Dubai TV Interview, Oct 11, 2021

Speaking to Dubai TV on Monday, Mohamed Hashad, Director of Research and Development at Noor Capital, discussed the current situation across global markets, with anticipation for a number of developments over the course of the week.

ECB

Hashad explained that we had seen a lot of hints from the European Central recently regarding a change in monetary policy. However, we believe that the economic numbers are still fragile, especially that there is an evident decline in European consumer confidence and high inflation levels. Accordingly, Hashad believes that Christine Lagarde will not change monetary policy until the first quarter of next year because economic numbers do not allow her to raise interest rates.

The U.S.

We believe that Goldman Sachs’ view is greatly exaggerated as if we take an overview of the US data, we will find it positive except for the jobs data. There was an apparent recovery in US retail sales and a rise in US consumer confidence as there were many other positive data, but the US jobs data was disappointing.

The US economy added only 194K jobs, much less than market expectations of 490K jobs and less than the previous reading of 235K jobs. The negative repercussions of the Coronavirus continue to pressure the job markets negatively. Regarding the asset purchase program, Jerome Powell has made it clear more than once that he will start reducing asset purchases only when he sees a clear development and optimal exploitation of the labor markets.

But as we can see, the markets have begun to understand that Jerome Powell will reduce asset purchases before the end of this year, with the possibility of raising interest rates at least twice next year in an attempt to curb inflation.

The most significant evidence that the markets have come to grips with is that the US dollar hasn’t fallen significantly even after the negative US jobs data.

Oil

Hashad indicated that oil had been one of the most moving assets and continue to achieve gains for the eighth consecutive session, as prices recorded 81.50 cents per barrel. This is the highest oil level since November 2014.

A significant factor supporting oil prices is the apparent improvement in global demand for oil and energy markets. Although the easing of closure restrictions is one of the reasons that help the oil to rise, many countries have eased closure restrictions, and the condition of travel has also improved. In addition, the health situation in many countries, especially oil-consuming countries, has improved.