Core Viewpoint - Saudi Arabian equities experienced their largest decline in nearly nine months, influenced by geopolitical tensions in Yemen, Iran, and Venezuela, with the Tadawul All Share Index dropping 1.8% and closing at its lowest since October 2023 [1][2]. Group 1: Market Performance - The Tadawul All Share Index fell 1.8%, marking the most significant drop since April when US tariffs affected global markets [1]. - The index closed at its lowest level since October 2023, indicating a prolonged period of low performance [1]. - Saudi Arabian equities are facing their worst annual performance since 2015, attributed to subdued oil prices impacting public spending and company earnings [4]. Group 2: Geopolitical Influences - Ongoing clashes in Yemen between Saudi-backed forces and UAE-backed separatists have prompted Saudi Arabia to call for talks among southern factions [2]. - Iran's Supreme Leader has attributed recent protests to external forces, further complicating the regional geopolitical landscape [2]. - The current weakness in the Saudi market is linked to these geopolitical issues, although there is no immediate indication of escalation, particularly regarding Yemen [3]. Group 3: Future Outlook - The outlook for Saudi market performance in 2026 is mixed, with some analysts suggesting potential upside from changes in foreign ownership limits, while others note a general lack of market momentum [4]. - Potential disruptions in the oil market due to political changes in Venezuela may impact stock performance, but any effects will be felt only after crude trading resumes [3].

Core Viewpoint - Oil prices are experiencing a slight increase due to ongoing geopolitical tensions, despite having faced significant annual losses in 2025, marking the worst performance since 2020 [1][2]. Group 1: Price Movements - Brent crude oil is trading at $61.03 per barrel, reflecting a 0.30% increase, while U.S. West Texas Intermediate is at $57.59 per barrel, also up by 0.30% [1]. - Both major oil benchmarks fell nearly 20% in 2025, indicating a challenging year for the oil market [2]. Group 2: Geopolitical Factors - Tensions between Ukraine and Russia have escalated, with allegations of drone attacks on civilian and energy infrastructure, contributing to upward pressure on oil prices [3]. - Ukraine's President Zelensky reported over 200 drone attacks targeting power infrastructure, while Russia claimed drone strikes on its energy and industrial facilities [3]. Group 3: U.S. Sanctions Impact - The U.S. has imposed new sanctions on four companies and associated oil tankers involved in Venezuela's oil sector, further constraining oil exports from the country [4]. - These sanctions are forcing Venezuela's state oil company PDVSA to shut down wells in the Orinoco Belt due to limited storage capacity [5].

Group 1: Oil Prices and Geopolitical Risks - Oil prices increased as geopolitical tensions rise, with ICE Brent surpassing $62 per barrel [2] - The U.S. military has been ordered to quarantine Venezuelan oil for at least two months, impacting oil supply dynamics [3] Group 2: International Oil Trade and Production - China's Commerce Ministry issued 19 million tonnes of refined product export quotas, maintaining year-on-year volumes as domestic consumption is prioritized [4] - Kazakhstan's CPC Blend oil exports were reduced by a third to 1.14 million barrels per day due to adverse weather and repairs following a Ukrainian drone attack [6] Group 3: Company Developments - Eneos is positioned to acquire Chevron's stake in the Jurong Island refinery in Singapore, valued at approximately $1 billion [5] - Fitch Ratings upgraded Pemex's long-term national rating to AA, citing government support amid a $10 billion debt tender [8] - Reliance Industries received a one-month waiver from the U.S. to continue importing 350,000 barrels per day of Russian crude from Rosneft [9] - Stonepeak and Canada's Pension Plan Investment Board agreed to purchase a 65% stake in BP's Castrol division for $6 billion, with BP retaining a 35% stake [9]

Group 1: Oil Price Movements - Oil prices have stabilized after recent gains, with Brent crude at $62.46 and West Texas Intermediate at $58.48, both up over 4.5% in the last five trading days due to geopolitical risks [1] - Robust U.S. economic data has supported the rally, with the economy growing at its fastest pace in two years in Q3, driven by strong consumer spending and rebounding exports [2] Group 2: Supply and Inventory Dynamics - Preliminary data indicates a build in U.S. crude stocks, with a rise of about 2.4 million barrels reported by the American Petroleum Institute [3] - Venezuela's legislature has passed a law criminalizing actions against its shipping, which may impact supply dynamics amid U.S. sanctions enforcement [4] - Multiple vessels carrying Venezuelan crude are currently anchored offshore due to onshore tank storage filling up, indicating a growing export bottleneck that could tighten supply flows [5] Group 3: Geopolitical Risks - Ongoing Russian attacks on Ukraine continue to create uncertainty, with fading optimism over peace talks potentially leading to higher oil prices if Russian supply does not return to the market [6] - Despite supply risks, there are persistent concerns about excess crude inventories and a structural surplus, with long-term forecasts suggesting global oil inventories may continue to rise through 2026, potentially exerting downward pressure on prices [7]

Economic Growth and Productivity - The recent GDP print indicates a strong performance, marking the highest growth in two years, although it predates the government shutdown [2][4] - Productivity is currently driving economic growth, which is beneficial as it allows for wage increases and higher profit margins for companies, but it also leads to a reduced need for hiring [3][4] - The Fed's concerns about inflation may be misplaced, as inflation has moderated and is not expected to rise significantly [5][6] Business Investment and AI Impact - Business investment is anticipated to be strong next year, with AI playing a significant role in this growth [7][10] - Spending on data centers and the electric grid is expected to be a crucial part of business investment [8] - The momentum from AI productivity gains is expected to build on the solid productivity growth observed over the past two years [10][16] Labor Market Dynamics - There is a real concern regarding a softening labor market, driven by demographic changes and immigration trends, which may hinder firms' ability to hire [17][18] - A skills mismatch and slower workforce growth could lead to lower innovation and growth in the near term, although productivity from AI investments may offset these challenges [18] Economic Outlook and Federal Reserve Actions - The economic outlook for next year is generally positive, with expectations of a rate cut potentially occurring in 2026, although the timing remains uncertain [19][20] - The Fed is expected to be cautious in its approach to rate cuts, influenced by data and political pressures, with a focus on maintaining institutional integrity [21][22]

Group 1: Gold Price Trends - Gold futures opened at $4,516.70 per troy ounce, reflecting a 0.2% increase from the previous day's closing price of $4,505.70, marking the second consecutive opening above $4,500 [1] - The one-week gain in gold prices is +4.8%, the one-month gain is +11.2%, and the one-year gain is +72.9%, indicating significant upward momentum in gold prices [7] Group 2: Geopolitical Influences - Geopolitical risks, particularly ongoing tensions between the U.S. and Venezuela, have contributed to rising gold prices, with Russia and China aligning with Venezuela amid U.S. sanctions [2] - Historical context shows that gold has been a popular hedge against global conflicts, with the Russia-Ukraine war and Middle Eastern unrest driving demand earlier this year [3] Group 3: Performance of Precious Metals - Silver prices have increased by 149% in 2025, while platinum prices have risen by 161%, showcasing strong performance across precious metals [3] Group 4: Investment Options in Gold - Common investment options in gold include physical gold, gold mining stocks, gold ETFs, and gold futures, each with distinct advantages and disadvantages [8][20] - Gold mining stocks are noted for their volatility due to their dependence on gold prices and exposure to geopolitical risks [12] - Gold ETFs, such as SPDR Gold Shares, track the price of gold and are backed by physical gold, providing a more liquid investment option compared to physical gold [18][22]

Group 1 - Oil prices are rising due to increased U.S. pressure on Venezuela, raising concerns about supply disruptions in the region [1] - Brent crude increased by 0.9% to $61.03 per barrel, while WTI rose by 1% to $57.07 per barrel following U.S. Coast Guard actions against tankers transporting oil from Venezuela [1] - Geopolitical developments are providing support for oil prices despite oversupply from faster-than-expected OPEC+ output increases and subdued global demand [2] Group 2 - The market remains oversupplied due to rising production outside OPEC+ and slower global demand [2] - Analysts suggest that the geopolitical situation is helping to stabilize oil prices despite the underlying oversupply [2]

Economic Outlook - The current economic data is incomplete and presents a "data fog," making it difficult to ascertain the true state of the economy, particularly regarding inflation and the labor market [2][3] - There are concerns about the sustainability of AI infrastructure spending and whether major tech companies can maintain profitability to manage their increasing debt [4] Market Sentiment - Despite uncertainties, there is some optimism in the market, with expectations that the Federal Reserve may cut interest rates in early 2026, which typically benefits market performance [7][8] - The market may experience a "Santa Claus rally," but this is uncertain and may not be significant for long-term investors [5][6] International Markets - International markets have significantly outperformed the U.S. this year, with some regions, particularly in Asia, showing gains of 50-60% [10][12] - A weaker dollar could benefit U.S. investors by amplifying profits when repatriated, making international exposure increasingly attractive [13] Investment Strategy - A cautious approach is advised for 2026, with a focus on diversification and potential exposure to international markets, as the U.S. may not remain the best investment destination [9][11] - Investors should be selective in AI investments, focusing on companies that enhance productivity rather than those heavily indebted for infrastructure buildout [15][16] IPO Market - The IPO market is expected to pick up, driven by venture capital firms seeking exits, although it will be selective, favoring strong companies [19] Risks - Key risks include the independence of the Federal Reserve, geopolitical tensions, and potential political changes that could impact market stability [20][21] - There is a concern about market overvaluation, which could lead to a significant correction if inflation reaccelerates or if the Fed has to reverse its monetary policy [24][28]

Core Insights - The seizure of a Venezuelan tanker by the U.S. and subsequent sanctions are expected to have limited immediate effects on the Chinese oil market due to existing oil volumes and weak demand [1][2] - Venezuelan oil exports to China are projected to increase in December and January, driven by prior exports and significant discounts on crude [3][5] - The impact of the tanker seizure and potential further sanctions may not be fully realized until February [4] Group 1: Venezuelan Oil Exports - Venezuelan oil exports have sharply declined following U.S. actions, with the country supplying only about 4% of China's total crude imports [2] - December arrivals of Merey crude, Venezuela's primary export grade, are expected to exceed 600,000 barrels per day, potentially setting a record [5] - A significant portion of the Merey crude discharged in November is still seeking end-buyers, indicating a supply surplus [7] Group 2: Market Dynamics - The influx of Venezuelan oil coincides with increased deliveries from other sanctioned producers like Russia and Iran, contributing to rising floating oil storage in Asia [6] - Asian floating oil storage reached 71 million barrels, up from 53 million barrels at the end of October, indicating a growing supply glut [6] - Traders are currently less concerned about market pressures due to the ample supply from Venezuela, Russia, and Iran [7]

Gold will remain favourable in the short term due to the uncertainties in the geopolitical environment around the world. The ongoing EU plans regarding frozen Russian reserves serve as a further comp... ...