Noor Capital | Mohammad Hashad Interview on Dubai TV – June 23, 2023

Mohammad Hashad, Director of the Research and Development Department at Noor Capital and member of the US Association of Technical Analysts, commented on the developments of the global financial markets, especially the interest rate hike in the UK that exceeded expectations, as now experts began to expect that there is indeed an inevitable recession that could hit the UK economy, as for his viewpoint on this development, Hashad replied: “The British economy is one of the major economies that has suffered since the beginning of the effects as well as the negative repercussions of the Covid-19 pandemic, and we can say that this is the main reason that pushed the Bank of England to surprise the markets in a bold move and raise interest rates by 50 basis points instead of the expected 25 basis points”.

He noted that of course the BoE’s decision had an impact on the price movements of the Pound sterling, but the Bank of England is under great pressure from the continued rise in inflation readings, so we find the Consumer Price Index on an annual basis eight and seven out of ten, and we note the decline in unemployment benefits last month to approximately thirteen thousand six hundred, and the basic idea is that the more negative data will be, the more is the possibility of entering in a recession.”

Recession Fears

Hashad added: “We are now in the slowdown zone, but the idea is also whether the recession will be deep or will it be a moderate recession? From my personal point of view, the period with the beginning of 2024 may witness a recession in the United Kingdom, but it is not a deep recession, rather it will likely be a moderate recession”.

BoJ

Asked about interest rates, and unlike all central banks around the world, investors notice that the Japanese central bank does not raise interest rates, so we now see inflation at the fastest pace in forty-two years, so does the current position put the Japanese central bank in front of challenges? Hashad pointed out that the impact of the Japanese Central Bank’s position was obvious on the performance of the Japanese yen, especially during the past months, as it is one of the currencies that was most affected after the decline in demand for it as one of the safe-haven currencies.


Hashad added: “The basic idea in the monetary policy of the Japanese central bank is not just to push through quantitative easing mechanisms, but here is patience with quantitative easing, and we find the Bank of Japan does not want to amend or prejudice monetary policy to be able to control returns, and my point of view also I think that during the year 2023 The Bank of Japan will prioritize yields in order to reach its inflation target of 2 percent for a sustainable period.


Oil’s Performance

Asked about the losses incurred by oil, and noting that oil prices have been declining for a while, but talking again about raising interest rates deepens the losses of black gold, and concerning the most prominent other reasons that could deepen oil losses; Hashad replied: “One of the main reasons is the rise in interest rates, and observers noticed that crude oil incurred significant losses today and yesterday, as oil is under strong selling pressure, which forced it to move away from its last week’s gains after it touched $72.65 per barrel, and there are other basic factors, the most important of which is the return of fears in the markets due to the abundance of oil supply.

Hashad added that the major companies in China intend to export a very large amount of petroleum products, and there are 3.3 million tons that will be exported to the market during the current month, an increase of 19% compared to last month. to 90% within one year due to the embargo on Russian oil, in addition to the continued high interest rates by central banks.

Gold

Regarding gold prices, which reached their lowest levels since February in light of the strength of the dollar, and whether the performance of gold appears normal, and are there other factors besides the strength of the dollar that negatively affect the precious metal, Hashad indicated that the factor of high US Treasury yields is the first in determining the performance of gold price, followed by the technical support level or the main support level that was broken at the level of 1945 dollars an ounce, which may lead to further decline.