Think petrol-powered cars are dead? Tell that to investors
As you would expect, the price of gold surged anew alongside that of oil after Israel launched a wave of attacks on Iran. Rising global instability is meat and drink for gold bugs; there's nothing they like more than the sight of fighter jets on the move.
But hold on, what's this? Prices are also surging in that largely forgotten corner of the precious metals markets, platinum, and it's got very little to do with Iranian ambitions for a nuclear bomb.
Rather, it is the growing conviction that there is life after apparent death for the internal combustion engine (ICE). Despite the best efforts of policymakers to kill them off, petrol-fuelled cars are experiencing something of a comeback in more environmentally acceptable, hybrid form. The market for traditional all petrol cars is also continuing to grow strongly in non OECD countries.
What's that got to do with the price of platinum? Though not nearly as widely held as gold, the metal enjoys some of the same characteristics, in that it is extensively used in jewellery and there is steady, if unspectacular, investment demand for it.
But it has historically failed to command the same totemic status as gold as an alternative form of money, or as insurance against collapse in the global monetary order – a tail risk that seems to grow bigger by the day.
On the other hand, it does have an industrial use, catalytic converters, and that's where the lion's share of the demand comes from. These convert harmful emissions from ICE vehicles into less harmful ones.
When Western governments announced timelines for going all electric, it was therefore widely assumed that this also sounded the death knell for platinum.
Once upon a time, the metal enjoyed near price parity with gold, but over the past decade, it has lagged ever further behind, and now stands at close to a record discount of more than $2,000 (£1,474) per ounce.
Corecam, a Zurich-based wealth management firm, thinks it has spotted an opportunity. In recent analysis, the firm points out that platinum prices are now near or below the cost of production for many South African miners, where 80pc of the global platinum supply originates.
Most producers are struggling to break even, a predicament that historically marks the cyclical bottom in commodity markets. Hardly any investment has flowed into new sources of platinum production in recent years.
Now consider the following. Despite the incentives offered, EVs have failed to achieve the market penetration expected of them. Range limitation, basic lack of charging point infrastructure, and of course still relatively high prices have been a turn-off for consumers.
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Reuters
4 hours ago
- Reuters
TRADING DAY Truce hopes spark rebound
ORLANDO, Florida, June 16 (Reuters) - TRADING DAY Making sense of the forces driving global markets By Jamie McGeever, Markets Columnist Investor sentiment and risk appetite rebounded sharply on Monday as fears around the Israel-Iran conflict subsided, shifting the spotlight away from geopolitical risk and back towards this week's raft of central bank policy meetings. In my column today I look at why the dollar's status as a safe-haven asset in times of heightened geopolitical uncertainty may be fading in a world of 'de-dollarization'. More on that below, but first, a roundup of the main market moves. If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. Today's Key Market Moves Truce hopes spark rebound Signs of de-escalation between Israel and Iran - or at least hopes of de-escalation - ensured markets started this week much more positively than they finished last week. Whether that optimism is justified remains to be seen but the rebound was pretty strong, taking Wall Street and world stocks back to within sight of their recent highs. It's a very fluid situation, so investors' relief may be short-lived. Iran has called for U.S. President Donald Trump to get Israel to halt its attacks, but both countries continue to fire missiles at each other. Meanwhile, a U.S. official said Trump will not sign a draft G7 leaders' statement calling for de-escalation of the conflict. Optimism that a truce will be reached appears to be stronger in equity markets than elsewhere. Gold gave back Friday's gains but not before hitting $3,451 an ounce, a level last reached when it clocked a record high on April 17, and in volatile trade oil settled 1.7% lower, having surged more than 7% on Friday. Perhaps equity investors have it right. The oil price has less of a bearing on global growth or asset prices than it used to, and markets have been pretty resilient to Middle East conflicts in recent years, with selloffs proving to be shallow and short-lived. Unless there is a real adverse oil price shock, it will probably be a similar story this time around, although spiking inflation would be problematic for central banks. Economists at Oxford Economics sketch out an extreme scenario where the closure of the Strait of Hormuz pushes oil up to $130 a barrel, which could lift U.S. CPI inflation to almost 6%. Oil is nowhere near that yet though. As Deutsche Bank's Henry Allen notes, perhaps the story of the year is how resilient stock markets have been in the face of myriad large shocks - DeepSeek's emergence casting doubt over U.S. tech valuations; Europe's fiscal regime shift triggering the biggest daily jump in German yields since 1990; the U.S. losing its triple-A credit rating; Trump's tariffs and the S&P 500's fifth-biggest two-day fall since World War Two. And yet here we are, with world stocks at all-time highs. Aside from geopolitics, the focus for investors this week will mostly revolve around central banks. The Bank of Japan will deliver its policy decision on Tuesday, and economists expect it to hold off from raising rates again due to the uncertainty around U.S. tariffs. Later this week we have decisions from Indonesia, Brazil, Switzerland, Sweden, Norway, Britain and the U.S. Federal Reserve. Israel-Iran conflict highlights dollar's tarnished safe-haven appeal A dramatic spike in the potential for all-out war between Israel and Iran would typically be expected to spark an immediate and strong rally in the U.S. dollar, with investors seeking the safety and liquidity of the world's reserve currency. That didn't happen on Friday. The dollar's response to Israel's strikes on Iranian nuclear facilities and military commanders, followed by Tehran's initial threats and retaliation, was pretty feeble. The dollar index, a measure of the currency's value against a basket of major peers, ended the day up only around 0.25%. To be sure, the dollar fared better than U.S. stocks or Treasuries, which both fell sharply on Friday. But with oil surging over 7% and gold up a solid 1.5%, a strong 'flight to quality' flow would have lifted the dollar more than a quarter of one percent. The U.S. currency's move was particularly weak given the dollar's starting point on Friday. It was at a three-and-a-half year low, having depreciated 10% year to date, with sentiment and positioning heavily bearish. Yet a significant geopolitical shock generated barely a knee-jerk bounce. For comparison, the dollar rose more than 2% in both the first week of the 2006 Israel-Lebanon War and in the week following Israel's invasion of Southern Lebanon last year. The dollar's weak response to this latest Middle East conflict supports the narrative that investors are now reassessing their high exposure to dollars, in light of some of the unorthodox policies put forward by U.S. President Donald Trump in recent months. The dollar was down slightly early on Monday, and gold and oil were giving back some of Friday's gains too, as markets regained a foothold at the start of a busy week packed with key central bank meetings. The dollar has historically been one of the best hedges against short-term volatility sparked by geopolitical risk, behind gold and on a par with oil, according to research published last year by Joe Seydl, senior markets economist at JP Morgan Private Bank. Indeed, a Journal of Monetary Economics paper from last year stated plainly, "The dollar is a safe-haven currency and appreciates when global risk goes up," a trend resulting from the "fundamental asymmetry in a global financial system centered around the dollar" built up over the course of several decades. That latter part of that argument hasn't changed. The dollar accounts for almost 60% of the world's $12 trillion FX reserves, with its nearest rival, the euro, accounting for around 20%. Almost two-thirds of global debt is denominated in dollars, and nearly 90% of all FX transactions around the world have the greenback on one side of the trade. That means traders, financial institutions, businesses, consumers and governments still need to be more exposed to dollars than any other currency, even if they question the direction of current U.S. policy. However, the dollar's downside 'structural' risks are growing, analysts at Westpac noted on Sunday, as concern over Washington's fiscal health and policy uncertainty erode the dollar's 'safe-haven identity'. Investors are now looking to hedge their large dollar exposure more than ever. If this dampens their instinctive demand for dollars in periods of sudden geopolitical tension, uncertainty and volatility, then the so-called 'dollar smile' theory could be challenged. This 'smile' is the idea that the dollar appreciates in periods of financial market stress as well as in 'risk on' periods of strong global growth and investor optimism, but sags in between. This idea was first outlined over 20 years ago by then currency analyst and now hedge fund manager Stephen Jen. If the Israel-Iran conflict continues to escalate, that dollar smile could get rather lopsided. What could move markets tomorrow? Want to receive Trading Day in your inbox every weekday morning? Sign up for my newsletter here. Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias.
NBC News
4 hours ago
- NBC News
Luxury credit card rivalry heats up as Amex, JPMorgan tease updates to their premier cards
The long-running rivalry between the country's top premium credit cards is about to heat up again. JPMorgan Chase announced last week that a refresh of its Sapphire Reserve — the travel and dining rewards card that went viral when it arrived in 2016 — was imminent. In response, American Express on Monday said that 'major' changes were coming to its consumer and business Platinum cards later this year. While short on details, the New York-based card company said that its update would be its largest ever investment in a card refresh. 'We are going to double down on the things we know based on the data that our card members love,' said Amex President of U.S. Consumer Services Howard Grosfield in an interview. 'But more importantly, we'll bring a whole bunch of new and exciting benefits and value that will far, far, far exceed the annual fee.' American Express pioneered the premium credit card space decades ago with cards that bundled perks at airlines and hotels with access to its own network of high-end airport lounges. But JPMorgan shook up the industry in 2016, igniting stiff competition among card issuers with a lavish sign-on bonus and other incentives for its Sapphire card. The expectation among industry experts is that both companies will offer ever-longer lists of perks in travel, dining and experiences, while potentially raising their annual fees, as has been the pattern with recent updates. The Platinum card has a $695 annual fee, while the Sapphire has a $550 fee. On Reddit and other forums, card users circulated rumors that JPMorgan was hiking the annual fee on its Sapphire product to $795. A JPMorgan spokesperson declined to comment. The new Platinum card will launch in the fall, Grosfield said.
Reuters
4 hours ago
- Reuters
Israel's Haifa-based Bazan group says all refinery facilities shut down after Iranian attack
June 16 (Reuters) - Israel's Haifa-based Bazan Group said all refinery facilities have been shut down after a power station used to produce steam and electricity were significantly damaged in an attack by Iran, according to a regulatory filing on Monday. The group said the Iranian attack resulted in the death of three company employees. The refinery is located in Haifa Bay, according to Israeli media.
