Focus: Equity markets fall as oil continues decline

Short Url
Updated 22 April 2020
Follow

Focus: Equity markets fall as oil continues decline

What happened:

Yesterday virtually all global equity markets fell in reaction to the historic fall of WTI into negative territory. The markets are, however, well above their March lows.

The oil price rout continued into Wednesday. Brent followed WTI in the race to the bottom, reaching levels not seen since 1999. Storage in major hubs like Amsterdam, Rotterdam, Fujairah and Singapore is filling up quickly, and the industry is desperately seeking storage off-shore, underground, or wherever else possible at whatever price. Mid-day Monday CEST, Brent traded at $18.98 per barrel and WTI at $11.42 per barrel — down 1.81 and 1.30 percent respectively

OPEC+ ministers held a conference call to discuss the situation. There were no decisions made about further action — another sign that the drop in demand is beyond any measures that a subgoup of producers can take. This is a demand-driven global problem, requiring global solutions.

The macro picture in the Eurozone looks dismal: The GDPs of Germany, France and Spain are forecasted to shrink by 4 percent, 8.6 percent and 12.4 percent respectively. The ECB will hold a crucial call this evening to discuss government debt in the Eurozone, particularly Italy.

US congress passed another $545bn corona relief package targeting the healthcare sector and small businesses.

Background:

The financial sector is also exposed to the collapse of oil prices as loans turn bad and bets on future prices go badly wrong.

ETFs specializing in oil saw inflows in the billions over the last few months as investors sought to catch the bottom of the market — a dangerous game at the best of times.

The United States Oil Fund (USO) is the world’s largest oil-based ETF with more than $4bn in assets. As WTI dropped below zero, it was forced to change its allocation to longer durations and other kinds of energy derivatives. It had to seek permission from the US SEC to issue further shares.

Equity markets seemed immune to developments in the real economy. The MSCI global traded 20 percent above its low point earlier this year. There is an apparent lack of correlation between what has happened in most major economies as they went into lockdown with steadily declining GDPs.

The recent rally was fuelled by stimulus packages of an unprecedented scale. Still, how companies fare in future depends on the shape and pace of the recovery, which is uncertain

The rally was also fuelled by sliding interest rates, meaning companies paying dividends are king.

The rush into bonds, particularly treasuries, can be explained by investors not looking at government bonds in terms of return on investment but security of investment. We have seen a shift in favor of longer durations like the 30-year treasury, because of their yield.

Where we go from here:

The Bureau International des Exposition agreed to postpone the Dubai EXPO by one year. This is a huge blow to the economy of Dubai, given the importance of travel, leisure, hospitality and conferences to its GDP.

We shall have to look out for credit events in the GCC with oil prices at their current low levels. The weakest economies in the region are Oman and Bahrain.

Hopefully currency events can be avoided, as it becomes harder to defend the dollar pegs when reserves decline. Currencies of oil-exporting countries that do not have a dollar peg depreciated in line with how their economies were affected by the falling oil price.

 

— Cornelia Meyer is a Ph.D.-level economist with 30 years of experience in investment banking and industry. She is chairperson and CEO of business consultancy Meyer Resources.

Twitter: @MeyerResources


Death toll from German Christmas market car-ramming rises to four, Bild reports

Updated 4 min 54 sec ago
Follow

Death toll from German Christmas market car-ramming rises to four, Bild reports

  • Death toll rises to 4, small child among the dead
  • German media point to anti-Islam, far-right sympathies

MAGDEBURG, Germany: The death toll from a car-ramming at a German Christmas market in the city of Magdeburg rose to four on Saturday, according to German newspaper Bild, after a Saudi man was arrested on suspicion of plowing a car into the crowd.
Scores of people were injured in the attack on Friday evening, which came amid fierce debate over security and migration during an election campaign in Europe’s largest economy in which the far right is polling strongly.
Police were not immediately available to comment on the reported casualty figures. Local officials had initially said at least two people were killed and had warned that the toll could rise.
The Bild report said 41 people were critically injured, 86 were receiving hospital treatment for serious injuries and another 78 sustained minor injuries.
German authorities are investigating a 50-year-old Saudi doctor who has lived in Germany for almost two decades in connection with the car-ramming. Police searched his home overnight.
The motive remained unclear and police have not yet named the suspect. He has been named in German media as Taleb A.
A Saudi source told Reuters that Saudi Arabia had warned German authorities about the attacker after he posted extremist views on his personal X account that threatened peace and security.
Der Spiegel reported that the suspect had sympathized with the far-right Alternative for Germany (AfD) party. The magazine did not say where it got the information.
Germany’s domestic intelligence agency declined to comment on the ongoing investigation.
Germany’s FAZ newspaper said it interviewed the suspect in 2019, describing him as an anti-Islam activist.
“People like me, who have an Islamic background but are no longer believers, are met with neither understanding nor tolerance by Muslims here,” he was quoted as saying. “I am history’s most aggressive critic of Islam. If you don’t believe me, ask the Arabs.”
Andrea Reis, who had been at the market on Friday, returned on Saturday with her daughter Julia to lay a candle by the church overlooking the site. She said that had it not been for a matter of moments, they may have been in the car’s path.
“I said, ‘let’s go and get a sausage’, but my daughter said ‘no let’s keep walking around’. If we’d stayed where we were we’d have been in the car’s path,” she said.
Tears ran down her face as she described the scene. “Children screaming, crying for mama. You can’t forget that,” she said.
German Chancellor Olaf Scholz is scheduled to visit Magdeburg later on Saturday.
His Social Democrats are trailing both the far-right AfD and the frontrunner conservative opposition in opinion polls ahead of snap elections set for Feb. 23.
The AfD has led calls for a crackdown on migration to the country.
Its chancellor candidate Alice Weidel and co-leader Tino Chrupalla issued a statement on Saturday condemning the attack.
“The terrible attack on the Christmas market in Magdeburg in the middle of the peaceful pre-Christmas period has shaken us,” they said.
A leading member of Scholz’s Social Democrats in the Bundestag parliament warned against jumping to conclusions and said it appeared the attacker did not have an Islamist motive.
“Now we have to wait for the investigations. It seems that things are different here than was initially assumed,” Dirk Wiese told the Rheinische Post newspaper.


Eight convicted in France over murder of teacher who showed Prophet caricature

Updated 35 min 13 sec ago
Follow

Eight convicted in France over murder of teacher who showed Prophet caricature

  • Eight sentenced for roles in hate campaign against teacher
  • Two associates of killer sentenced to 16 years for complicity, the father of pupil sentenced to 13 years for inciting hatred

PARIS: A French court sentenced eight people to prison terms ranging from one to 16 years for their roles in a hate campaign that culminated in the murder of a teacher who had shown caricatures of the Prophet Muhammad in class, local media reported.
Days after Samuel Paty, 47, showed his pupils the caricatures in October 2020, an 18-year-old Chechen assailant stabbed and beheaded him outside his school in Conflans-Sainte-Honorine, near Paris. The assailant was shot dead by police moments after.
Among those convicted on Friday was the father of a student whose false account of Paty’s use of the caricatures triggered a wave of social media posts targeting the middle-school teacher.
The court sentenced Brahim Chnina to 13 years in prison for criminal terrorist association, according to broadcaster Franceinfo. Chnina had published videos falsely accusing the teacher of disciplining his daughter for complaining about the class, naming Paty and identifying his school.
Abdelhakim Sefrioui, the founder of a hard-line Islamist organization, received a 15-year sentence. Both Sefrioui and Chnina were found guilty of inciting hatred against Paty.
Many Muslims consider any depiction of the Prophet Muhammad to be blasphemous. Sefrioui’s lawyer said his client would appeal the decision, according to French media.
Two associates of Paty’s killer, Abdullakh Anzorov, were also convicted. Naim Boudaoud and Azim Epsirkhanov were sentenced to 16 years in prison for complicity in a terrorist killing. Both had denied wrongdoing, according to Franceinfo.
Last year, a court found Chnina’s daughter and five other adolescents guilty of participating in a premeditated conspiracy and helping prepare an ambush.
Chnina’s daughter, who was not in Paty’s class when the caricatures were shown, was convicted of making false accusations and slanderous comments.
French media reported that the 13-year-old made the allegations after her parents questioned why she had been suspended from school for two days.


Rafael Nadal delights fans after landing in Jeddah for Next Gen ATP Finals

Updated 39 min 11 sec ago
Follow

Rafael Nadal delights fans after landing in Jeddah for Next Gen ATP Finals

  • The Spanish tennis legend toured the old city of Al-Balad and greeted a massive crowd at King Abdullah Sports City

JEDDAH: Tennis superstar Rafael Nadal began his three-day visit on Friday to Jeddah, where he took a tour of Al-Balad and met players and fans at the Next Gen ATP Finals presented by PIF.

The Spanish legend started his time in Jeddah by visiting Al-Balad and taking a tour of Jeddah Historic District before making his way to King Abdullah Sports City, where the Next Gen ATP Finals are being played.

Nadal led a meet-and-greet and attended a prize-giving ceremony at an U-14 ATF tournament, which was held at a stadium next to the main competition.

The 22-time Grand Slam champion met future stars of tennis competing in the Next Gen ATP Finals — Alex Michelsen, Jakub Mensik and Joao Fonseca — before thrilling the massive crowd in the fan zone, where he signed autographs and posed for selfies.

Nadal, who is working with the Saudi Tennis Federation to support its ambition of inspiring one million people to engage — from playing to administration — with tennis by 2030, continues his tour of Jeddah on Saturday by meeting Saudi Davis Cup players ahead of the semifinals of the Next Gen ATP Finals.


Semifinal lineup set for Next Gen ATP finals in Jeddah

Updated 42 min 45 sec ago
Follow

Semifinal lineup set for Next Gen ATP finals in Jeddah

  • Learner Tien stuns top seed Arthur Fils to face Alex Michelsen at King Abdullah Sports City
  • Van Assche defeats Basavareddy to set up clash with undefeated Joao Fonseca in Saturday’s other match

JEDDAH: The semifinal lineup for the 2024 Next Gen ATP Finals presented by PIF was confirmed on Friday following a dramatic conclusion to the group stage in Jeddah.

Sixth seed Learner Tien produced a sensational performance against top seed Arthur Fils to open the evening session with a 4-2, 4-2, 3-4 (4-7), 4-3 (7-5) victory that created an electric atmosphere inside the King Abdullah Sports City stadium.

With only the winner advancing from the Blue Group to the semifinals, the tension was present from the first point, and it ensured a match full of drama and excitement. Despite being separated by 102 places in the PIF ATP Rankings, it was the lower-ranked Tien who seized control, securing early breaks in the first two sets to take a commanding 2-0 lead.

However, Fils refused to go down without a fight. The World No.20 from France, buoyed by the majority of the enthusiastic support, soon displayed his world-class ability to fight back and win the third set. A knife-edge fourth set eventually went to another tiebreak before Tien emerged victorious to continue a remarkably successful week in his first professional tournament outside the US.

The 19-year-old was supported by fellow American Alex Michelsen during his match against Fils, but the two friends will become opponents on Saturday when they play each other for a place in the final.

Tien said: “It was great from the moment we walked out. The crowd was great, the atmosphere was really good, and it carried throughout the match, so it was really fun playing out there.”

In the first of the two winner-takes-all group stage matches on Friday, sixth seed Luca Van Assche claimed the runner-up spot in the Red Group by defeating seventh seed Nishesh Basavareddy 3-4 (2-7), 4-3 (9-7), 4-2, 4-2 following an entertaining and competitive contest.

The 20-year-old Frenchman reached the last four on his debut in Jeddah last year and has now matched that result, having secured two wins out of three in the group stage.

Van Assche will next face Joao Fonseca on Saturday for a place in the final after the 18-year-old Brazilian topped the Blue Group with a marathon 3-4 (4-7), 4-3 (10-8), 4-3 (7-5), 3-4 (4-7), 4-3 (7-5) victory over the already-eliminated third seed Jakub Mensik in the last match of the day.

On playing Fonseca in the semifinals, Van Assche said: “He’s an unbelievable talent. I practiced with him four or five days ago, so he’s a tough opponent for sure. I know that I can beat him, so it will be a very good match — a tough one. But you practice to play these matches, so it’ll be cool.”

Day three got underway with second seed Alex Michelsen confirming his place as the winner of the Red Group after fourth seed Juncheng Shang retired from their match. The 20-year-old American was leading 4-1, 1-1 before China’s Shang called time early, having struggled with illness over the last two days.

Michelsen has enjoyed a successful return to Jeddah. He went winless on his debut appearance in 2023, but has been a leading star this year, winning all three of his group stage matches to ease into the semifinals.


Green Falcons arrive in Kuwait for 26th Arabian Gulf Cup

Updated 21 December 2024
Follow

Green Falcons arrive in Kuwait for 26th Arabian Gulf Cup

RIYADH: The Saudi national football team arrived in Kuwait on Friday ahead of the 26th Arabian Gulf Cup to take place from Dec. 21 until Jan. 3 next year.

Upon arrival at Kuwait International Airport, the team was welcomed by Deputy Saudi Ambassador to Kuwait Yahya Al-Qahtani and several other officials, state news agency SPA reported.

The Green Falcons are scheduled to conduct an evening training session on Saturday at the Yarmouk Club Stadium, with the first 15 minutes opened for members of the media.