Noor Capital | Interview with Mohammad Hashad on Dubai TV – February 19, 2024

Mohammed Hashad, Head of Research and Development at Noor Capital and member of the US Association of Technical Analysts, commented on the key developments across financial markets and the performance of the most important assets, in an interview on Dubai TV.

Asked about the reasons why US stocks have recently given up some of their gains, Hashad noted that the US stock market rally, which began last year, was temporarily halted, as stocks closed last week’s trading with losses.

It is also the first losses in five weeks, against the backdrop of a decline in investors’ sentiment and deteriorating risk appetite, as the markets began to realize that the US central bank; the Federal Reserve, will not rush to the step to cut interest rates very soon and that the Fed has not defeated inflation yet in the battle that began in March 2022.

Accordingly, Hashad believes that the environment of high interest rates and the continuation of the monetary tightening cycle is not a good climate for the stock market because it leads to an increase in the cost of borrowing, which affects the profitability of corporates and companies.

In addition to the continued rise in US ten-year Treasury bond yields, which reached a record level of 2.54% in light of the inverse relationship between the bond market and the stock market. Consequently, US stocks gave up their gains.

Commenting about gold prices that reached $2,020 per ounce, and pointing out why the precious metal surges, Hashad said that gold prices have returned to stability above the psychological barrier of $2,000 per ounce, with geopolitical tensions continuing in various regions around the world.

Geopolitical tensions occurring now in the Middle East and the Red Sea region have increased the demand for gold as one of the most important safe haven assets.

Regarding inflation data from the United States, asked how markets react to the US inflation data and what impact such key data could have on the Federal Reserve’s decision on interest rates, Hashad stated that the inflation figures were disappointing. Although inflation slowed to about 3.1%, less than 3.4% last December, it was less than market expectations that indicated 2.9%.

It is possible that the markets have now ruled out the idea that the Federal Reserve may cut interest rates next March and postpone the cut until May, or even later.

Hashad believes that the continued rise in interest rates has a positive impact on the performance of the US dollar, and therefore the Fed needs more evidence before it could begin to cut interest rates in light of the strong US labour market and inflation data, as the Fed wants sustainable inflation at 2% and wants to see a labour market that is quieter than it is now.

Summarizing the most important events that the markets are awaiting in the new trading week, Hashad said that the FOMC minutes, on Wednesday, will give markets a clear vision on the future of monetary policy and interest rates. Market participants are also awaiting inflation data from Canada and the results of the services and manufacturing sectors from the United States, Europe, and the UK.