EMISSIONS: Climate Committee Urges UK to Cut Emissions by 87% By 2040
The Climate Change Committee (CCC) advises the UK government to reduce emissions by 87% versus 1990 levels by 2040, compared with 81% in the last official target from November, it said in its advice of the UK’s Seventh Carbon Budget.
- The limit on the UK’s emissions over the period 2038- 2042 should be at 535 MtCO2e, compared with the previous budget at 965 MtCO2e over 2033-2037. The target should be met through domestic action without resorting to international credits.
- The UK should ensure that UKA prices are high enough to incentivise decarbonisation, with potential measures including a higher carbon price floor and/or linkages with the EU ETS.
- The Committee also advises the government to implement regulations to formally include emissions from international aviation and shipping emissions in carbon budgets.
- Toby Perkins MP, Environmental Audit Committee Chair, commented that it’s crucial for the international aviation and shipping emissions to be legislated in the carbon budgets.
- The government has until 30 June 2026 to put the seventh carbon budget into legislation. Previous governments – whether Conservative or Labour – have always followed the CCC’s advice on the level of UK carbon budgets.
- Toby Perkins MP reacted positively on Climate Change Committee’s advice and urged ministers to be open to improvements.
- “The Climate Change Committee’s recommendations go to the heart of the Government’s growth agenda: there is enormous potential in the areas it has identified for improvement of the environment. Ministers must not be afraid to take the giant leaps suggested,” Perkins said.
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COMMODITIES: Trend Conditions in Gold Bullish Following Last Week's Climb
The trend structure in WTI futures is bullish despite the recent pullback. The move down appears corrective and is allowing an overbought trend reading to unwind. The 20-day EMA, at $74.28, has been pierced. A clear break of it would signal scope for a deeper retracement and expose the 50-day EMA, at $72.11. A reversal higher would highlight the end of the correction and refocus attention on $79.48, the Apr 12 ‘24 high and a key resistance. Gold traded higher last week. A bull cycle remains in play and the recent breach of resistance at 2726.2, the Dec 12 high, reinforces current conditions. Sights are on $2790.1, the Oct 31 all-time high. A break of this hurdle would confirm a resumption of the primary uptrend. On the downside, the first key support to watch is $2668.8, the 50-day EMA. A reversal lower and a breach of this average would reinstate a bearish threat.
- WTI Crude up $0.18 or +0.24% at $74.75
- Natural Gas down $0.26 or -6.56% at $3.763
- Gold spot down $7.52 or -0.27% at $2763.68
- Copper down $5 or -1.16% at $427
- Silver down $0.11 or -0.37% at $30.473
- Platinum down $6.09 or -0.64% at $945.48
EQUITIES: E-Mini S&P Starts the Week on a Bearish Note
A bull cycle in the Eurostoxx 50 futures contract remains intact and the move lower from Friday’s high is considered corrective. The move down is allowing an overbought trend condition to unwind. Moving average studies are in a bull-mode set-up that highlights a dominant uptrend. The first important support to watch is 5086.38, the 20-day EMA. A resumption of the uptrend would open 5298.50, a Fibonacci projection. The S&P E-Minis contract is starting the week on a bearish note, extending the pullback from Friday’s high. Key short-term support to watch lies at 5961.75, the Jan 16 low. For now, the move down appears corrective, however, a breach of 5961.75 would strengthen a bearish threat and signal scope for a deeper retracement. This would open 5943.94, a Fibonacci retracement. Key resistance is unchanged at 6178.75, the Dec 6 high.
- Japan's NIKKEI closed lower by 366.18 pts or -0.92% at 39565.8 and the TOPIX ended 7.03 pts higher or +0.26% at 2758.07.
- Elsewhere, in China the SHANGHAI closed lower by 2.025 pts or -0.06% at 3250.601 and the HANG SENG ended 131.58 pts higher or +0.66% at 20197.77.
- Across Europe, Germany's DAX trades lower by 224.91 pts or -1.05% at 21169.14, FTSE 100 lower by 14.67 pts or -0.17% at 8487.68, CAC 40 down 61.52 pts or -0.78% at 7865.18 and Euro Stoxx 50 down 70.38 pts or -1.35% at 5148.9.
- Dow Jones mini down 364 pts or -0.82% at 44238, S&P 500 mini down 113 pts or -1.84% at 6020.75, NASDAQ mini down 670 pts or -3.06% at 21240.5.
FOREX: GBPJPY Should Look Through CBs, More Closely Pinned to Sentiment
The sharp Deepseek-triggered slide in equity futures is helping underpin haven currencies this morning, tipping USD/JPY to new YTD lows. It's GBPJPY that should draw some interest given the risk-off haven rally as well as GBP's recent spell of uncertainty - which drove GBP/JPY 1week vol turnouts to hit levels last seen in the wake of the November US elections.
- While the cross's leg lower today is nearing 1%, it's still clear of Friday lows at 192.08. Importantly, the cross is less exposed to the central bank flurry midweek (Fed, BoC, ECB), so should be more clearly pinned to market sentiment and global equities.
- 2025 range has been defined by the upleg posted off late November lows - with markets finding both the 76.4% retracement of the fade off highs as a decent support mid-January and 194.81, the 38.2% Fib, as a solid inflection point to cap last week's rally.
