市场资讯及洞察

Deteriorating demand and rising global output are the main factors that sent the WTI Crude into a bear market territory. There is a shift of sentiment in the oil markets. The US sanctions have been the primary influence behind the rally in oil prices, and now that fears have eased, fundamentals took over, and economic forces- demand and supply are driving the markets.

Supply Side The US sanctions have created fears that oil supply will take a hit and will likely drop by 30% by next year. There was also resistance from OPEC members to increase the output ceiling and boost production. These downside factors have put upward pressure on oil prices.

In the last couple of weeks, sentiment soured as US crude oil reaches a new all-time high at 11.63 million bpd and is predicted to break through 12 million barrels per day by mid-2019. The US sanctions on Iran will be therefore unlikely to have a significant impact on supply. The US decision to offer Oil Waivers to different nations also came as a surprise mitigating the effect of the Iran sanctions on the global oil supply and accelerating the slide in oil prices.

It appears that the waivers were put in place to avoid a shock in the market and higher prices. Demand Side The concerns over global economic growth are forcing traders to reduce their projections for oil demand. Trade tensions are flashing warnings that could dent the world’s oil demand growth.

A slowdown in global economic growth, consumer spending, investment flows and a rising US dollar are leading to mounting uncertainties around the demand for oil. The demand shock is boiling over slowly, and the effect will likely be felt over time. It is too soon to know how the OPEC will react to the supply glut.

Meanwhile, we will have to wait for the OPEC and its allies to discuss scenarios of cutting production again next year. This article is written by a GO Markets Analyst and is based on their independent analysis. They remain fully responsible for the views expressed as well as any remaining error or omissions.

Trading Forex and Derivatives carries a high level of risk. More information on trading WTI and Brent crude oil here.

The Political Event of the Year 2020 The most-waited political event of the year is fast approaching: the US elections will take place on the 3 rd of November. The nominees of the two main political parties - Republican and Democratic party are yet to be announced at the Presidential Nominating Convention. However, the clear frontrunners are President Trump and Joe Biden.

Without any doubt, this election will be widely monitored as US politics may affect the global economy, alliances and trade agreements. Markets were rattled by the long-drawn trade war between the world’s two powerful economies. Even though we kick-started 2020 with positive trade negotiations, the tussle between the US and China over the transparency of the coronavirus outbreak worsen the already fragile relationship.

Ahead of the Presidential election, investors are bracing for the tensions between the US and China to get worse as it is a politically-motivated move by President Trump to win another term. Rightly so, the recent new tech war between the two countries are keeping the markets on edge. The COVID-19 Effect In modern times, history has shown that an incumbent President has a clear advantage and usually wins re-election.

The last president to lose re-election was George W Bush which was mostly due to an economic recession. Therefore, in recent history, an incumbent President has never failed to win a second term unless a recession has occurred during their time as president. At the beginning of the year, the odds of President Trump winning the election was high.

US-China Tensions & COVID-19 The Trump administration had a tough stance against China which had bode well with a majority of Americans. As per Pew Research Center: 73% of US Adults say they have an unfavourable view of China. Around two-thirds of Americans (64%) say China has done a bad job dealing with the coronavirus outbreak.

Around three-quarters (78%) place a great deal or fair amount of the blame for the global spread of the coronavirus on the Chinese government’s initial handling of the COVID-19 outbreak in Wuhan. However, as the virus continues to spread across the globe, the US recorded around 5.3 million of coronavirus cases with more than 165,000 deaths. The US was hit the hardest by the pandemic and the handling of the outbreak by the Trump administration was questioned.

The President has failed to timely respond to the crisis, is also being blamed for sidelining the advice of the experts and played down the severity of the coronavirus crisis. Strong US economy Heading into the election year, the US President was confident that its hard stance on China and a thriving US economy with a historically strong labour market and greater economic security will be the focal points of his election campaign. However, the US economy contracted due to the various forms of lockdown amid the pandemic.

The preliminary Q2 GDP figures show that the US is poised to shrink by a 32.9% – the deepest decline in decades. The pandemic continues to wreak havoc across the globe and the outlook for the third quarter remains murky. COVID-19 Changed the Odds As per the latest polls, the odds have changed – the battleground states look good for Joe Biden.

The presumptive Democratic nominee even has big leads over states like Michigan, Pennsylvania and Wisconsin where the Republicans won by margins of less than 1% in the last election: The most recent data suggest that even Republicans supporters are questioning its response to the coronavirus pandemic. COVID-19 is unlikely to fade away by the election date and combined with the uncertainty about the state of the US economy – the current polls show that Joe Biden is running well ahead of President Trump. Republicans and Democrats: Policies and Markets Under any presidential campaign, tax policies are the primary factor for the markets because of its direct impact on corporate valuation.

The Republicans are supposedly considered as more “market-friendly” compared to Democrats. Cutting Taxes vs Raising Taxes In simpler words, the Republicans encourage tax cuts and believe in an income tax system that does not unfairly target those who create jobs and wealth while Democrats support a more progressive tax structure to provide more services and reduce economic inequality by making sure that the wealthiest Americans pay the highest amount in taxes. After the 2016 election, markets rallied on the assumption of promises of tax cuts and faster economic growth.

However, the trade war has created an uncertain environment for investors and the economy did not progress in the way expected. For Joe Biden to see through this agenda, he plans to make new, bold investments and speed up the timetable for many of the 10-year investments he has already announced. He will pay for the ongoing costs of the plan by reversing some of Trump’s tax cuts for corporations and imposing common-sense tax reforms that finally make sure the wealthiest Americans pay their fair share.

Stock Market Performance by President The below interactive chart shows the percentage gain in the Dow Jones Industrial Average by Presidential term. Despite the pro-business policies, the Dow performed better under Barack Obama over the same time frame as compared to President Trump. Generally, a Democratic win means higher taxes which will negatively affect corporate valuation and the stock market.

However, we have seen that there are higher market returns under Democrats as both the combination of higher taxes and government spending stimulate the economy and support the markets. Source: MacroTrends The Need for More Fiscal Stimulus In a pandemic-induced environment, markets are in a need of more fiscal support from the government. The Fed Chair Jerome Powell has also emphasised on the importance of fiscal stimulus to support the economy.

The Democrats seem to be in favour of more government spending than the Republicans. A Democratic Sweep – Bad for Markets? Leading up to the election date, volatility may be high but markets will eventually adjust to either the Republicans or Democrats policy changes.

Investment opportunities will arise irrespective of a Democratic or Republican win. Some investors may concentrate on certain industries or sectors that can be impacted as the opposing views of both parties on renewable energy, climate, trade policies and health care could affect stocks related to those industries. But most importantly, this election will be geared towards finding a government that will fight the pandemic more effectively and also eased trade tensions with key allies.

A democratic sweep may not be as disastrous as investors fret as historically stocks did also well under the Democrats and in some cases even better than under the Republicans.

Which safe-haven to choose in 2020 – Gold or the Mighty Dollar? In times of uncertainties – be it economical, political or policy-related, investors generally seek safety with haven assets like the US dollar, Japanese Yen, Swiss franc or Gold. Our attention today is on Gold and the US dollar, both of which have had an interesting start to the year so far.

Gold Major equity indices reached fresh record highs in January. Yet, gold price remains in elevated levels around $1,550. It is a situation of “cautious” risk appetite.

The narrative is simple. Investors are still navigating in an environment with high levels of uncertainties, despite easing trade tensions and receding recession fears: QE and record low-interest rates Geopolitical tensions Global growth uncertainties Growing global debt China’s commitment to Phase One Major central banks are pumping money into the economy through quantitative easing and are reducing interest rates to stimulate the economy, hence driving demand for riskier assets. Hard assets like gold are therefore generally sought as investors are hedging against poor fundamentals and the long-term headwinds.

Currently, the fears that the Coronavirus may spread to more countries and dent economic growth are also boosting the short-term outlook for gold. US Dollar Index We are seeing a stronger US dollar but the greenback acting as a safe-haven will likely face some limitations. The Federal Reserve cut interest rates three times last year, mainly due to weaker global growth and trade tensions.

Lower rates and still a stronger US dollar? The US dollar is gaining a competitive advantage over its peers in the currencies market. The US economy is stronger and the Fed is considered to be less-dovish than other central banks.

While some might still need to reduce interest rate further in 2020, the Fed is expected to remain on pause with the expectations of being among the first central banks to be able to start hiking again in 2021. The Tandem Given that gold is internationally quoted against the US dollar, any appreciation or depreciation of the greenback will generally cause an inverse reaction in the price of gold. A strong dollar will therefore negatively affect the price of gold.

Since the beginning of the year, instead of a negative correlation, both the US dollar Index which represents the performance of the greenback against a basket of currencies and the XAUUSD pair are moving in tandem. An alignment which is unusual but occasionally occurs during periods of heightened geopolitical and economic risks. Source: Bloomberg Quantitative Easing and Central Bank Gold Hoarding Quantitative easing is a controversial and unconventional monetary measure used by central banks to pump money into their economies.

Recession fears and lack of inflation growth despite a decade of low- interest rate have forced central banks to reconsider QE in 2019. The ECB has resumed the QE process while the Fed is providing liquidity in the repo markets. While the Fed denies that the interventions are not technically a new phase of QE, such liquidity interventions in the markets instilled fears of a struggling global economy.

As a result, QE is triggering a rally in gold. The Favourite Mighty Dollar At the same time, the US dollar is being favoured in the currencies market as it retains a positive interest rate differential with many countries. Overall, investors are looking for the next best alternative.

The US economy is not shielded from the global headwinds, but are perceived as performing better in comparison to other major countries. Is Gold a Better Safe-Haven? As major economies engage in easing monetary policies, central banks are also piling up on gold.

Emerging markets like China and Russia have also increased their gold reserves over concerns on currencies like the US dollar and Euro. Why? To diversify away from the US dollar?

A stock rally and a stronger dollar do not seem to have tamed the rise of gold. The stock rally is being driven by the QE process, easing trade tensions and receding recession fears, while the US dollar is being favoured over its peers. However, we note that a partial trade deal and a global economy poised for a mini-recovery could limit the potential upside of the US dollar.

The “by-default” strengthening of the US dollar could limit the effectiveness of the actions enacted by the Fed to shelter its economy from global headwinds. Also, the global growth narrative is dependent on China’s commitment to Phase One. Both are moving together, but the magnitude is different.

The current sentiment is positive yet fragile due to the uncertainties, which is creating a favourable environment for the precious metal. About GO Markets GO Markets was established in Australia in 2006 as a provider of online CFD trading services. For over a decade we have positioned ourselves as a firmly trusted and leading global regulated CFD provider.

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Tyson Foods & Skyworks Earnings Reports Tyson Foods and Skyworks are among the two major earnings results released on Monday. The meat processor reported its quarterly results before the open while Skyworks Solutions issued its reports after market close. Tyson Foods, Inc. (NYSE: TSN) Tyson Foods is one of the largest processors and marketer of chicken beef and pork.

The company is considered as one of the world’s largest food companies and a leader in protein. The lockdown measures have seen temporary plant closures, reduced, member attendance, and supply chain volatility, which have forced the company to adjust its product mix and redirect products accordingly. Second Quarter Highlights: GAAP EPS of $1.00, down 15% from the prior year; Adjusted EPS of $0.77, down 36% from the prior year GAAP and Adjusted operating income of $501 million Total Company GAAP and adjusted operating margin of 4.6% Record total Company sales of $10,888 million Secured $1.5 billion term loan facility Tyson Foods has welcomed the actions of the government to strengthen the food supply chain and prioritising support for meat and poultry processors last week, but the company is still anticipating to operate under multiple challenges related to the pandemic which is expected to drive operating costs higher and negatively impact volumes for the remainder of fiscal year 2020.

Given the uncertainty, the Company withdrew its annual guidance and warned of shortages of protein in grocery stores across the US, mainly due to the closures of facilities and a lack of workers. Also, almost 900 employees at a processing plant in Indiana were tested positive for COVID-19. Amid a gloomy outlook for the meat market, the shortages have driven prices of protein like pork and beef higher.

Source: Bloomberg The company’s share price which has remained quite resilient in the month of April tumbled by almost 8% on Monday to $55.32. Skyworks Solutions, Inc. (Nasdaq: SWKS) The semiconductors manufacturer is an innovator of high-performance analog semiconductors connecting people, pace and things. The company’s wireless technologies are playing a key role as the world goes remote.

Leveraged our Sky5® platform across flagship 5G handset launches at Samsung, Oppo, Vivo, Xiaomi and other Tier-1 players Expanded our technology reach across our customized Diversity Receive platforms, with new 5G-centric solutions being deployed across a growing set of customers Ramped wireless remote patient monitoring systems with GE Extended our market leadership in Wi-Fi 6 home and enterprise-grade gateways at Cisco Enabled home security systems at Honeywell Accelerated content across multiple automotive leaders including Volkswagen, Renault, Hyundai and Nissan Launched asset tracking and fleet management solutions at Juniper and Blackberry Powered 5G mobile hotspots with Verizon and AT&T, supporting work-from-home trends Supported 5G Massive MIMO and small cell base station deployments across the U.S., Europe and Japan The company reported earnings of $1.34 per share on revenue of $766m which came above estimates. However, Skyworks provided a weaker guidance outlook for its third quarter between $670m and $710m in revenue. Its share price struggled to find a firm direction in after-hours trading.

Walt Disney, Activision Blizzard, and Beyond Meat are among the few that are expected to report earnings on Tuesday. After the warnings of shortages by the meat giant, Tyson Foods, Beyond Meat will be on investors’ watchlist.

Monday started on a buoyant note as the weekend negotiations between the US and the Chinese officials on structural issues, including intellectual property protection, technology transfer, agriculture among others were productive which encouraged President Trump to extend the 1 st March deadline. Asian stocks and trade-sensitive currencies like the Antipodeans are flashing green. Given that the deadline has been extended, the chances of a trade deal between the two world largest economies also rises which is boding well with investors.

MSCI Asia Pacific Index rose by 0.5% as of writing. Asian stocks edged higher as investors are cheering up the latest signs of progress. Source: Bloomberg Terminal In the Australian share market, the real estate sector was the biggest dragger on the ASX today.

However, the broad optimism in the market helped the index to close in positive territory despite paring gains in the afternoon trade. USDCNH – The Yuan is climbing higher sending the USDCNH pair to its lowest level since July 2018. USDCNH (Weekly Chart) Source: GO MT4 The Antipodeans being trade-sensitive currencies are finding buyers on trade optimism.

However, we can see that AUDUSD and NZDUSD are finding resistance as domestic fundamentals are keeping a lid on the gains. After a strong Retail Sales figures, the NZD pairs gapped higher on the open. However, the pairs are unable to keep the bullish momentum due to the weak fundamentals.

On the technical side, the pairs are in the overbought conditions as per the RSI. NZDUSD and AUDUSD (Hourly Chart) Source: GO MT4 The move in the financial markets in the Asian session following the “delay” announcement has not been huge, but it lifted sentiment and brought relief to the markets!

What do we know about the state-owned oil giant - Saudi Aramco? World’s largest company World’s biggest state-owned oil and gas companies World’s cheapest oil producer A leader in oil production Second-largest proven crude oil reserves All of the above would probably make this upcoming Initial Public Offering (IPO) one of the most hyped IPOs of all time. In 86-year of history, Saudi Arabia has officially stated its plan to float the company on the Riyadh stock exchange.

After first being announced in 2016, the Saudi Aramco officially confirmed the IPO on November 3. However, the size and scope of the IPO were unknown so far. On Sunday, Saudi Arabia’s officials have officially launched the IPO and confirmed that the domestic listing will take place in December.

Vision 2030 The primary purpose of the IPO is to diversify Saudi’s economy and its reliance on the oil industry. After the fall in the oil prices in 2015, Crown Prince, Mohammed bin Salman’s introduced the Vision 2030 which encompasses the desire to reinforce and diversify the capabilities of Saudi’s economy. The Prince has designed its vision on three main pillars: Saudi Arabia’s status as the heart of the Arab and Islamic worlds.

Becoming a global investment powerhouse. Transforming the country’s strategic location into a global hub connecting Asia, Europe and Africa. Hence, transforming Aramco from an oil-producing company into a global industrial conglomerate is a key step in raising funds for the Vision 2030.

Lacklustre International Response Even though the national oil company do have a high degree of independence, the Crown Prince has taken a more active role in the company over the years. As the purpose of the IPO is to raise funds to follow the plans to diversify the economy, the money will not be going to the company, unlike standard IPOs It is, therefore. a distinct consideration for the Aramco investor Bankers were unable to convince many international money managers of the merits of the deal which prompted Aramco to keep the IPO local. Shares will not be marketed in the US, Canada and Japan as originally expected.

The Domestic IPO On Sunday, Aramco finally provided details on what could be the world’s biggest IPO. Currently, the Chinese online retail giant, Alibaba holds the record with an IPO of $25 billion. Valuation Aramco valued the company between the $1.6 trillion to $1.7 trillion which was below their Crown Prince’s valuation of $2 trillion.

The new valuation implies that the investors will yield a dividend lesser than those from other leading oil and gas companies. A Smaller Stake Aramco decided to sell only 1.5% of its company on Riyadh’s Tadawul exchange which amounts about half of the amount that had been considered at an indicative price range of 30 Saudi riyals ($8.00) to 32 Saudi riyals per share. At the top of the range, the company could raise as much as $25.60 billion beating Alibaba’s capital raise in 2014.

The IPO will be split into two tranches: 5% will go individual investors who will have until November 28 to sign up for the IPO 1% to institutional investors who will have until December 4 to subscribe. Despite the lower valuation, a smaller stake and an IPO limited to local investors, Saudi Aramco is confident that they will have sufficient Middle Eastern institutional investors and local demand for a successful IPO. Setbacks in the Oil Market Oil Demand Oil prices have slumped in the last few years and have more than halved since mid-2014 mainly because of: A glut in global supply A lacklustre demand The dramatic fall in prices has forced OPEC members to cut back production to help stabilise supply and cushion the fall in prices.

US shale producers, geopolitical risks, tensions in the Middle East, trade tensions, and slowing global growth are key factors affecting the supply and demand dynamics in the oil market. Oil and Gas Divestment – Climate Activism Another crucial factor that has caused a shift in the oil market is the growing movement towards climate change which are subsequently pushing investors away from the oil and gas sector. The industry has faced intense pressure from activists and we might see the pressure intensifying as such high-scale IPO will undermine their fight against the climate crisis.

Saudi Aramco is among the top carbon dioxide and methane emitters. Those concerns are forcing portfolio managers to divest from oil and gas companies to embrace more sustainable investment. Drone Attacks The crippling attacks have caused major damage to Saudi Aramco’s facilities in Abqaiq and Khurais.

Even though the company recovered quickly and resumed production, investors are taking note of the nation’s vulnerabilities to attacks. As of writing, it was also reported that Yemen’s Houthi rebels has seized Saudi ship carrying oil rig. At a time where Saudi Arabia wishes to diversify and entice foreign investors, keeping the IPO as a local affair has undermined the efforts to open its economy to the world.

The much-muted details of the IPO, setbacks in the oil markets and the gruesome killing of Jamal Khashoggi have trigger hesitations from international investors to buy Saudi Aramco at full price. Saudi Aramco is a leader in the industry and will probably be able to cope with the current challenges of the industry until the industry is faced with the situation of peak oil demand. Oil Prices and the IPO The upcoming IPO will be one of the key determinants of the immediate price action of oil.

The public offering and the OPEC meeting are intertwined and oil traders should monitor these events carefully. OPEC’s de facto leader is Saudi Arabia and it is reported that the Saudis are set to push OPEC countries to make deeper oil cuts to keep oil prices higher. On the trade front, even though there are some conflicting trade headlines, there is much optimism on the trade front to keep oil prices from falling to September lows.

All-in-all, those two main events provide some upward room for oil prices.