Noor Trends News, Technical Analysis, Educational Tools and Recommendations
Mohammed Hashad, Head of Research and Development at Noor Capital and a distinguished member of the US Association of Technical Analysts, provided insightful commentary and thorough analysis on the latest market dynamics and key asset performances in an exclusive interview with Dubai TV.
Firstly, the markets are anticipating the Federal Reserve meeting. Let’s start by discussing the expected tone or stance of this meeting.
One of the most important and prominent topics awaited by investors. I believe the tone remains or will remain one of tightening. The Fed will not back down from sustainable inflation at 2% despite inflation easing for the first time in the second quarter of the year, but it still remains far from the 2% target.
From my personal perspective, one or even two months’ readings do not reflect the overall trend. Therefore, it may mean it’s better to be open to broader alternatives by the Fed or diverse means by the Fed.
The US stock market is hovering around record levels. Is this due to inflation slowing down, or are there other factors contributing to this upward momentum?
The US stock market has achieved significant gains as the three main US market indices continue to rise for the third consecutive session. The US stock markets celebrated a slowdown in both general and core inflation for the first time since the first quarter of 2024.
Yes, there’s a slowdown in inflation, but it’s still far from 2%. I also believe another important factor driving the stock markets to this upward momentum is the inverse relationship between bonds and stocks. The yields on 10-year US Treasury bonds fell to 1.73%.
Another factor that cannot be overlooked, is one of the main reasons that pushed the stock market higher is the enthusiasm for artificial intelligence sector stocks and their ability to expand and diversify profits or distribute profits significantly. Thus, we find the Dow Jones index at its highest level ever since its inception in 1896, for the first time above the 40,000 mark.
Regarding oil prices as well, today’s session started with gains but overall did not achieve significant increases, almost reaching 1%. The most prominent factors that led to these increases in oil:
Concerns about the global supply shortage in the oil market in general.
Geopolitical concerns or political uncertainty in some oil-producing countries, especially after the crash of the Iranian president’s plane. Another important factor that pushed prices higher is the shutdown of one of the largest Russian refineries, in southern Russia, which has an annual production capacity of 4 million tons, equivalent to approximately one million barrels per day. What the markets expect from the upcoming OPEC+ meeting in June is that the organization will maintain the oil plan at 2.2 million barrels per day until mid-2024.
As for gold, it’s hovering around record levels. What led to these increases and will they continue?
It’s clear that the increases will continue, and we may see $2,500 per ounce soon. The continued geopolitical tensions in the region generally increase buying volumes, whether from individuals, institutions, central banks, or countries. We find that China has been continuing for the eighteenth consecutive month to purchase very large quantities of gold and wants to reduce reliance on the US dollar as a form of reserve. About 30 to 50% of total purchases, and thus gold is considered one of the most important safe haven assets to hedge against market fluctuations.
