HRH Crown Prince Condoles Sultan of Brunei Darussalam on Death of his Son    Joint Forces Command of the Coalition to Restore Legitimacy in Yemen: Interception, Destruction of Bomb-Laden UAV Launched by Terrorist, Iran-Backed Houthi Militia Toward the Kingdom    IOC praises resolution to postpone NOC's elections    Spain declares state of emergency to impose regional curfews    OIC Secretary General Receives Australian Ambassador to Saudi Arabia    Bestselling global literary icons will lead cultural program at SIBF 2020    Recovery rate improves as new coronavirus infections drop    MoE to hold first semester final exam remotely    Riyadh Region Governor Receives Lebanese Ambassador    King Fahd Port Achieves Increase in Total Products by 5% During September 2020    Monshaat, Community Jameel discuss ways to support SMEs in Saudi Arabia    SABIC reports Q3 net profit of SR1.09 billion    Japan expects record low number of newborn babies for 2020    Emirates Post issues stamp to mark start-up of Unit 1 of Barakah Plant    Closure of the October 2020 Issuance under the Saudi Arabian Government SAR-denominated Sukuk Program    Philippines Evacuates Nearly 1,800 as Tropical Storm Molave Approaches    Saudi Press: Saudi Arabia Calls On International Community to Ensure Using Space for Peaceful Purposes    Weather Forecast for Sunday    Dubai Crown Prince launches AED500 million economic stimulus package    SAMA to Commemorate Saudi Arabian G20 Presidency by Introducing SR20 Denomination Banknote    Shahid Alam named new Indian consul general    Zakat Fund launches ‘Smile of Hope' Project to support kids with cancer in Bahrain    Algeria Welcomes Permanent Ceasefire Agreement in Libya    Philipsen claims first podium at Vuelta España    Polish President Duda infected with coronavirus WHO warns hospitals struggling as COVID-19 surge in Europe continues    CSG, Deccan Knights, Makkah Eagles, ARM triumph in Ace Travel Saudi Cup event Usman (120), Naseer (84 & 5 for 44), Bilal (79), Nazeer (75), Mohsin (74), Malik (66) shine    Plan to make vaccinations compulsory for birth certificate    Global AI Summit 2nd Day Witnesses Establishment of 3 Strategic Partnerships    Sharjah Film Platform to feature over 60 films    Combining the love of football with humor on Twitter    Dubai Sports Council, UEFA discuss mutual cooperation    Arab world's modern-day cultural pioneers, intellectuals to convene at SIBF 2020    MoH Marks World Osteoporosis Day 2020    Saudi man accused of harassing foreign wife asked to be produced before court Court allows divorce, custody of children by mother    Man United, Liverpool in talks to join new European super league    KSrelief, IMC, Sign Memorandum of Cooperation    Napoli blast four goals as they thumped Atlanta 4-1    VAR foils Liverpool in derby draw with Everton    Ithra to Launch 3rd Creativity Season (Tanween)    MoH Calls on Groups of Patients to Postpone Umrah Performance    Red Sea International Film Festival Announces a New Short Film Competition    S. P. Bala, legendary Indian singer, dead at 74    Happy National Day 90    Every work has its fruits, so choose wisely    Eid Al-Adha Prayer Performed at the Grand Holy Mosque    Pilgrims Perform Dhuhr and Asr Prayers in Arafat Holy Site    Senior Scholars Council Issues Decision No. 246 Regarding Attendance of Friday Prayer and Prayers at Mosques in a Case of Spread of Epidemic or Fear of its Spread    Custodian of the Two Holy Mosques Addresses Citizens and Muslims on Eid Al-Fitr    

Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.

Risk bubble
Published in The Saudi Gazette on 24 - 06 - 2020

GENEVA — Mounting anxiety that the second wave contagion would dent the pace of business reopening and the massive fiscal, monetary stimuli are a sweet blend for technology stocks.
Nasdaq (+0.74%) renews record after record as the cheap liquidity flows into the most admired tech players while cyclicals, such as financials and energy stocks, are left behind but not dumped. The overall risk sentiment remains relatively strong.
Equities in Asia ticked higher at the open but were mostly flat into the afternoon session. The Reserve Bank of New Zealand (RBNZ) maintained its official interest rate at the historical low of 0.25% and the asset purchases unchanged at NZD60 billion.
But the policymakers pledged to add more stimulus and deploy more policy tools to support the economy, if needed, as they recognized that the downside risks prevail despite the post-COVID normalization. The Kiwi remained offered past the 0.65 mark, but the bias remains comfortably positive on the back of a globally improved appetite for risk and beta currencies.
European futures hint at a slow open following a strong Tuesday session.
There is a total lack of direction and little predictability across the market with one outstanding behavior — buying the dips in equities and increasing hedges via safe-haven assets against a possibly sharp market rout. It is increasingly clear to everyone that most equity prices are artificially bloated.
In this respect, we see a stronger yen and Swiss franc, and a decent rally in gold. The price of an ounce advanced to $1773, the highest since 2012, and the market looks set for a further advance towards $1800 regardless of the rise in share prices. The major driver behind the gold rush is fear — fear of a seeing a burst in the actual risk bubble.
In the currencies market, the US dollar edges lower. In the dearth of important economic data and event, the EURUSD looks set for further gains. Due later this morning, the latest Ifo survey will likely confirm an improved business sentiment in Germany. A strong read should help boosting interest in euro and euro-denominated equities.
Cable, on the other hand, consolidates gains near the 1.25 mark. Here also, the major driver is the soft US dollar, but the recent rise in optimism regarding a possible Brexit deal by the end of this year keep the sterling bears on the sidelines for the moment.
Meanwhile, Boris Johnson announced the dramatic end of confinement measures in July, which is a big gamble to boost the British economy despite lingering risks on public health.
Elsewhere, the WTI rally gives signs of exhaustion above the $40 per barrel on the back of building US inventories. The latest API data printed a 1.75-million-barrel rise in US stockpiles last week, versus 300K expected by analysts.
The more official EIA data should confirm a third straight week rise in inventories. Failure to extend gains above the $40 mark should trigger a temporary negative correction in oil, yet the downside should remain limited near the 100-day moving average, $33.80 pb.
— The writer is senior analyst at Swissquote Bank

Clic here to read the story from its source.