United States fails in keeping oil prices high

No sooner had OPEC Plus depressed market sentiment by admitting a potential rollover of its cuts into 2025, Iran reemerged as the main talking point of the markets.

Having downplayed the Israeli retaliatory strike, the oil markets are now anticipating an Iranian attack on Israel, using a large number of drones from Iraqi territory.

A semblance of geopolitical risk premium has lifted ICE Brent futures ahead of a particularly jittery week when the United States votes for its president.

OPEC Plus postponed its planned increase of oil production, bringing back the 2.2 million barrel per day output under eight countries’ voluntary cuts, citing concerns about soft oil demand, particularly on the heels of China’s slowing down, as well as rising non-OPEC supply.

In an attempt to retain its share in gas market, the US Treasury announced new sanctions imposed on Novatek’s Arctic LNG 2 liquefaction terminal, Russia’s latest LNG project in the Arctic, targeting construction service provider Smart Solutions and four LNG tankers run by newly created UAE firms.

European majors flock into US gas, Norway’s state oil firm Equinor boosted its portfolio of non-operated US shale assets after it bought EQT’s gas interests in the northern Marcellus basin for US$1.25 billion, taking its stake to 40.7% as most of the assets are still operated by Expand Energy.

In an attempt to diversify its energy supplying countries, China’s top driller locked in Key Iraqi Deal. China’s top upstream firm CNOOC signed an exploration and production contract with Iraq to develop the onshore Block 7, with the state-owned firm holding 100% interest over a massive territory covering more than 6,000 km2 in Diwaniyah province.

US air and naval presence in Middle East

Defense Secretary Lloyd Austin has ordered more warplanes and Navy ships to the Middle East to maintain US presence in the region as an aircraft carrier strike group is preparing to leave, the Pentagon announced Friday.

Austin ordered additional ballistic missile defense destroyers, a fighter squadron and tanker aircraft, and several Air Force B-52 long-range strike bombers to the region, press secretary Maj. Gen. Pat Ryder said in a statement. 

“These forces will begin to arrive in coming months as the USS Abraham Lincoln Carrier Strike Group prepares to depart,” he added. 

Ryder did not say how many American forces will be in the region with the changes, but as many as 43,000 US troops have been there recently.

The bulked up US military stance comes as Israel has shown no sign of relenting in its war with Hamas in the Gaza Strip and a separate conflict against Hezbollah in Lebanon.

Israel also launched a retaliatory strike on Iran last week targeting military bases and weapons production. That followed Tehran’s strike on Israel exactly one month ago when it fired a barrage of about 180 missiles at the country.

Washington, while pressing for a cease-fire in Gaza and Lebanon, has made little progress on that front ahead of the US presidential election.

Two White House officials, Amos Hochstein and Brett McGurk, were in Israel on Thursday to speak with Israeli Prime Minister Benjamin Netanyahu, but they returned home on Friday with little to show.

In the meantime, US officials have repeatedly said it will defend Israel and US personnel and interests in the region, with the Pentagon last month sending roughly 100 American troops to Israel to operate a provided Terminal High Altitude Area Defense system.

The additional B-52 bombers are notable as it is the second time within a month that the US has ordered the warplanes to the Middle East, where it uses the aircraft to send a warning to Iran and its proxies.

“Secretary Austin continues to make clear that should Iran, its partners, or its proxies use this moment to target American personnel or interests in the region, the United States will take every measure necessary to defend our people,” Ryder said.

 

PSX daily trading volume up 30.6%WoW

Pakistan Stock Exchange (PSX) started the week on a strong note, with KSE-100 index reaching its highest-ever closing at 90,864 points on Tuesday, closing the week ended on November 01. 2024 at 90,859, up by 0.96%WoW. Average daily traded volume was up 30.6%WoW to 649.2 million shares, from 497.1 million shares traded a week ago.

The momentum was fueled by anticipated continuation of monetary easing and the country reporting its first-ever quarterly budget surplus in over 20 years of PKR1.7 trillion during 1QFY25, coupled with strong corporate results.

Regrettably, Pakistan missed two of the IMF's quarterly targets: tax collection marking a shortfall of PKR90 billion, and cash surplus for the provinces, marking a shortfall of PKR182 billion.

CPI for the month was reported at 7.2%YoY, with real interest rate comfortably above 10% at current policy rate levels.

Trade deficit for October 2024 was reported at US$1.4 billion, with exports for the month at US$2.97 billion, up 4.9%MoM.

Foreign exchange reserves held by State Bank of Pakistan (SBP) increased by US$116 million WoW at US$11.15 billion as of October 25, 2024.

On the currency front, PKR largely remained stable against the greenback throughout the week, closing the week at PKR277.7 to a US$.

Other major news flow during the week included: 1) Prime Minister visited Saudi Arabia and Qatar, 2) Saudi Arabia likely to finalize US$1.2 billion oil facility by end December this year, 3) Germany seeks COAS help over IPP deal termination, 4) MoUs signed with Pakistan increased to 34 and 5) T-Bills yields slip by 64-140bps ahead of inflation data.

Pharmaceutical, Wollen, and Leasing Companies were amongst the top performing sectors, while Inv.Banks/ Inv.Cos/ Securities Companies, Leather & Tanneries, and Engineering were amongst the laggards.

Major net selling was recorded by Banks/DFI with a net sell of US$13.0 million. Insurance and Mutual Funds absorbed most of the selling with an aggregate net buy of US$12.3 million.

Top performing scrips of the week were: GLAXO, CHCC, NCPL, SYS, and KAPCO, while top laggards included: KOSM, NBP, PKGS, MUGHAL, and SRVI.

Market is expected to remain positive, with primary focus on the upcoming Monetary Policy Committee meeting, where an anticipated rate cut could further bolster market momentum.

Despite the recent rally, valuations remain attractive, with the market trading at a P/E of 4.0x and offering a dividend yield of 11.4%.

AKD Securities recommend focusing on sectors that stand to benefit from monetary easing and structural reforms, particularly high-dividend-yield stocks that are likely to re-rate as yields converge with fixed-income returns.

Top picks of the brokerage house include: OGDC, PPL, MCB, UBL, MEBL, FFC, PSO, LUCK, MLCF, FCCL and INDU.

 

 

 

Hezbollah attacks Israel

Two separate Hezbollah rocket attacks have killed seven people in northern Israel, authorities say — the deadliest day of such strikes in months, reports BBC.

An Israeli farmer and four foreign agricultural workers were killed when rockets landed near Metula, a town on the border with Lebanon.

Later, an Israeli woman and her adult son were killed in an olive grove near Kibbutz Afek, on the outskirts of the coastal city of Haifa.

Hezbollah said it had fired barrages of rockets toward the Krayot area north of Haifa and at Israeli forces south of the Lebanese town of Khiam, which is across the border from Metula.

The Israeli military identified two projectiles crossing from Lebanon and falling in an open area near Metula on Thursday morning. Four foreign workers who were killed were all Thai nationals.

The military established the zone at the end of September, just before it launched a ground invasion of Lebanon with the aim of destroying Hezbollah weapons and infrastructure.

Thursday’s second rocket attack reportedly hit an agricultural area near Kibbutz Afek, which is about 65km (40 miles) south-west of Metula and 28km from the Lebanese border.

The military said a total of 55 projectiles were fired towards the Western Galilee region, where the kibbutz is located, as well as the Central Galilee and Upper Galilee in the early afternoon. Some of the projectiles were intercepted and others fell in open areas, it added.

The deadly rocket attacks in northern Israel came as two US special envoys met Prime Minister Benjamin Netanyahu in Jerusalem to discuss a possible ceasefire deal to end the war with Hezbollah.

Israel went on the offensive against Hezbollah - which it proscribes as a terrorist organization - after almost a year of cross-border fighting sparked by the war in Gaza.

It said it wanted to ensure the safe return of tens of thousands of residents of northern Israeli border areas displaced by rocket attacks, which Hezbollah launched in support of Palestinians the day after its ally Hamas’s deadly attack on Israel on 7 October 2023.

More than 2,800 people have been killed in Lebanon since then, including 2,200 in the past five weeks, and 1.2 million others displaced, according to Lebanese authorities.

Israeli authorities say more than 60 people have been killed by Hezbollah rocket, drone, and missile attacks in northern Israel and the occupied Golan Heights.

There was no immediate comment from the Israeli military. But dozens of paramedics and other emergency workers have been killed and injured since it intensified its air campaign against Hezbollah five weeks ago.

The military has previously accused Hezbollah of using ambulances to transport weapons and fighters. The IHS has denied having ties to military operations.

Dollar hegemony in danger

The history shows that the world’s base currency can lose its position, as happened with Britain’s pound in the 20th century. The US economy is much smaller as a share of world output now than it was after WWII, when its dominance began. And now some investors are flagging concerns about the potential for chaotic images emanating from the US election that could undermine confidence in American rule-of-law and the broader political system.

In 2009, after the meltdown in US mortgage securities triggered the biggest financial crisis since the Great Depression, China’s central bank chief of the time issued a high-profile call to move the global financial system away from the dollar. 

Fifteen years later, it continues to reign supreme — having weathered the launch of trade wars under Donald Trump’s administration and a welter of US sanctions on other countries that showcased the risk, for some nations anyway, of keeping assets in dollars. The greenback remains the main currency of choice in global reserves and massively dominates the foreign-exchange market.

Multiple stewards of US economic policy over decades have highlighted the importance of democratic, transparent governance and respect for the law in underpinning the dollar’s role. A violent attempt to disrupt the transfer of power occurred in the wake of the last election, and had little impact on markets. But further instances could have consequences, some warn.

“You can’t be complacent around any of these things” with regard to the dollar, Robin Vince, CEO of BNY Mellon — one of the world’s largest custodians of financial assets — said in an interview last week. “As is the case with many tipping points, you don’t quite know when you’re approaching it until you go over the other side.”

Thierry Wizman, a three-decade Wall Street veteran, said “the American exceptionalism narrative could end if traders lose faith in US institutions.”

“The way that could happen in the next few weeks is if we have an election without a definitive result for several weeks, and where people can’t trust the institutions to adjudicate any of these disputes,” said Wizman, a global currency and rates strategist at Macquarie.

Courtesy: Bloomberg

 

 

Who is Sheikh Naim Qassem?

Hezbollah’s Deputy Secretary General Sheikh Naim Qassem has been elected as the new chief of the Lebanese resistance movement after his predecessor Sayyed Hassan Nasrallah was martyred in an Israeli strike on southern Beirut last month.

On Tuesday, Hezbollah's Shura Council, the group's central decision-making body, appointed the 71-year-old cleric to the post.

“Based on faith in Allah Almighty…, adherence to Hezbollah’s principles and goals, and following the established procedure for the election of the Secretary-General, Hezbollah’s Shura Council has elected His Eminence Sheikh Naim Qassem as Secretary-General of Hezbollah, entrusting him with the blessed banner on this journey. We pray to the Almighty to grant him success in this honorable mission of leading Hezbollah and its Islamic resistance,” the council said in a statement, Press TV reported.

The statement also pledged to the fallen victims, fighters of the Islamic resistance as well as well the steadfast and loyal Lebanese nation that Hezbollah will stand by its principles, goals and path to keep the flame of resistance alive and its banner held high until final victory.

Sheikh Qassem is a veteran figure in Hezbollah, having served as deputy secretary general of the Lebanese resistance group since 1991.

He was appointed deputy secretary general under Hezbollah’s late secretary general, Abbas al-Musawi, who was killed by an Israeli helicopter attack in 1992, and remained in the role when Nasrallah became leader.

His political activism began in the Lebanese Amal Movement, founded in 1974. He left Amal in 1979, in the wake of Iran’s Islamic Revolution, which shaped the political thinking of many young Lebanese activists.

He took part in meetings that led to the formation of Hezbollah in 1982.

Sheikh Qassem has long been one of the leading spokesmen for Hezbollah, conducting many interviews with foreign media.

He was born in 1953 in Beirut’s Basta Tahta district, and his family originally hails from Kfar Fila town in Lebanon’s southern Nabatieh province.

 

Saudi Arabia convenes Arab Islamic Summit

Saudi Arabia has announced to hold a joint Arab-Islamic follow-up summit in the Kingdom on November 11, 2024 to discuss the continued Israeli aggression on the Palestinian territories and Lebanon, in addition to the current developments in the region.

This is in line with the directives of Custodian of the Two Holy Mosques King Salman and in continuation of the efforts made by Crown Prince and Prime Minister Mohammed bin Salman (MBS) in coordination with leaders of other Arab and Islamic countries. The summit will be held as an extension of the joint Arab-Islamic summit held in Riyadh on November 11, 2023.

Saudi Arabia reaffirmed its condemnation and denunciation of the crimes and violations that are being perpetrated by the Israeli occupation authorities against the Palestinian people, apart from the continuing Israeli attacks and violations against the people of Lebanon.

This is in light of the Kingdom's follow-up of the current developments in the region, as well as the continued sinful Israeli aggression on the occupied Palestinian territories, and its expansion to include the Lebanese Republic in an attempt to undermine its sovereignty and territorial integrity, and the serious repercussions of this aggression on the security and stability of the region, the Saudi Press Agency said in a statement.