Oil back in the driver’s seat

00:00:00: Middle East tensions are flaring up again, oil prices rebound lifting bond yields and reviving inflation concerns around the globe.

00:00:07: Energy stocks are attracting fresh inflows while Chinese technology stocks may start gaining investors' attention.

00:00:15: thanks to massive government support for AI infrastructure in China.

00:00:23: Korean and Taiwanese peers are today dealing with large swings in high volatility.

00:00:29: So welcome to Swiss Coats.

00:00:31: Daily Market Talk is Thursday, the ninth of July.

00:00:35: I'm Yipega Skardishkea.

00:00:36: We will talk about latest market drivers & money flows.

00:00:40: But before we do And as always Please keep in mind that opinions on my own This isn't financial advice.

00:00:55: So the latest news is not brilliant.

00:00:57: The Middle East tensions are flaring up again, US President Donald Trump called the end of the ceasefire yesterday and the U.S continued bombing Iran last night.

00:01:08: Washington also revoked a recent easing on Iranian sanctions meaning that Iran will be able to sell tens of millions of barrels of oil currently on sea And Tehran said It will launch a large-scale retaliatory operation against the US bases across the Gulf region.

00:01:26: Meanwhile, Russia is now limiting some energy exports to avoid domestic energy shortages aimed at Ukrainian attacks on its energy facilities.

00:01:34: What a wonderful world!

00:01:36: So latest turn of events in the Middle East reversed short term bearish outlook for oil prices.

00:01:42: U.S.

00:01:42: query rose up to thirteen percent since last week's deep and it which is also the two hundred day moving average to the upside with increasing possibility of seeing the barrel reach and bridge the eighty dollar per barrel level.

00:02:01: Brand critter on the other hand, shortly traded above the eighty dollar per barrel market yesterday.

00:02:06: Both are slightly lower today but short-term risks remain tilted to upside.

00:02:12: But immediate upside pressure in oil prices could be less severe than one we saw during the first weeks of the Iranian war because first the markets just got used to the tensions there and disruptions in this trade off formers.

00:02:25: therefore the surprise effect is much less then fresh news and overreaction from the global markets will also be limited.

00:02:35: Second, a number of ships already transited through the Strait of Hormuz delivering oil to key markets.

00:02:40: A few days ago remember South Arabia cut the price off its oil significantly for Asian clients to get millions of barrels quickly absorbed by Asian markets.

00:02:51: Third we have seen Oil market go from supply shortage due to geopolitical tensions to supply excess in a blink of an eye over past three months especially few weeks, meaning that as the tensions de-escalate and traffic in the straight of homes is restored oil will continue to flow.

00:03:09: And prices will fall again.

00:03:14: Oil reserves and a pretty high-paying threshold as they waited weeks before starting to replenish their oil reserves.

00:03:22: As the prices started to fall, They wouldn't jump in if prices were to rise again.

00:03:26: But on the other hand If the tensions in the Middle East prolong beyond a few weeks it will mean trouble again Because first, we don't know how much oil China is sitting on today and when the situation will get critical for them.

00:03:39: That's a total suspense.

00:03:40: Second If Iran starts attacking energy infrastructure across neighboring Gulf countries The long-term damage could reduce supply outlook again And vanish to actual supply block quickly.

00:03:53: Third, the world's oil reserves plunge sharply in the first three months of Iranian war Leaving market with a smaller cushion.

00:04:02: So we can say that today, We are somewhere close to the square one of the Iranian War.

00:04:06: But this time we have some valuable experience on how quickly things could turn around.

00:04:11: I think that fact that midterms in the US are approaching will also encourage the United States and President Trump To find a rapid solution to avoid further prolongation Of The war.

00:04:21: not that U.S cares about the war In Iran but the president cares About energy prices into November Midterms And it's nothing good That u.s guessing price are still EIGHTY-FIVE percent higher than when they were at the start of this year.

00:04:37: The Fed, on other hand has made a major U-turn due to the rise in energy prices from expecting or more rate hikes into the end of the year, and a feminist release yesterday showed nothing but uncertainty among the FOMC members.

00:04:53: There was no clear policy path there.

00:04:55: The menace rather pointed at that wide range of scenarios for how inflation in US will evolve.

00:05:01: Duh!

00:05:01: At this point nobody really has a crystal ball to predict complex geopolitics off the Middle East on how the resolution.

00:05:08: So at the end of today, it will all come down to how fast US could restore stability in their region and keep oil prices in check.

00:05:16: Good luck with that!

00:05:38: slowly sailing toward a two point ninety percent mark multi-decade higher level.

00:05:43: Rising yields are waiting on sentiment across the global financial markets, The German Dax and French Kekechon tank more than two per cent yesterday while Dojo's industrial index in the US fell more then one percent as investors piled into energy stocks for this second session narrow.

00:06:02: The SPZR Energy Fund rebounded more to trading sessions, while the Nasdaq hundred outperformed the rest with a point twenty-seven percent gain as investors saw at Refusion Technology heavy index on thinking that maybe companies there are less exposed.

00:06:29: thirty billion US dollars worth of a deal with Apple.

00:06:33: NVIDIA really, three point sixty five percent unused at China will allow the companies by small amount of H two hundred chips from NVIDia.

00:06:42: Bloomberg on other hand pointed out that the fact that nvidia has now become cheaper than many off their sampey five hundred companies including The chocolate company Hershey's.

00:06:52: indeed MVSP ratio fell to thirty-five and the price sales ratio slipped below twenty after and he saw his stock price retreat nearly twenty percent from the mid-May to early June.

00:07:04: Today, Nvidia's stock prices are around thirteen per cent lower than its May peak And valuations that I just cited are based on this level.

00:07:12: Overall The reescalating in the Middle East tensions could hinder the ongoing rotation.

00:07:17: trade toward non technology pockets off of market But energy space and laggers over past few days could eventually see inflows return.

00:07:28: The AI spending to remain robust benefits from another strong rally and the latter is unfortunately compromised today.

00:07:35: First, investors are uncomfortable with big AI spending increasing their finance by debt And latest bond sale from Amazon came as a warning this week!

00:07:45: The demand for the latest US USD worth of Bond offering was just one point six times over subscribe versus four times what average for U.S high-grade corporate deals.

00:07:56: Second, Hejai warns that the data center construction growth may be slowing and that's outright negative news for future revenue outlook.

00:08:10: Third, valuations are still very high even after a recent pullback across technology stocks whether we're talking about big tech or any kind of chip makers.

00:08:20: Interestingly though, the technology outflows from US, South Korean & Taiwanese markets all benefit a tank to the Chinese big technology names but very, very recently.

00:08:30: So the Chinese technology has been diverging negatively from their global peers' members since past six months and so But Alibaba searched well for saying yesterday's trading session on reports pointing to improving June quarter trends.

00:08:45: It's been awhile I've been waiting for the Chinese Technology to perform well!

00:08:49: The question is could the convergence continue?

00:08:54: China is very serious in this technology war.

00:08:56: The government recently rolled out a U.S.

00:09:07: Notable discount to global peers in numbers.

00:09:10: Hansang's PE ratio is sitting around twelve point sixty two level today with a price-to-sales ratio of one point thirty nine only.

00:09:18: yes, One point thirty-nine while NASDAQ hundreds P ratio stands near thirty seven almost three times hansangs With a price the sales ratio above six.

00:09:28: that more than four times huntsang.

00:09:30: So the question today is whether the Chinese stocks could catch a good momentum again when consumer health in China remains poor and fears competition among the Chinese technology makers continue to worry investors?

00:09:52: This episode of Market Talk has been helpful and it has been insightful to you, so please do not hesitate.

00:09:59: To leave your comments, reactions and questions below.

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00:10:20: So let's know that you enjoy them.

00:10:22: So I will meet you again tomorrow.

00:10:24: And until then, good day trading!