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Basic Materials Roundup: Market Talk

19 May 2018 8:20 am

The latest Market Talks covering Basic Materials. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

Shares of miners and other commodities producers were more or less flat after a farm bill failed to pass Congress and a key deadline for negotiations on the North American Free Trade Agreement passed without resolution. "There's scant time for a 2018 deal, and new decision points and risk factors are quickly coming into play," said analysts at brokerage Morgan Stanley, in a research note. "US House Speaker Paul Ryan had argued for May 17th as a deadline for getting a new NAFTA deal done in 2018, based on the notion that Congress needs 195 days between a formal deal announcement and a vote." The most likely resolution will be an extension of negotations into 2019, when the agreement will likely be ratified, according to the Morgan Stanley analysts. On the farm bill, Republicans in the House of Representatives voted down legislation that would have funded agricultural and food-stamp programs for five years, as conservatives attempted to pressure leaders into bringing an unrelated immigration bill to a vote.

-Rob Curran, rob.curran@dowjones.com

1945 GMT - Net bets on higher gold prices fell to their lowest level since mid-July as prices hit their lowest point of the year, according to CFTC data. Bullish bets by hedge funds and other speculative investors outnumbered bearish bets by 31,327 contracts, down 40% from the previous week. The dollar rising to its highest level of the year and the yield on the benchmark 10-year US Treasury note hitting a nearly seven-year high have pressured gold with more investors anxious about higher interest rates. (amrith.ramkumar@wsj.com; @AmrithRamkumar)

1747 GMT - The exit of sanctioned Russian tycoon Oleg Deripaska from EN+, the company that controls aluminum giant Rusal, should be read as a clear message to investors and the US Treasury. "Mr Deripaska's immediate departure from the boards of En+ and Rusal is just the start of the sweeping changes to come," says Lord Barker of Battle, chairman of En+'s board. "The En+ directors' unanimous approval of my far reaching, sanctions removal plan, shows we mean business." The US gave the group a path to getting out from under US sanctions if Deripaska divests control. Barker is now scrambling to find a buyer. "My team and I are totally focussed and working flat out." (ian.talley@wsj.com)

1548 GMT - Few in the market were surprised by EN+ Group's confirmation of Oleg Deripaska's departure from his directorship or by the news of the company's want for Mr. Deripaska to reduce his stake by 50%, says Mark Bodner, Rusal's former sales director. "He was given no choice," Mr. Bodner says, adding that at the same time, "the sanctions were heavy-handed and ill-thought-out as has been clear from the adverse impact on the interests of Americans and American allies." Rusal's profits won't immediately snap back, though, causing Rusal to post a loss in the quarter, Bodner says. "They may recover more than half of their contract orders, but some customers, fearing sanctions in April locked in other supply for two, three, or four months because of Rusal's cancellations," Mr. Bodner says.(david.hodari@wsj.com; @davidhodari)

1531 GMT - London Metal Exchange three-month aluminum futures are down 1% at $2,268 a metric ton, their losses having softened since EN+ Group -- parent company of global aluminum giant United Co. Rusal -- announced it has formally accepted the resignation of sanction-hit Russian billionaire Oleg Deripaska as director. Prices fell by as much as 2.2% in the wake of the news, with aluminum now in the red so far this year as prices have eased on indications from the U.S. Trade Representative that the company may escape sanctions announced in early April. EN+ Group also announced it was seeking to halve Mr. Deripaska's stakes in the holding company. (david.hodari@wsj.com; @davidhodari)

1519 GMT - London shares remain in the red as Glencore falls 4.2% after reports that the miner may face a probe into its dealings in the Congo. The FTSE 100 Index drops 25.37 points to 7762.6 following reports that the U.K.'s Serious Fraud Office is preparing to seek permission for a full investigation into Glencore's dealings with Israeli billionaire Dan Gertler and Congo's leader Joseph Kabila. Elsewhere, shares in paper and packaging company D.S. Smith rise 2.1% on a brokerage upgrade. AstraZeneca falls 2.3% after first-quarter earnings fell 37%. (philip.waller@wsj.com)

1139 GMT - Shares in precious-metal producers fall as gold and silver prices decline. Randgold Resources Ltd. drops 0.7% to 5748 pence, Fresnillo PLC declines 0.4% to 1266 pence and Anglo American PLC sheds 0.7% to 1869 pence as the price of gold falls 0.3% to $1,287 an ounce and silver backtracks 0.4% to $16.41 an ounce. Gold is not getting the boost from trade and geo-political tensions being enjoyed by oil, says Mihir Kapadia at Sun Global Investments. "While political and regional uncertainty have propelled oil markets, gold prices have lost over 5% in the last few months, as the U.S. dollar has gained ground. Gold has not really performed its traditional role as a safe haven." (philip.waller@wsj.com)

(END) Dow Jones Newswires

May 19, 2018 04:20 ET (08:20 GMT)

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