Daily Brief - 4 June 2024

BHP and $49 billion Anglo bid fails

BHP Group has faced a test of patience after failing to secure the $49 billion takeover of smaller rival Anglo American Plc.

The question now is whether that discipline holds, even with all mining bosses gunning for more volume in copper, the single most coveted metal as the energy transition accelerates. The Anglo tilt was an ambitious bid to transform the world's largest miner into the top global producer of the red metal in one fell swoop.

Having faltered, people familiar with the matter say BHP won't rush into more, at least in part because there are few alternatives when it comes to copper. The next six months and beyond, given the intricacy of Anglo's plan, are crucial.

ECB rate cut expectations unravel

The European Central Bank (ECB) is adjusting its interest-rate cuts expectations, with strong economic data and hawkish officials pushing some analysts and investors to waver.

The latest economic reports offer grounds for wariness, as a key gauge of euro-zone pay that policymakers had hoped would show inflation had finally been conquered failed to moderate, indicating price pressures, particularly in the services sector, may take longer to ease.

The overall retreat in consumer-price gains should resume in the coming months.

Red sea disruption causes deeper impact on world trade according to Maersk

Maersk has raised its profit outlook due to the impact of the Red Sea disruptions on the world's supply lines. The disruptions have removed capacity from the global fleet and boosted freight rates.

Maersk now sees underlying earnings before interest, tax, depreciation, and amortization at $7 billion to $9 billion this year, compared with a previous forecast of $4 billion to $6 billion.

Short-term rates for containers are marching higher due to capacity shortages and early peak season demand. Maersk shares rose as much as 3.7% in Copenhagen at the open on Tuesday.