(MENAFN- Investor Ideas) Investorideas ( ), a go-to platform for big investing ideas releases market commentary from Samer Hasn, Senior Market Analyst at XS.
Crude oil is back in sharp decline today with more than 1.5% losses for both brent and WTI.
The renewed decline in oil prices comes as hopes fade over the possibility of providing more support packages for the Chinese economy, which reinforces concerns about the future of demand for crude from its largest importers. The declines also come amid concerns about the effects of Trump's policies that could weaken the Chinese Economy and deepen those concerns.
The Standing Committee of the Chinese Legislative Council, after its meeting that lasted throughout the working days this week, approved a package equivalent to $1.4 trillion as part of a debt swap program. However, the disappointment comes with the lack of disclosure of financial measures to support the economy directly, and the debt swap measures will only push the maturity dates of the debts forward, according to what was reported by the Wall Street Journal, citing economists.
Adding to these disappointments, concerns about China's economic recovery could intensify if Donald Trump returns to the White House next year. He has signaled a willingness to reintroduce protectionist policies, potentially imposing tariffs as high as 60% on Chinese imports. Such measures would likely hurt China's export sector-a critical driver of its growth recovery-and heighten worries about future crude demand, which explains today's steep losses.
On the other hand, any of the policies that Trump previously spoke about may not actually be implemented, but rather will be a tool to negotiate new terms of trade and do not mean a rupture between the two economies, according to John Paulson, who is considered to take over the Treasury Department in the new administration.
This is not the only thing that the oil market may fear, as Trump's intention to support the production and extraction of fossil fuels and ease regulatory restrictions will put downward pressure on crude prices with the increase in supply.
I also believe that uncertainty may cloud the oil market regarding the likely path of inflation and interest rates in the United States, as Trump's protectionist policies may fuel inflation, which may encourage the Federal Reserve to slow down the pace of rate cuts.
While this was reflected in Jerome Powell's cautious tone after the central bank announced its decision to cut rates by 25 basis points. Trump's victory also weakened the possibility of cutting interest rates in January of the new year, to remain below 30% after exceeding 60% a month ago, according to CME FedWatch Tool figures.
As for the geopolitical side, we do not find any certainty regarding the possible steps that Trump may take towards the Middle East front. The escalation of the conflict between Iran and Israel may lead to the disruption of oil supplies from the region, which may lead to a rise in inflation again, which is what Trump may not want. This is because reducing fuel prices is a major part of Trump's plan to reduce inflation.
On the other hand, Trump's intention, at least the declared one, to de-escalate the situation in the region may clash with the desires of Israeli Prime Minister Benjamin Netanyahu and behind him the far-right coalition who call for expanding the war and are counting on the Republican administration to give them a free hand in the region. While these conflicting interests may keep the uncertainty high in the markets.
About Investorideas - Big Investing Ideas
Investorideas is the go-to platform for big investing ideas. From breaking stock news to top-rated investing podcasts, we cover it all. Our original branded content includes podcasts such as Exploring Mining, Cleantech, Crypto Corner, Cannabis News, and the AI Eye. We also create free investor stock directories for sectors including mining, crypto, renewable energy, gaming, biotech, tech, sports and more. Public companies within the sectors we cover can use our news publishing and content creation services to help tell their story to interested investors. Paid content is always disclosed.
Disclaimer/Disclosure: Investorideas is a digital publisher of third party sourced news, articles and equity research as well as creates original content, including video, interviews and articles. Original content created by investorideas is protected by copyright laws other than syndication rights. Our site does not make recommendations for purchases or sale of stocks, services or products. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. All investing involves risk and possible losses. This site is currently compensated for news publication and distribution, social media and marketing, content creation and more. Contact management and IR of each company directly regarding specific questions. More disclaimer info: More disclaimer and disclosure info Learn more about publishing your news release and our other news services on the Investorideas newswire /News-Upload/ Global investors must adhere to regulations of each country.
MENAFN08112024000142011025ID1108866624
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.