“The noise is also increasing around the United States about the debt ceiling. Increasing the debt ceiling used to be a formality, but in a polarized USA this is no longer the case “, he writes.
WARNING: US Treasury Secretary Janet Yellen. Photo: NTB
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In a debate post in the Wall Street Journal, US Treasury Secretary Janet Yellen warned over the weekend that the US could face a financial crisis that “could exacerbate the damage of the ongoing public health crisis” – and even permanently damage the US economy – if politicians refuse to increase debt.
Furthermore, commodities are falling sharply on Monday, following the weekend’s announcement by Chinese Prime Minister Li that the country will use “market tools” to stabilize prices.
“I guess this means releasing more raw materials to domestic markets from China’s strategic reserves. As a price taker, and not a price setter, this is what China can do to influence prices in the medium term. But when it comes to a day when liquidity is lower due to holidays (in Asia, editor’s note), markets are nervous about a chaotic Evergrande collapse and US interest rates and the dollar have risen before the interest rate meeting in the Fed, the effect is oversized “, writes Halley and Oanda.
– Climate measures take effect
Chen in DNB Markets points out on Monday that the iron ore price has almost halved from the top in May this year, and is back at 2019 levels.
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CHINA EXPERT: Senior economist Kelly Chen at DNB Markets. Photo: Iván Kverme
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“Iron ore, together with coal, are the two most important inputs for making steel. At first glance, it may seem strange that steel prices are about to rest, while the price of iron ore is corrected all the way back, and coal prices are constantly rising to new records. It may seem as if the price of iron ore is the Canary Islands, first noticing that the demand for steel is reduced “, she reasons.
“But just as important are the climate measures that China is now gradually preparing. For steel, the Chinese authorities’ production ceilings and efficiency requirements are of great importance, in my opinion. I think we are now seeing the effect of the goal of replacing more polluting production methods with newer ones (“electric arc furnace”), where the latter uses significantly less iron ore “, Chen continues.
Dark red in Europe, USA
She further points out that climate-motivated restrictions on Chinese domestic coal production, political restrictions on Chinese imports of Australian coal and disappointing hydropower production have raised coal prices in China.
“This has global consequences, by increasing the demand for gas and the spot prices of Asian LNG imports. On the margin, in a tight gas market as it is now in Europe, high LNG prices will pull up the gas price in Europe “, writes the senior economist.
The stock market turmoil in Asia has spread to Europe, where leading stock exchanges such as the German DAX and the French CAC 40 are both pulling down by more than 2 percent. British FTSE 100 is down 1.4 percent. Here at home, the main index on the Oslo Stock Exchange falls 2.3 percent to 1,115.85.
In the United States points Monday’s futures trading against a sharp fall from the start on Wall Street.
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