Russian President Vladimir Putin visited Crimea on Friday for the first time since Russia annexed the Ukrainian peninsula, ahead of a separatist vote by pro-Moscow militants in eastern Ukraine this weekend.
“The referendum in the Donetsk region is to go ahead on Sunday [today] as planned despite Putin having called for it to be postponed,” Commerzbank analyst Carsten Fritsch said. “The crisis threatens to escalate once again if — as expected — a majority votes in favor of the region splitting from Ukraine.”
OIL: The market rallied on Ukraine-linked supply risks and stronger-than-expected US crude demand, but ended the week on a stable note as some traders cashed in their gains.
“Oil prices pushed higher on both sides of the Atlantic amidst increased geopolitical risks after pro-Russian separatists in the Ukraine announced they would go ahead with an autonomy vote scheduled for eastern Ukraine this weekend,” Tradition Energy analyst Eugene McGillian said.
“Additional support ... also appears to have come from increased concerns that Libya will not boost its oil exports after rebels that control two of Libya’s oil export terminals announced they will not work with Libya’s new Islamist-backed prime minister,” he added.
A full-blown armed conflict in Ukraine could disrupt supplies transported between Eastern Europe and the West, sending energy prices rocketing.
The oil market jumped by more than US$1 on Wednesday after US crude inventories unexpectedly fell from a record high last week, suggesting that demand may be rising the world’s No. 1 crude consumer.
The US Department of Energy said crude reserves sank by 1.8 million barrels in the week to May 2, confounding expectations for a gain of 1.2 million barrels and signaling solid demand.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery next month eased to US$108.09 a barrel from US$108.71 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate, or light sweet crude, for next month jumped to US$100.70 per barrel compared with US$99.93.
BASE METALS: Nickel on Friday surged to US$20,500 per tonne, hitting the highest level since February 2012 following a supply outage at a huge mine in New Caledonia.
Nickle for delivery in three months ended the week on US$20,100 a tonne, compared with US$18,150 a week earlier.
“A perfect storm appears to have blown up on the nickel market,” Fritsch said. “Besides the ore export ban in Indonesia and the uncertainty over what would happen to Russian shipments in the event of far-reaching sanctions against the country, it was news from New Caledonia that rocked the nickel market. Vale [SA], the world’s second-largest nickel producer, had to shut down production in the nickel complex formerly known as Goro ... following an acid spill.”
The facility, with a capacity of 60,000 tonnes per year, is one of the world’s biggest nickel mines.
By Friday on the London Metal Exchange, copper for delivery in three months advanced to US$6,736 per tonne from US$6,648 a week earlier, while three-month aluminum dropped to US$1,765.50 a tonne from US$1,775.25, lead rose to US$2,102.50 from US$2,078.25, tin increased to US$23,120 from US$22,930 and zinc gained to US$2,040 from US$2,012.
PRECIOUS METALS: Gold hit a three-week peak as Ukraine fears boosted demand for the precious metal, which is seen as a haven in times of geopolitical turmoil.
The metal rose as high as US$1,315.70 per ounce on Monday, before pulling lower as Putin attempted to de-escalate tensions.
“Some buying has occurred on the back of Ukraine concerns, but for the moment we are still rangebound,” IG trader Brenda Kelly said.
By Friday on the London Bullion Market, gold rose to US$1,291.25 an ounce from US$1,281.25 the previous week, while silver increased to US$19.25 from US$19.17.
On the London Platinum and Palladium Market, platinum advanced to US$1,429 an ounce from US$1,425 and palladium slipped to US$804 an ounce from US$816.
RUBBER: Prices in Kuala Lumpur fell on weak demand, as poor manufacturing data from top consumer China also hit sentiment.
The Malaysian Rubber Board’s benchmark SMR20 fell to US$0.16675 a kilo from US$0.17390 a week earlier.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure
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