Al Ittihad claims top spot in Saudi Pro League after victory over Al Fateh    Saudi delegation participates in the 7th U20 Deans Summit in Brazil    Al-Jubeir discusses with EU officials enhancing bilateral cooperation    GASTAT: Non-oil exports up 22.8% in September 2024    Saudi Arabia to host 28th Annual World Investment Conference in Riyadh    Saudi Arabia allows licensed flour milling companies to export flour    Saudi Arabia joins international partnership initiative to boost hydrogen economy    Israeli drones kill two paramedics, injure four in southern Lebanon    Trump's new attorney general nominee sparks concerns over DOJ independence    Australia drops proposed laws to regulate social media misinformation    Six Palestinians killed in Israeli airstrikes on central Gaza    Riyadh Emir inaugurates International Conference on Conjoined Twins in Riyadh    Al Khaleej stuns Al Hilal with 3-2 victory, ending 57-match unbeaten run    SFDA move to impose travel ban on workers of food outlets in the event of food poisoning    Al Okhdood halts Al Shabab's winning streak with a 1-1 draw in Saudi Pro League    Saudi musical marvels takes center stage in Tokyo's iconic opera hall    Al Khaleej qualifies for Asian Men's Club League Handball Championship final    Katy Perry v Katie Perry: Singer wins right to use name in Australia    Sitting too much linked to heart disease –– even if you work out    Denmark's Victoria Kjær Theilvig wins Miss Universe 2024    Order vs. Morality: Lessons from New York's 1977 Blackout    India puts blockbuster Pakistani film on hold    The Vikings and the Islamic world    Filipino pilgrim's incredible evolution from an enemy of Islam to its staunch advocate    Exotic Taif Roses Simulation Performed at Taif Rose Festival    Asian shares mixed Tuesday    Weather Forecast for Tuesday    Saudi Tourism Authority Participates in Arabian Travel Market Exhibition in Dubai    Minister of Industry Announces 50 Investment Opportunities Worth over SAR 96 Billion in Machinery, Equipment Sector    HRH Crown Prince Offers Condolences to Crown Prince of Kuwait on Death of Sheikh Fawaz Salman Abdullah Al-Ali Al-Malek Al-Sabah    HRH Crown Prince Congratulates Santiago Peña on Winning Presidential Election in Paraguay    SDAIA Launches 1st Phase of 'Elevate Program' to Train 1,000 Women on Data, AI    41 Saudi Citizens and 171 Others from Brotherly and Friendly Countries Arrive in Saudi Arabia from Sudan    Saudi Arabia Hosts 1st Meeting of Arab Authorities Controlling Medicines    General Directorate of Narcotics Control Foils Attempt to Smuggle over 5 Million Amphetamine Pills    NAVI Javelins Crowned as Champions of Women's Counter-Strike: Global Offensive (CS:GO) Competitions    Saudi Karate Team Wins Four Medals in World Youth League Championship    Third Edition of FIFA Forward Program Kicks off in Riyadh    Evacuated from Sudan, 187 Nationals from Several Countries Arrive in Jeddah    SPA Documents Thajjud Prayer at Prophet's Mosque in Madinah    SFDA Recommends to Test Blood Sugar at Home Two or Three Hours after Meals    SFDA Offers Various Recommendations for Safe Food Frying    SFDA Provides Five Tips for Using Home Blood Pressure Monitor    SFDA: Instant Soup Contains Large Amounts of Salt    Mawani: New shipping service to connect Jubail Commercial Port to 11 global ports    Custodian of the Two Holy Mosques Delivers Speech to Pilgrims, Citizens, Residents and Muslims around the World    Sheikh Al-Issa in Arafah's Sermon: Allaah Blessed You by Making It Easy for You to Carry out This Obligation. Thus, Ensure Following the Guidance of Your Prophet    Custodian of the Two Holy Mosques addresses citizens and all Muslims on the occasion of the Holy month of Ramadan    







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SPX, Nasdaq renew record; gold down
Published in The Saudi Gazette on 26 - 08 - 2020

GENEVA — The S&P500 (+0.36%) and Nasdaq (+0.76%) advanced to new records on Tuesday, as investors continued betting on accommodative Federal Reserve (Fed) policy to redress the US economy that has been ravaged by the pandemic, but Fed Chair Powell's Thursday's speech in Jackson Hole meeting may remain short of the very dovish market expectations and trigger a downside correction at the current levels.
Airline shares, which led Monday gains, were sharply sold, as companies prepare to announce by how much they will shrink operations once the federal aid expires on Oct. 1 and the numbers will be ugly.
Equities in Asia failed to follow up on US session gains. Major Asian indices edged lower on lingering uncertainties regarding the global economic outlook.
The latest data showed that new home sales in the US rose sharply in July (+13.9% m-o-m) to reach the highest since 2006, but the average American household remains squeezed by slow business activity and the delay in government help. The US consumer confidence dived to a six-year low in August.
Due Wednesday, the US durable goods orders are expected to have risen 4.3% in July. A softer-than-expected figure should revive the Fed doves, while a better-than-expected read would improve the investor mood, but should not have a material impact on dovish Fed expectations as it is clear to everyone that the economy needs sustained support for posting good results.
The US dollar remains steady near the 93 mark, but the treasuries are dumped. The US 10-year yield advanced above 0.71% as capital moves to risky equity markets for better returns.
Capital leaves gold as the risk rally intensifies. The price of an ounce fell to $1914 on Tuesday, as US equities hit new records. The upbeat US sovereign yields encourage selling as well. But dip-buyers are seen near the $1900 mark as the actual risk rally starts feeling uncomfortable in the absence of any additional aid plan from the Fed, or the government.
Meanwhile, the US-China trade talks seem to progress as China reiterates its commitment to reach its phase-one promises despite a lot of political noise around China's Xinjiang and Hong Kong policies and the tech war.
According to the latest news, the two countries would be discussing next steps in trade negotiations, including the protection of intellectual property and obstacles to US financial services and agriculture. But investors prefer to wait and see given the sudden and drastic changes in the tone and the direction of US-China negotiations.
The EURUSD treads water near the 1.18 mark, awaiting a fresh direction from the US dollar. On the other hand, the rising COVID cases across Europe increase the doubts regarding the European recovery trades and provides a stronger case for a softer euro against the greenback. But the dollar bears need to give in to allow a meaningful downside correction in EURUSD. The next negative target stands at 1.1685, the 23.6% Fibonacci retracement on March–August rebound.
Cable continues being bought near 1.3050 and sold past 1.32. The USDJPY advanced to three-week highs on the back of a stronger risk appetite and outflows from the safe haven yen.
WTI crude jumped to $43.60 per barrel as the Tropical storm Laura strengthened into a hurricane threatening the US refineries along the Texas-Louisiana coast. It is said that the US refineries could lose as much as 12% of their capacity for more than six months.
Also, the weekly API data showed a 4.5-million-barrel decline in US weekly inventories, versus a draw of 2.7-million-barrels expected by analysts. Lower supply news should give support to oil prices in the short run, but supply-side news tends to have an ephemeral positive impact on oil prices.
The global oil market remains swamped with excess supply and prospects of slow recovery in global demand should cap the upside potential in oil prices approaching the $45 per barrel.
— The writer is senior analyst at Swissquote Bank


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