Dubai Be(comes) Exclusive

Posted on March 14, 2022 by Exclusive Capital Team

Last year, we made a promise.

A promise to return with a bang!

And that’s precisely what we did.

Exclusive went back to Dubai. Bigger. Better. And definitely Stronger.

This is the story of how Dubai became Exclusive!

This year, Exclusive was the sine qua non of the iFX EXPO Dubai as the panel of speakers included our very own Chief Economist & Senior Fund Manager, George Kessarios, and our Chief Sales Officer, Peter Leonidou, who shared their vast knowledge and expertise on topics relating to the financial services sector.

The best thing about events like the iFX EXPO Dubai is the chance to get up close and personal with industry professionals and gain new and meaningful face-to-face connections. Our Exclusive A-Team did a phenomenal job spreading Exclusiveness and showcasing our new, pioneering products and services that can empower brands, businesses, and organisations to achieve their investment goals through sustainable growth.

Team, we did it!

This. Is. Exclusive!

Hang Seng tumbles 5% after a recent Covid wave in China

Posted on March 14, 2022 by Vrasidas Neofytou

Hong Kong’s Hang Seng index dropped to as much as 5% on Monday morning as China is seeing its worst COVID outbreak in more than two years, with major cities falling back into lockdowns, whilst other cities are also seeing tougher social restrictions.

Investors are concerned that China’s economic growth may be harmed because of the recent Covid wave, which caused the Chinese government to enforce complete or partial lockdowns in the country’s economically prosperous southern provinces.

Hang Seng index, 1-hour chart

As a result, equity traders liquidated Chinese assets, with the Hang Seng Index falling 5% to 19,531, a total loss of 15% since last week, the Shanghai Composite Index falling 2.5 percent to 3,223 and the CSI300 index falling 3% to 4,174.

Worst Covid outbreak in two years: “Zero-Covid” stance by government

China is experiencing the largest Covid outbreak since the end of nationwide lockdown in March 2020, with over 1,800 new confirmed coronavirus cases reported on Sunday, March 13, the highest daily figure in two years and more than triple the number reported on Saturday.

In keeping with Beijing’s zero-tolerance policy of eliminating transmission as rapidly as possible, the southern tech hub Shenzhen and the north-eastern province Jilin have imposed targeted lockdowns, conducted mass testing, and suspended public transportation.

Shenzhen, often known as China’s Silicon Valley, connects Hong Kong’s economic centre to China’s mainland, with a population of over 17 million people.

As a result, the city has become one of the most important manufacturing centers in the world, particularly for electronics, and it has the 4th world’s largest container port.

Finally, China is the world’s largest crude oil and other commodities importer and the growing COVID cases in the country will raise concerns over demand for those commodities, coupled with worries over supply chain disruptions.

Hang Seng index, 1-hour chart

Worst Covid outbreak in two years: “Zero-Covid” stance by government

Shenzhen, often known as China’s Silicon Valley, connects Hong Kong’s economic centre to China’s mainland, with a population of over 17 million people.

As a result, the city has become one of the most important manufacturing centers in the world, particularly for electronics, and it has the 4th world’s largest container port.

Euro breaks below $1,10 despite hawkish ECB stance

Posted on March 11, 2022 by Vrasidas Neofytou

The common currency lost almost 1% on Thursday, falling below $1,10 key support level as the growing concerns over the ongoing Ukraine-Russia military conflict and worries over stagflation offset the hawkish turn of the European Central Bank to normalize monetary policy.

EUR/USD pair, Daily chart

The Russian invasion of Ukraine has weighed on Euro which fell to as low as $1,08 mark on Monday, March 07, its lowest level since May 2020, before bouncing above $1,11 on Thursday in hopes for a positive result on the planned talks between Ukraine and Russia’s foreign ministers in Turkey, which eventually faded.

Forex investors jumped into the safety of the U.S dollar, Japanese Yen, and Swiss Franc and moved away from the war-sensitive Euro following the geopolitical uncertainty and worries over Eurozone’s growth outlook.

The DXY-U.S. dollar index has gained more than 3% this year, rallying towards the 99,50 mark, its highest level in 21 months, pushing the EUR/USD pair below $1,10 key psychological support level, its lowest level in 2 years.

The hawkish stance from ECB and the threat of stagflation:

The Euro jumped to as high as $1,1120 yesterday after the ECB’s chair Christine Lagarde said that the bank will phase out its pandemic-led bond buying program in Q3, 2022, opening the door to an interest rate hike at the end of the year to curb surging inflation, before reversed below $1,10 on Ukraine crisis and stagflation fears.

According to ECB President Christine Lagarde, “Any adjustment to the key ECB interest rates will take place sometime after the end of our net purchases under the APP (Asset Purchase Program) and will be gradual.”

Investors worry for a stagflation period in the Eurozone’s economy as ECB modestly downgraded its growth forecasts for 2022 and next, ramping up inflation expectations, with Lagarde adding that the Russian invasion was a “watershed for Europe”, which would curb growth but boost inflation.

Eurozone has been struggling with surging oil and natural gas prices, record-high electricity costs, and soaring industrial metal prices since the Q4, 2021 when Russia started increasing its troops on Ukraine’s borders, which are posing a significant threat to the continent’s commodities-dependent economies and to the much more vulnerable to Russian sanctions Europe’s manufacturing sector.

Global markets bounce, commodities fall ahead of Russia-Ukraine talks

Posted on March 10, 2022March 10, 2022 by Vrasidas Neofytou

Risk-on mood in the financial markets on Thursday morning as investors gained confidence from the planning diplomatic talks between Russian and Ukraine later today, sending global equities to weekly highs, and plunging energy, grains, and industrial metal’s prices from their multi-year highs.

Tech-heavy Nasdaq Composite gained 3,5% last night, posting its best day since November 2020, following by 2,5% gains in Dow Jones and S&P 500, while the positive sentiment continued this morning into the Asian markets, with Japan’s Nikkei 225 adding 4%, while the Chinese markets rallied 2%.

Nasdaq Composite, 1-hour chart

Looking in the currency market, the DXY-U. S dollar index lost some steam, falling off recent 22-month highs of 99 mark, with Euro bouncing back above $1,10 level, and the Pound Sterling crossing above $1,315.

Ukraine’s compromise?

Many catalysts triggered the sell-off in the energy market and the rally on the equities, including comments from the Ukraine’s PM Zelenskiy, saying that he is prepared for certain territorial compromises and “neutrality” on the today’s planning talks with Russia, reversing the negative sentiment and increasing the possibility of a diplomatic solution to the military conflict.

All eyes will be turned on Turkey today, as the Russian foreign minister Sergei Lavrov and the Ukrainian counterpart Dmytro Kuleba will have their first planning meeting since Russia invaded Ukraine on February 24, 2022.

Commodities sell-off:

Crude oil prices lost as much as 14% yesterday, posting their biggest one-day drop since April 2020, with Brent and WTI prices falling from the intraday highs of $132/b and $127/b to intraday lows of $106/b and $104/b respectively, before bouncing to near $112/b on Thursday morning.

Brent oil, 1-hour chart

Energy investors sold some positions in the European natural gas Dutch TTF contract, sending the price to near €150/MWh, more than 50% lower from Monday’s record high of €345/MWh following the reports that some European countries will not ban oil and gas imports from Russia.

Hence, the comments from the United Arab Emirates energy minister Suhail al-Mazrouei and UAE’s ambassador to Washington added bearish pressure on energy prices, saying that their country will be encouraging OPEC to consider higher output to fill the supply gap due to sanctions on Russia after it invaded Ukraine.

In addition, the collapse of the oil and gas prices was also supported from news of possible progress by the U.S. administration in encouraging more crude oil output from other sources to compensate for supply disruptions following Russia’s invasion, mainly from OPEC countries such as Iraq, and UAE, or even Iran and Venezuela which are under oil embargo from the Western countries.

Both crude oil contracts broke above $130/b level on Monday, a 13-year high, after U.S. and UK banned oil and gas imports from Russia, the world’s third-larger oil producer, just behind U.S. and Saudi Arabia, with 11 million bpd production.

Other commodities that have seen significant rallies since the war in Ukraine also pulled back Wednesday, including Wheat which lost -7%, Palladium -6%, Gold, and Silver with 3% losses, while base metals Copper, and Aluminium dropped off more than 5% from their recent record highs.

Gold and Palladium hit fresh record highs after Russian sanctions

Posted on March 9, 2022 by Vrasidas Neofytou

Investors have jumped into the safety of precious metals since the start of the Ukraine-Russian conflict on mounting concerns that the invasion of Ukraine and the Russian economic sanctions could support the rally in the commodity complex, skyrocketing inflation rates which would eventually damage the global economic growth after the pandemic.

The dollar-denominated precious metals advance higher despite the DXY-dollar index breaking above the 99 mark, its highest level since May 2020 on Ukraine concerns.

Gold, Daily chart

Gold jumps to $2,070/oz:

Gold rallied to near its record high of $2,070/oz and Silver jumped to $27/oz on Tuesday afternoon supported by safe-haven demand after U.S. President Joe Biden together with Western allies announced a ban on Russian crude oil and natural gas imports, in response to the country’s invasion of Ukraine.

Despite the Western sanctions on Russian energy doesn’t affect gold and silver exports much, investors preferred the safety of precious metals as they think that the new sanctions consist of a further escalation event between Russia and the U.S. and its allies.

Gold gained more than $200/oz or 12% in 2022, as traders jumped into inflationary-hedged yellow metal amid the threat of an inflationary shock to the global economy, as the Russian sanctions could increase the cost of raw materials such as energy (oil, gas, coal), food (wheat, corn, soya), and industrial metals (copper, aluminium, nickel, palladium).

Palladium hits $3,400 on supply concerns:

Another winner of the Russia-Ukraine conflict is the Palladium-crucial for the automobiles sector, which saw its price gaining more than 40% since the Russian invasion of Ukraine on February 24, 2022, and more than 100% since mid-December 2021 when Russia started moving troops on the Ukraine borders.

Palladium, Daily chart

Palladium, which is used by carmakers to remove toxic emissions from exhaust fumes, hit an intraday all-time high of $3,400 on Monday, March 07, 2022, as the commodity traders concern over potential for a longer period of supply disruptions for the metal as Russia is a major Palladium producer, accounting for 40% (2.6 million ounces in 2021) of the total production across the world.

However, the price of the auto catalyst metal eased off Monday’s record high towards $3,000 key level after Russian and Ukrainian officials announced new rounds of ceasefire talks, prompting some investors to lock in profits from a parabolic rally.

Brent hits $113/b, European gas climbs to €200/MWh as buyers move away from Russian oil & gas

Posted on March 2, 2022 by Vrasidas Neofytou

The energy market outshines again, with both Brent and WTI crude contracts climbing above the $111/b mark for the first time since July 2014, while European gas prices jumped up by 55% to near €200/MWh level on fears for a historic amount of Russian energy supply disruptions from the fragile situation in Ukraine, together with the financial and energy sanctions against Russia.

The international crude benchmark Brent surged to as high as $113/b on Wednesday morning for the first time since July 2014, while the U.S.-based WTI rose 7%, breaking above $111/b, its highest since August 2013.

Brent crude contract, 1-Hour chart

The global oil market was already tightening significantly and with little spare capacity before the invasion, with both Brent and WTI prices gaining more than 40% year to date and 95% from the beginning of 2021, with IEA warning that global energy security is under threat following Russia’s invasion of Ukraine.

Record-high European gas prices:

European benchmark Dutch TTF natural gas futures rally 55% this morning to a new all-time high of €195/MWh, while the U.S.-based Henry Hub gas prices climbed to near $4,90, posting a two-week high.

The invasion of Ukraine has created a dark cloud over the global gas sector as Russia plays a material role in supply since it produces almost the 20% of global natural gas and it accounts for about 40% of Europe’s gas consumption.

Most gas supplies transfer to Europe through pipelines including “Yamal-Europe”, which crosses Belarus and Poland to Germany, “Brotherhood” gas pipeline, which crosses Ukraine and Slovakia to Austria and Italy, and the off-shore Nord Stream 1, which goes directly to Germany through Baltic Sea.

Crude oil buyers are avoiding Russian crude:

The global energy market is facing its biggest oil and gas disruption since the 1990-91 Gulf War when Saddam Hussein invaded Kuwait, as physical energy buyers are avoiding Russian crude, gas, and refined products and scrambling to find alternatives.

Many refiners around the world have begun to shun Russian crude and seek alternative grades, citing sanctions exposure risk and difficulties obtaining financing and insurance.

Energy traders believe that already more than 2 million barrels per day of Russian oil exports left without buyers and that could increase to 4 million bpd or more in the next days if the war situation deteriorated.

Russia exports some 4 million to 5 million barrels per day of crude oil, and 2 million to 3 million barrels per day of refined products, while its total crude production comes to near 11 million per day.

Hence, buyers of Russian oil are facing difficulty over payments and vessel availability due to sanctions with BP cancelling fuel oil loadings from a Russian Black Sea port.

On top of that, fully replacing Russian oil and gas supplies to Europe would not be achievable in the short term, boosting energy prices to multi-year highs.

Russia exodus:

Major oil and gas companies are reviewing their business activities in Russia, with some of them such as Exxon, Shell, Equinor, and BP already announcing exodus from their Russian energy investments and future projects due to the war in Ukraine.

SPR release cannot calm the surging oil prices:

The US and other major economies have agreed to a coordinated release of 60 million to 70 million barrels of oil stockpiles to mitigate supply disruptions, but without achieving stability in the oil market until now.