ADVFN UK Market News

Category: Market News

  • Afentra plc Builds Momentum as Pacassa SW Discovery Opens the Door to Further Production Growth

    Afentra plc Builds Momentum as Pacassa SW Discovery Opens the Door to Further Production Growth

    In oil and gas, a discovery is important — but the real value comes from what happens next. For Afentra plc (LSE:AET), the successful Pacassa SW discovery in Angola is now being followed by a series of development, production and portfolio milestones that could make the second half of 2026 an important period for the company.

    In a recent Watch List interview, Paul McDade, CEO of Afentra plc, outlined the significance of the discovery, the company’s growing position in Block 3/05 and the range of offshore and onshore opportunities now moving forward.

    Pacassa SW Discovery Marks a Major Milestone

    The Pacassa SW well represents the first well delivered on Block 3/05 in more than a decade, making the result particularly significant for Afentra and its partners.

    The well encountered 136 metres of net oil pay within a gross 217-metre hydrocarbon-bearing interval, with the reservoir demonstrating good quality and strong indications of communication with the main Pacassa field. The results are consistent with Afentra’s pre-drill geological model and support the company’s view of the wider Pacassa SW opportunity.

    Afentra estimates that the wider Pacassa SW structure has the potential to contain up to 70 million barrels of gross recoverable resources, equivalent to approximately 23 million barrels net to Afentra, subject to further technical evaluation and the completion of the reserves and resources assessment.

    For a company of Afentra’s size, that potential is substantial.

    As Paul McDade explained, the discovery also benefits from its proximity to existing infrastructure. The Pacassa SW well is being completed as a production well and connected to the existing Pacassa production system, creating a potentially rapid route from discovery to cash-generating production. First oil is expected during Q3 2026.

    That ability to utilise existing infrastructure is particularly attractive, as it can help keep development costs and timelines under control while accelerating the potential contribution from the new discovery.

    Production Growth Moving Into Focus

    Pacassa SW is not the only source of near-term production potential.

    Afentra has also successfully restarted the Impala-1 well, which had been shut in since 2017. Following a light well intervention, the well achieved gross flow rates of up to approximately 4,700 barrels of oil per day during testing and is currently producing at around 3,000 barrels per day gross, with production intentionally constrained to manage water cut and longer-term reservoir performance.

    The restart provides immediate production while also generating valuable reservoir and well productivity data ahead of the planned Impala-2 development well.

    Impala-2 is expected to follow the Pacassa SW operations, with drilling anticipated to begin later in 2026 and results expected towards the end of Q4.

    Together, Pacassa SW, Impala-1 and Impala-2 create a series of important offshore catalysts for Afentra.

    Growing Exposure to Block 3/05

    The company’s broader strategy is also being supported by the anticipated completion of the Etu transaction, which is expected in Q3 2026.

    The transaction will increase Afentra’s interest in Block 3/05, providing greater exposure to the production and development opportunities across the asset.

    That is important because the company is increasingly demonstrating the ability to unlock value from mature Angolan assets through a combination of targeted drilling, workovers, redevelopment and operational optimisation.

    Rather than relying solely on large-scale exploration success, Afentra is pursuing a pragmatic strategy focused on assets where existing infrastructure and established production can help accelerate returns.

    Further Opportunities Beyond Pacassa

    The company’s growth ambitions extend beyond Block 3/05.

    Afentra is also progressing its operated activities on Block 3/24, where it recently completed its first operated offshore campaign without incidents. An innovative approach to wellhead inspections reduced the survey cost by approximately 90%, demonstrating the company’s focus on disciplined capital allocation and cost-effective execution.

    Onshore, Afentra continues to assess exploration opportunities across its Kwanza Onshore portfolio, with seismic interpretation beginning to identify potentially attractive targets.

    The company is also progressing plans around the KON 4 Quenguela Norte field, providing another potential development opportunity within its growing portfolio.

    A Busy Second Half of 2026

    For shareholders, the key feature of Afentra’s current position is the number of potential catalysts progressing simultaneously.

    Pacassa SW is moving towards production, Impala-1 has already returned to production, Impala-2 is approaching the drilling phase and the Etu transaction is expected to further strengthen Afentra’s position in Block 3/05.

    At the same time, the company is advancing Block 3/24 and continuing to evaluate its onshore exploration and redevelopment opportunities.

    The Pacassa SW discovery therefore represents more than a successful individual well. It provides further evidence that Afentra’s strategy of targeting mature African assets with production, infrastructure and redevelopment potential can generate meaningful organic growth.

    As Paul McDade has highlighted, the discovery provides clear proof of concept for Afentra’s organic growth strategy.

    With new production coming through, further drilling ahead and a growing portfolio of opportunities, Afentra plc is entering the next phase of its development with considerable momentum.

    For investors watching the company, the focus now shifts from what Pacassa SW has discovered to how quickly Afentra can turn that discovery, alongside its wider portfolio, into  production growth, enhanced cash flow and long-term value.

    For more information visit – https://www.afentraplc.com/

  • Good July inflation doesn’t mean the fight is over

    Good July inflation doesn’t mean the fight is over

    Weak July labor data, with 23,000 jobs lost and major downward revisions to previous months, boosted U.S. stocks, including the Dow Jones index, on hopes the Fed won’t raise rates.

    That confidence grew as CPI fell to 3.4% year over year in July from 3.5% in June, Core CPI fell to 2.5% from 2.6%, and PPI came in below expectations, flat monthly versus +0.2% expected and down to 4.7% year over year from 5.5% in June. 

    And yet, the U.S. 30-year Treasury yield hit 5.216% at auction, its highest since 2001. Why?

    Investors are still worried inflation could stay sticky as the situation in the Middle East remains unresolved, while the U.S. faces a huge deficit and rising debt. Meanwhile, USDJPY has climbed back above 159 despite joint U.S.-Japanese intervention, fueling fears that Japan could sell Treasuries to support the yen.

    The problem is that higher Treasury yields can quickly push up mortgage rates, car loans, etc., putting more pressure on the economy and ultimately financial markets.

    Adding to the pressure, an El Niño that could be one of the strongest on record may cause major losses, alongside the growing U.S.-China AI competition. If Z.ai’s GLM-5.3 outperforms GPT, Claude, and Gemini, it could put further pressure on chip stocks. 

    As for what could move markets this week, Wednesday is the deadline for a temporary CUSMA/USMCA deal. Without an agreement, the U.S. could impose 50% tariffs on around $20 billion of Canadian exports.

    Washington could also push Iran into unprecedented economic isolation, with China and India potentially caught in the crossfire for buying and transporting Iranian oil, adding more pressure to an already tense geopolitical situation. 

  • Citi raises Rolls-Royce price target by 50% as data centre demand boosts outlook

    Citi raises Rolls-Royce price target by 50% as data centre demand boosts outlook

    Citigroup has increased its price target for Rolls-Royce Holdings (LSE:RR.) by around 50%, raising it to 1,647 pence from 1,101 pence after stronger first-half results prompted substantial upgrades to the bank’s long-term profit and cash flow forecasts.

    Citi lifted its longer-term earnings and cash generation estimates by between 30% and 40%, with accelerating demand from data centre customers emerging as a major growth driver for Rolls-Royce’s Power Systems business.

    Despite the higher valuation, the bank retained its “neutral” recommendation. With Rolls-Royce shares trading at £15.25, Citi’s new target implies an expected total return of 8.6%, below the 15% required by the broker to justify a “buy” rating.

    Power Systems overtakes Civil Aerospace in Citi valuation

    One of the most significant changes to Citi’s investment case is the growing importance of Power Systems.

    The division has now overtaken Civil Aerospace as the largest contributor to the broker’s fair-value assessment. Citi’s sensitivity analysis assigns 504 pence per share of value to Power Systems, compared with 353 pence for Civil Aerospace.

    Strong demand from data centre operators is underpinning the division’s growth outlook. Citi now forecasts a long-term Power Systems margin of 23.5%, considerably above Rolls-Royce’s own medium-term target range of 18% to 20%.

    The bank increased forecasts across all three of Rolls-Royce’s main divisions, although it applied different assumptions regarding the sustainability of recent improvements.

    Citi cautious on Civil Aerospace profit boosts

    For Civil Aerospace, Citi’s upgraded estimates incorporate contract catch-ups that contributed a net £497 million during the first half, together with £125 million of releases from onerous contract provisions.

    However, the bank cautioned that much of this benefit was non-recurring and non-cash.

    Over the longer term, Citi expects annual contract catch-ups to settle at approximately £100 million, substantially below the level recorded during the first half.

    Defence margins expected to normalise

    Rolls-Royce’s Defence division achieved a record margin of 21% in the first half, comfortably exceeding the company’s medium-term target of between 14% and 16%.

    The performance was supported by a favourable sales mix, including strong international business and higher aftermarket activity.

    Citi does not expect the 21% margin to be sustainable over the longer term, instead forecasting Defence margins of approximately 16% to 16.5%.

    Small Modular Reactor business adds further value

    Citi separately values Rolls-Royce’s Small Modular Reactor operation at between 87 and 90 pence per share.

    The broker used two approaches to estimate the business’s potential value. One assumes Rolls-Royce eventually scales production to eight SMR deliveries annually, while the other models the company capturing a 25% share of a global market potentially reaching 400 units by 2050.

    Citi adds the resulting SMR valuation to enterprise value when calculating its overall equity price target for Rolls-Royce.

    Citi forecasts £5.69 billion of shareholder free cash flow by 2028

    The broker’s discounted cash flow model assumes compound annual profit growth of 12.2% over the next five years, followed by 8% growth between years six and 10 and a perpetual growth rate of 3%.

    Its valuation also incorporates operating cash conversion of 110% and a weighted average cost of capital of 9%.

    Citi expects Rolls-Royce group sales to reach £22.99 billion in 2026 before increasing to £28.62 billion by 2028.

    Free cash flow available to shareholders is forecast to climb to £5.69 billion in 2028, reflecting the broker’s substantially more optimistic view of the group’s long-term earnings and cash-generation potential.

  • U.S. stocks set for cautious open as Fed relief clashes with oil-price concerns: Dow Jones, S&P, Nasdaq, Wall Street Futures

    U.S. stocks set for cautious open as Fed relief clashes with oil-price concerns: Dow Jones, S&P, Nasdaq, Wall Street Futures

    U.S. stocks could begin Monday’s session with limited direction, with major index futures pointing to a broadly flat open following Friday’s modest retreat.

    Technology shares may provide some support after Bloomberg reported that Anthropic (NASDAQ:ANTP) told prospective investors its second-quarter revenue increased by at least 14 times compared with the same period last year.

    Documents reviewed by Bloomberg reportedly showed preliminary quarterly revenue exceeding $11.5 billion for the Claude chatbot developer, compared with $787 million in the second quarter of 2025.

    Market direction clouded by economic and geopolitical risks

    Broader trading activity could remain subdued as investors weigh conflicting signals surrounding the near-term outlook.

    Recent U.S. economic figures have reduced expectations that the Federal Reserve will raise interest rates next month. However, persistently elevated crude prices continue to present an inflationary and economic risk as the U.S.-Iran conflict remains unresolved.

    U.S. crude futures climbed 0.7% to $83 a barrel after President Donald Trump threatened to bomb Oman during an interview with Fox News.

    The comments came as Iran and Oman appeared to be making progress towards an understanding over the management of the Strait of Hormuz, a critical route for global energy supplies.

    Wall Street retreats from record territory

    U.S. equities finished modestly lower on Friday after advancing during most of the previous two sessions, although selling pressure remained relatively contained.

    The Dow Jones Industrial Average declined 107.58 points, or 0.2%, to 53,732.41. The Nasdaq dropped 73.86 points, or 0.3%, to 26,729.16, while the S&P 500 fell 13.23 points, or 0.2%, to 7,785.76.

    Performance across the week was mixed. The Dow lost 0.6%, while the Nasdaq gained 0.1% and the S&P 500 advanced 0.4%.

    Friday’s decline may have partly reflected profit-taking after the S&P 500 climbed above 7,800 to reach a record intraday level on Thursday.

    The benchmark also recorded an all-time closing high that day, while the technology-heavy Nasdaq finished at its strongest closing level in more than two months.

    Consumer sentiment and retail sales disappoint

    Investors also reacted to signs of weakening U.S. consumer conditions.

    The University of Michigan’s consumer sentiment index dropped sharply to 51.0 in August from 55.2 in July. Economists had expected a more modest decline to 54.2.

    Separate Commerce Department figures showed retail sales unexpectedly contracted 0.6% in July following a 0.2% increase in June. Economists had forecast growth of 0.1%.

    The July decline represented the first fall in retail sales since a 0.2% contraction in October 2025.

    Although the weaker economic figures have further reduced concerns about an imminent Federal Reserve rate increase, they have also raised questions about the resilience of the U.S. economy, particularly with elevated energy prices adding pressure on consumers and businesses.

    Oil and gold stocks outperform broader market

    Crude prices rebounded on Friday after Trump administration officials indicated that economic measures could be used to pressure Iran into reopening the Strait of Hormuz, increasing concerns that the dispute could remain unresolved for an extended period.

    Energy-related stocks benefited from the move. The Philadelphia Oil Service Index climbed 2.6%, reaching its strongest closing level in well over two months.

    Gold producers also rallied as bullion prices increased, sending the NYSE Arca Gold Bugs Index up 2.2%.

    Computer hardware shares recorded notable gains as well, while airlines, software companies and pharmaceutical stocks were among the weaker areas of the market.

    Investors heading into Monday’s session therefore face a mixed backdrop, with softer economic data reducing expectations for higher interest rates while simultaneously raising concerns about growth, and continuing geopolitical tensions keeping energy prices elevated.

  • European stocks edge lower as weak Chinese data weighs on sentiment: DAX, CAC, FTSE100

    European stocks edge lower as weak Chinese data weighs on sentiment: DAX, CAC, FTSE100

    European equities moved modestly lower on Monday as a series of disappointing economic indicators from China renewed concerns about the outlook for the world’s second-largest economy.

    Chinese consumer spending stagnated in July, while urban investment contracted at a faster rate and unemployment increased. The latest figures have added to expectations that Beijing may need to introduce further measures to support economic activity during the second half of the year.

    Iran conflict and Hormuz risks remain in focus

    Investors were also monitoring the lack of progress towards ending the U.S.-Iran war, with geopolitical tensions continuing to influence energy markets.

    Brent crude futures traded around $89 a barrel as renewed fighting in Lebanon and further attacks on tankers in the Strait of Hormuz reduced hopes of an imminent resolution to the conflict.

    Against this backdrop, France’s CAC 40 Index declined 0.4%, while the U.K.’s FTSE 100 Index and Germany’s DAX Index each slipped 0.1%.

    Mining stocks gain as U.S. dollar weakens

    Mining companies were among the stronger performers, with Antofagasta (LSE:ANTO), Glencore (LSE:GLEN) and Anglo American (LSE:AAL) moving higher.

    The gains came as the U.S. dollar approached two-month lows following softer retail sales and consumer sentiment figures released on Friday.

    A weaker dollar can provide support for dollar-denominated commodities, potentially benefiting shares of major mining groups.

    AstraZeneca rises on positive Phase III results

    In company news, HIAG Immobilien Holding (LSE:0QU6) advanced after the Swiss property company reported a sharp increase in first-half profit.

    AstraZeneca (LSE:AZN) also climbed after the British pharmaceutical group announced positive results from its Phase III SAFFRON trial.

    Optima Health (LSE:OPT), meanwhile, fell sharply after the workplace health and wellbeing services provider reported a substantial increase in debt alongside its full-year results.

  • Gold holds near $4,400 as Fed expectations and geopolitical risks pull in opposite directions

    Gold holds near $4,400 as Fed expectations and geopolitical risks pull in opposite directions

    Gold remained firmly supported near $4,400 an ounce on Monday as investors balanced softer U.S. economic data and a weaker dollar against persistent inflation risks stemming from disruption to Middle East energy supplies.

    At 01:04 ET (05:04 GMT), XAU/USD was 0.5% higher at $4,399.44 an ounce. Gold Futures rose 0.4% to $4,455.90, while other precious metals recorded stronger gains. XAG/USD climbed 1.7% to $65.83 and XPT/USD advanced 1.8% to $1,749.15 an ounce.

    Meanwhile, the US Dollar Index declined 0.2% to 99.49, providing a more favourable backdrop for dollar-denominated bullion.

    Cooling U.S. economy changes the rate outlook

    Bullion entered Monday’s session with momentum after gaining almost 1% over the previous week, as signs of weaker U.S. economic activity reduced concerns that the Federal Reserve could raise interest rates in the near term.

    Consumer sentiment declined for the first time in three months, while retail sales suffered their largest monthly drop in more than a year.

    Those figures have given policymakers less reason to tighten monetary conditions immediately. Lower expectations for interest rates can benefit gold because the metal offers no yield and faces greater competition from interest-bearing assets when borrowing costs rise.

    ANZ analysts said the negative correlation between bullion and U.S. Treasury yields has also become more pronounced, leaving gold increasingly sensitive to movements in borrowing costs.

    The brokerage sees three potential stages for the gold market over the next year. Initially, persistent inflation and a Federal Reserve remaining on hold could constrain prices. An energy-driven economic slowdown could then change the macroeconomic environment before eventual monetary easing provides a stronger catalyst for bullion.

    ANZ expects geopolitical deterioration to continue encouraging central banks to diversify their reserves and forecasts gold could reach $5,200 an ounce by year-end.

    The next important monetary-policy signal is due on Wednesday with the release of minutes from the Federal Reserve’s July meeting.

    Middle East energy uncertainty complicates the inflation picture

    While recent U.S. indicators have softened, geopolitical developments mean inflation concerns have not disappeared.

    Several ships were attacked in the Strait of Hormuz late last week, and the U.S. said it was preparing additional measures designed to increase pressure on Iran’s economy.

    Vessels have continued to leave the waterway despite the security risks, with some reportedly turning off satellite transponders in an effort to make themselves more difficult to detect.

    At the diplomatic level, Iran and Oman appear to be moving closer to an arrangement governing the management of the Strait of Hormuz. The United States, however, is not involved in those negotiations.

    The uncertain combination of security incidents and diplomatic efforts leaves the outlook for global energy flows highly volatile.

    Another substantial rise in oil prices could revive inflationary pressure, potentially limiting the Federal Reserve’s room to ease monetary policy even if economic growth continues to weaken.

    China and other central banks underpin bullion demand

    Beyond monetary policy and geopolitical uncertainty, structural demand from central banks continues to provide an important source of support for gold.

    Bullion’s recovery above $4,000 an ounce has coincided with stronger investor interest and sustained official-sector purchases, with China remaining a notable buyer.

    Gold moved above its 100-day moving average last week for the first time since April and has remained close to the technical benchmark.

    ANZ said global central banks accumulated 244 tonnes of gold during the first quarter of 2026, representing the strongest quarterly purchasing total since the final three months of 2024.

    China added 8 tonnes to its holdings in April alone, marking its largest monthly gold purchase since December 2024.

  • Crude holds firm as Middle East supply threats outweigh softer demand outlook

    Crude holds firm as Middle East supply threats outweigh softer demand outlook

    Oil markets were broadly steady on Monday, consolidating last week’s strong advance as investors continued to weigh mounting supply risks across West Asia against forecasts pointing to slower global demand growth.

    Brent oil futures added 0.1% to $88.62 a barrel by 00:42 ET (04:42 GMT), while West Texas Intermediate crude futures edged 0.1% lower to $81.37 a barrel.

    The limited moves followed a particularly strong week for Brent, which climbed more than 5% as worsening U.S.-Iran tensions increased concerns about the security of regional energy infrastructure and shipping routes.

    Strait of Hormuz disruption keeps supply premium elevated

    Iran’s attacks on tankers have contributed to another slowdown in vessel movements through the Strait of Hormuz, while the U.S. naval blockade against Tehran remains in place.

    Diplomatic prospects also showed little sign of improving over the weekend. Iran Foreign Minister Abbas Araqchi reiterated that Tehran was not holding direct negotiations with Washington, while the U.S. threatened further economic measures against the country.

    Risks to regional shipping have also spread beyond the Persian Gulf. Yemen’s Iran-backed Houthis continued attacks against vessels around the Bab al-Mandab strait, bringing renewed uncertainty to another strategically important route for international energy flows.

    The threat of further supply disruption has so far outweighed increasingly cautious forecasts for oil consumption.

    Both the Organization of Petroleum Exporting Countries and the International Energy Agency lowered their respective forecasts for global oil demand in 2026 last week, but those revisions have done little to offset the geopolitical premium embedded in crude prices.

    Refined products face greater strain than crude

    The effects of the conflict are becoming particularly visible in refined fuel markets, according to ANZ analysts.

    Diesel has “emerged as the tightest segment of the petroleum complex,” the analysts said, reflecting the combined impact of refinery outages, supply interruptions and constraints on maritime transportation.

    Refinery disruption across the Persian Gulf has reduced diesel production and limited export availability even as worldwide demand for the fuel remains resilient.

    That imbalance means the refined products market is experiencing more severe supply pressure than crude itself.

    Russia-Ukraine conflict adds to diesel supply concerns

    The continuing war between Russia and Ukraine represents another source of pressure for global fuel markets.

    Kyiv has carried out additional attacks against Russian oil infrastructure, adding to existing concerns about the availability of refined products at a time when Persian Gulf production is already being disrupted.

    The combination of constrained refinery operations, disrupted shipping routes and continued geopolitical instability suggests diesel supplies could tighten further in the coming months.

    For crude markets, these risks continue to provide underlying support even as major energy organisations become less optimistic about the trajectory of global oil demand during 2026.

  • Wall Street looks to retail earnings as softer data reshapes Fed rate outlook: Dow Jones, S&P, Nasdaq, Futures

    Wall Street looks to retail earnings as softer data reshapes Fed rate outlook: Dow Jones, S&P, Nasdaq, Futures

    Investors entered the new week with expectations for an imminent Federal Reserve rate increase fading, leaving U.S. stock futures mixed as attention shifts towards major retail earnings and another round of economic indicators.

    Walmart (NYSE:WMT), Home Depot (NYSE:HD) and Lowe’s (NYSE:LOW) are among the prominent retailers due to report in the coming days, potentially providing fresh evidence about the health of U.S. consumer spending.

    Away from Wall Street earnings, investors are assessing reports that Anthropic (NASDAQ:ANTP) could generate as much as $200 billion in annual revenue by 2028 as the artificial intelligence company considers a potential IPO. Geopolitical risk also remains prominent after commercial shipping through the Strait of Hormuz slowed dramatically over the weekend.

    Fed tightening expectations retreat

    U.S. futures showed no clear direction early Monday. At 03:08 ET (07:08 GMT), Dow futures had fallen 26 points, or 0.1%, while S&P 500 futures were 15 points, or 0.2%, higher. Nasdaq 100 futures gained 160 points, equivalent to 0.5%.

    The moves followed declines for the major Wall Street averages in the previous session, when unexpectedly weak U.S. retail sales added to evidence of cooling economic conditions.

    Applied Materials (NASDAQ:AMAT) contributed to the pressure after an optimistic outlook still fell short of demanding investor expectations. Its shares dropped more than 5%, with the disappointment spilling over into other stocks associated with the artificial intelligence investment cycle.

    Deutsche Bank analysts identified signs that markets could be entering a summer lull, noting that the VIX volatility index fell to a 2026 low on Friday. They nevertheless highlighted “challenging August crosswinds playing out in bond markets.”

    “Expectations for an imminent Fed rate hike have been pulled back, but this has been accompanied by a significant U.S. curve steepening, with the backdrop of higher oil prices, elevated fiscal deficits, and demand for capital from the AI investment boom putting upward pressure on yields,” the analysts wrote.

    Bond investors will receive further signals this week from the minutes of the Federal Reserve’s July policy meeting and preliminary August business activity data.

    Corporate results could prove equally important for equities. Alongside Home Depot, investors are preparing for earnings from Target, Lowe’s and Walmart as they assess whether U.S. households are becoming more cautious with their spending.

    Anthropic’s potential IPO faces ambitious growth assumptions

    Anthropic (NASDAQ:ANTP) expects annual revenue to reach approximately $190 billion to $200 billion by 2028, Reuters reported, citing people familiar with the AI developer’s finances.

    Those projections are attracting attention as bankers and investors attempt to determine an appropriate valuation ahead of a possible initial public offering.

    The forecast is more than four times Anthropic’s $47 billion revenue run rate disclosed in May, meaning any valuation based on the projection would incorporate substantial expectations for continued expansion.

    According to Reuters, bankers and investors are using enterprise value-to-revenue multiples based on financial forecasts extending two years into the future.

    Revenue multiples are frequently applied to rapidly growing software companies before their profitability reaches maturity. Looking two years ahead is less conventional, however, reflecting both Anthropic’s rapid expansion and the difficulty of valuing an AI developer facing enormous spending requirements for computing capacity, model development and talent.

    Strait of Hormuz traffic virtually stops

    Geopolitical tensions remain another important variable for global markets after commercial shipping activity through the Strait of Hormuz fell sharply during the weekend.

    Kpler data cited by Reuters showed only five commodity vessels transited the waterway on Saturday, followed by none on Sunday. The previous weekend had recorded 31 crossings.

    The slowdown followed attacks on three vessels operated by Abu Dhabi National Oil Company last week, which were reported by the United Arab Emirates.

    Prospects for an immediate diplomatic solution have also deteriorated after the U.S. suggested its naval blockade of Iranian ports could continue indefinitely.

    The scale of the disruption is particularly significant given the strait’s importance to global energy supplies. Before the U.S. and Israel launched their assault against Iran in late February, more than 130 vessels were crossing the route every day.

    Brent crude futures were last 0.1% lower at $88.45 a barrel.

    Chinese factories feel pressure from weaker domestic demand

    China delivered another softer economic signal on Monday as industrial production growth slowed to 4.5% year-on-year in July.

    The figure missed expectations for a 5% increase and represented a slowdown from June’s 5.3% growth rate, according to the National Bureau of Statistics.

    Domestic conditions remain challenging for manufacturers. China’s official manufacturing PMI slipped into contraction territory in July, while consumer demand continued to show limited momentum.

    Export demand remains a source of resilience, particularly for higher-technology Chinese goods, helping to cushion the broader slowdown in factory output.

    Producers are nevertheless facing additional pressure from higher costs caused by disruption across international energy and shipping markets.

    Nvidia could deepen AI infrastructure role with SB Energy investment

    Nvidia (NASDAQ:NVDA) is considering an investment of up to $3 billion in SB Energy, according to The Information, which cited people familiar with the discussions.

    The SoftBank Group-backed company is developing a planned data centre campus in Ohio for OpenAI, and Nvidia’s potential investment would further expand the chipmaker’s involvement in the infrastructure supporting the AI industry.

    Separate negotiations between Nvidia, OpenAI and SB Energy reportedly involve the possibility of around $100 billion in credit support from Nvidia for the Ohio project.

    Such an arrangement would illustrate how Nvidia’s role in the AI boom is expanding beyond supplying advanced processors and into financing the enormous computing infrastructure required to develop and operate artificial intelligence systems.

    No final agreement has been reached, and the terms under discussion could still change. Nvidia is scheduled to report its latest quarterly earnings next week.

  • Market Open: Defence Tech Fund, Gattaca Profit Growth

    Market Open: Defence Tech Fund, Gattaca Profit Growth

    FTSE 100 opens flat as Fed rate expectations support sentiment, while Defence Holdings invests £2m and Gattaca reports profit growth.

    Market Overview

    The FTSE 100 opened broadly unchanged at 10,749.95, down less than 0.01 per cent from its previous close, while the Euronext 100 gained 0.04 per cent to 1,970.69 and Germany’s DAX was 0.02 per cent higher at 26,446.72. European sentiment was supported by falling bond yields and expectations that the Federal Reserve may remain on hold after softer US retail sales data. Overnight on Wall Street, the Nasdaq closed lower at 26,729.16 and the S&P 500 declined to 7,785.76.

    Commodity trading was mixed, with copper and gold higher while Brent crude and natural gas moved lower. Oil markets remained sensitive to continuing tensions involving Iran following a strong week for prices. Against sterling, the US dollar and Japanese yen strengthened marginally, the Swiss franc weakened slightly, while the euro and Australian dollar were unchanged. Bitcoin rose against sterling.

    Market Numbers

    FTSE 100: Down (-0.001%), 10,749.95
    Euronext 100: Up (+0.04%), 1,970.69
    DAX: Up (+0.02%), 26,446.72
    NASDAQ: Down, 26,729.16
    S&P 500: Down, 7,785.76

    In the Headlines

    Defence investment – Defence Holdings (LSE:ALRT)
    Defence Holdings has committed £2 million to a new UK defence technology fund. The investment increases the company’s exposure to emerging defence technologies as the sector attracts greater strategic attention.

    Contract hiring – Gattaca (LSE:GATC)
    Gattaca reported growth in profit and net fee income for FY26, supported by contract hiring. The performance highlights the importance of its contract recruitment operations in driving earnings growth.

    Currencies (vs GBP)

    USD: Up (+0.00%), $1.3546
    CHF: Down (-0.00%), Fr.1.1009
    EUR: Unchanged (0.00%), €1.1704
    JPY: Up (+0.01%), ¥215.684
    AUD: Unchanged (0.00%), $1.9119
    Bitcoin (BTC/GBP): Up, £46,806.15

    Commodities

    Copper: Up
    Gold: Up
    Brent Crude: Down
    Natural Gas: Down

  • European gas extends rally as Hormuz disruption deepens supply concerns

    European gas extends rally as Hormuz disruption deepens supply concerns

    European natural gas prices climbed for a fourth consecutive session on Monday, reaching their highest levels in several weeks as escalating tensions around the Strait of Hormuz combined with unusually low storage inventories to intensify concerns over supplies heading into autumn.

    Benchmark Dutch front-month futures rose 1.83% to €62.55 per megawatt-hour, touching their strongest level since July 24. British wholesale contracts recorded an even larger advance, rising more than 2% to 154.01 pence per therm and also reaching their highest intraday level since July 24.

    The gains marked a fourth straight positive session for both benchmarks, their longest consecutive daily advance since late July.

    Hormuz tensions add geopolitical premium

    The latest move follows an escalation in U.S. diplomatic and military rhetoric towards Tehran ahead of the weekend.

    Energy traders have increased the geopolitical risk premium embedded in European gas prices after Washington warned that it could impose a complete naval blockade on Iranian ports if restrictions on commercial shipping through the Strait of Hormuz continue.

    The prospect of stronger naval enforcement has further reduced expectations that an agreement restoring normal maritime traffic can be reached quickly.

    Disruption through the waterway has left LNG tankers originating from Qatar stranded and delayed spot cargoes that would otherwise be heading towards European import terminals.

    European utilities are simultaneously competing with Asian buyers for available LNG supplies. Asian importers have been bidding aggressively for uncommitted cargoes, increasing the challenge for European companies seeking replacement volumes on the global spot market.

    Low storage levels increase Europe’s exposure

    Supply concerns are being amplified by a significant deficit in European gas inventories.

    Figures from Gas Infrastructure Europe show that underground storage facilities across the European Union are only 59% full, an unusually low level for the middle of August.

    Intense summer heatwaves have contributed to the shortfall by increasing the amount of gas burned by utilities to meet cooling-related electricity demand. Delays to LNG imports have further restricted the pace at which inventories can be replenished ahead of the winter heating season.

    Market pricing is also making storage injections less attractive. Immediate gas supplies are commanding a substantial premium, leaving the forward curve deeply backwardated.

    That structure reduces the economic incentive for traders to purchase expensive spot gas today and store it for delivery later, potentially making it more difficult to rebuild inventories before colder weather arrives.

    Energy markets remain focused on supply risks

    With relatively few European economic releases scheduled at the beginning of the week, gas traders are looking primarily to geopolitical developments and movements in wider energy and commodity markets for direction.

    Broader financial markets received some relief from softer U.S. inflation indicators last week, which strengthened expectations for a more dovish Federal Reserve stance.

    European gas markets face a different set of pressures, however. Energy analysts continue to see limited scope for a sustained decline in prices while shipping through the Strait of Hormuz remains disrupted and European storage inventories remain significantly below normal seasonal levels.