed sharply by 6.2% in June to its lowest level in six months. Exports grew 1.7% to $261 billion, a record, boosted by shipments of energy and food.
Though U.S. jobless claims rose to 260,000 last week, close to 2022 highs, overall conditions in the labor market remain tight, signaled by a decline in U.S. layoffs and a brisk pace of hiring in July.
Job security in the U.S. tech industry is rapidly declining, with more than 32,000 workers laid off so far this year.
The Cleveland Fed suggested the central bank should raise interest rates to at least 4% by the first half of next year.
The average U.S. mortgage rate dropped to 4.99% this week, falling sharply from a 13-year high of 5.81% in June. It is the first sub-5% rate since April.
Operating profit at Rolls-Royce fell by more than 50% to $152 million on losses in its civil aviation unit.
Air Lease Corp posted strong quarterly results as delivery delays from Boeing and Airbus boosted demand for the lessor’s planes.
Mining and commodities giant Glencore announced over $4.5 billion in share buybacks after posting record half-year profits of $18.9 billion on the back of soaring metal prices.
Uber rival Lyft posted a 30% rise in revenue in the recent quarter and an increase in operating profit to $79.1 million, well ahead of forecasts, but posted a wider net loss of nearly $380 million.
Third-party food deliverer DoorDash saw second-quarter revenue rise 30% as consumers stuck to at-home ordering despite restaurant and store reopenings.
International Markets
COVID-19 hospitalizations in Australia have fallen from all-time highs, an earlier-than-expected peak in the nation’s BA.4/5 virus wave.
The Bank of England predicted the country would fall into a recession this autumn, including the worst decline in living standards on record.
Canada’s trade surplus widened to $4 billion in June on a 2% rise in exports, according to the latest data. The nation’s energy exports hit a record high, but analysts warned they would narrow in coming months due to lower crude prices.
Mexico’s central bank is expected to hike its benchmark interest rate to a historic high of 8.5% next week.
Swiss bank Credit Suisse is looking at cutting thousands of jobs across the globe in the coming months in a bid to lower overall costs by over $1 billion.
Lufthansa expects short-haul flights in Europe to drive a return to operating profit for the full year, with passenger bookings now at 83% of pre-pandemic levels. Separately, the airline’s ground staff reached a pay deal that will end a week-long strike that disrupted thousands of flights.