FOREX NEWS

  ●  Iran floating storage now exhausted   ●  Brent Crude rises to $114   ●  Global selloff across asset classes Iranian offshore oil dries up Multiple reports are claiming that Iran’s offshore crude oil supplies have now run dry as a result of the blockade enforced by the US Navy. Iran has long maintained a fleet of tankers stationed in international waters near Malaysia and Singapore, which it has used to supply its allies with crude oil throughout the duration of the conflict, bypassing international sanctions and granting the war-torn country a much-needed income stream. The reports indicate that back in April, 150 million barrels were held in floating storage, but because of the inability of Iranian ports to dispatch new oil tankers, these supplies have substantially dwindled. Without fresh inventory to replenish them, Iran’s offshore supplies have now apparently been exhausted. According to US Central Command, the naval blockade has denied the Iranian regime at least $25 billion in oil revenue, severely limiting Tehran’s ability to replace destroyed weaponry and infrastructure. The missing oil volumes are not enough to cause a major supply shock; the bigger problem is that Iran now has very few economic options left, cornering the country into potentially more drastic courses of action. International shipping rates are already sky-high, as are risk premiums for navigating through middle eastern waters, and today’s development is certainly doing nothing to help matters. The Brent Crude benchmark rose to $114 per barrel earlier this morning, pulling further ahead of WTI contracts, which remain grounded at a more modest $100. The huge difference is indicative of just how high freight costs have risen; refiners would normally arbitrage this kind of spread, but the logistical costs of doing so now make such financial plays impossible. Global markets shaken Financial markets at large are reacting poorly to the deepening energy crisis. Higher crude oil prices mean higher inflation, something the world is collectively sick to death of hearing about. All asset classes were shaken yesterday, and the damage appears to be worsening this morning. Gold plummeted almost 3% on Thursday and continued the descent as today’s session got underway, briefly dipping under $4,000 per ounce. Silver has fallen to an 11-month low of $54 per ounce, platinum is lingering dangerously close to long-term support levels at $1,550, while palladium has already taken the plunge, dropping to a 16-month low of $1,040. Cryptocurrencies fared little better; Bitcoin fell back down to $81,000 but is showing some degree of resilience as of this morning. Equities are facing the additional problem of an ongoing flight from technology stocks, causing the S&P 500 to drop 1.2% and the Nasdaq-100 to crumble 2.9%, although the Dow Jones managed to remain flat on the day. The tech selloff has been particularly unkind to Asian stock markets. The Nikkei 225 fell 2.7% yesterday and continued to collapse this morning before buyers stepped in. The Kospi followed a similar path, falling 3.5% on Thursday and remaining under pressure early on Friday. It was the same story in the Hang Seng index, which lost 3% yesterday amid concerns that the Chinese government has largely abandoned the idea of a planned stimulus package that investors had been hoping for. A turbulent end to the week to say the least. #OIL #BRENT #IRAN About the Author Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment.

A number of recent developments suggest that the glacial relations between Russia and other parts of the world may be beginning to thaw. Political commitments are slowly being abandoned in favour of economic pragmatism, particularly now that the world finds itself without the endless fount of Middle Eastern resources. Northeast Passage This week, Reuters reported that Russian oil exports through the Northeast Passage have increased substantially this year, already surpassing 2025 volumes by 50%. During the summer months, ice cover in the Arctic Ocean is thin enough to permit vessels to traverse the entire span of Russia’s northern coast, which allows oil tankers to transit from the northwestern port of Arkhangelsk all the way to Japan and the Far East. The passage completely bypasses Western maritime jurisdictions, avoiding chokepoints such as the Suez Canal or the Malacca Strait, to say nothing of the Red Sea and all the shipping problems encountered therein. The United States, the United Kingdom and the European Union routinely stop and seize oil tankers deemed to be in violation of international sanctions, while also barring such vessels from Western ports and blacklisting operators from insurance and financial services, making oil shipments via the Suez route highly problematic. The legal difficulties of heading west are compounded by the current sky-high freight costs plaguing the global shipping industry. Under normal circumstances, the Northeast Passage is the more expensive route due to icebreaker escort fees, navigation permit charges, slower transit speeds and increased insurance premiums, but maritime freight rates are now expensive enough that the northern route has become economically viable. The North Sea Route, as it is also known, is much shorter than the traditional Suez route, cutting the journey to China from 21,000 km to just 12,000 km. By shaving thousands of nautical miles off the journey, the notion of delivering a tanker full of precious crude oil via the dangerous Arctic corridor is suddenly much more palatable. With the world’s super tankers tied up in much longer sea voyages, the northern release valve is seeing more use than ever before. US-Russia diesel agreement The second development is the direct agreement between Donald Trump and Vladimir Putin to ship Russian diesel to the United States. The first tanker will set sail later today, according to Deputy Prime Minister Alexander Novak, who went on to claim that additional shipments would soon follow and that Russia ‘will meet the United States’ needs, to the extent of our capabilities’. President Trump stated that Russia would export 300,000 tonnes of diesel in October, followed by 500,000 tonnes in November and 1,000,000 tonnes ‘immediately thereafter’. Paradoxically, the US is in fact a net exporter of diesel, but finds itself importing such refined petroleum products anyway due to geographic constraints and simple market dynamics. Most of the United States’ refining capacity is located around the Gulf Coast, from where much of the produced diesel is immediately exported to Latin America. Channelling fuel from Texas to the East Coast of the US is surprisingly difficult because of domestic shipping regulations and pipeline constraints; it makes more financial sense to simply import the required fuel from the likes of Canada, Europe, or, as of this week, Russia. The global oil market makes more sense when viewed in terms of regional networks of buyers and sellers as opposed to sovereign states trading with one another. The conflict in Iran has squeezed petroleum deliveries globally and said networks are now having to adjust to the change in market dynamics. Ukraine relations sour While not indicative of much in isolation, the recent souring of relations between Ukraine and the US adds crucial context to the Russian diesel agreement. Political friction between the war-torn country and the West in general has reached a level of discomfort not seen since the conflict began, while military aid packages meet increased resistance from US and European politicians alike. Economics trumps politics No one is immune from the rules of supply and demand. Faced with the economic reality of high energy costs and reduced access to natural resources, political purity suddenly becomes much harder to defend. The structural advantage of buying diesel from Russia now apparently outweighs the political commitment to ideological containment. The first diesel shipment is expected to reach the East Coast of the US within the next three weeks. About the Author Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment.

  ●  SpaceX smashes expectations   ●  Solid rise for the Dow Jones   ●  US dollar cools off Earnings season heats up Earnings season kicked off in earnest yesterday, as a number of big names across different sectors delivered their third quarter earnings. Industry giant 3M (MMM) convincingly beat expectations on Tuesday, rising the better part of 6% and providing momentum to the wider Dow Jones index, which closed the session a solid 1% in the green. Defence and aerospace company Northrop Grumman (NOC) also outperformed, gaining 4.5% after posting healthy margins and impressive free cash flow. The biggest outlier of all was SpaceX (SPCX), which reported earnings per share of $0.35 compared to expectations of just $0.16, as well as a net income of $4.4 billion for the third quarter, largely fuelled by its surging AI business. On top of that, it appears as though genuine efforts are being made to eventually merge SpaceX and Tesla into the same entity, according to the CEO of both companies Elon Musk. SpaceX surged more than 8% in extended trading hours following the earnings call. Speaking of Tesla (TSLA), the car manufacturer will report its own earnings after market close later today, as will Meta Platforms (META). While the Dow Jones performed solidly yesterday, the S&P 500 only managed a 0.3% rise, while the Nasdaq-100 sank 0.1%. The divergence reflects a rotation away from the more volatile elements of the technology sector and into the broader spectrum of US equities. Given the unhealthy tech concentration of US stock markets so far this year, such movements are a welcome development. Dollar cools off The dollar has cooled off somewhat in recent sessions, bringing the DXY from highs of almost 103 last week to a more modest 101.8 as of this morning. Several Federal Reserve officials have signalled a willingness to hold off on further rate hikes for the time being, and markets are now overwhelmingly pricing in a pause during next week's FOMC meeting. The reprieve has awarded competing currencies some much needed breathing room, allowing the euro to halt its slide against the greenback – at least for now. The common currency was sadly unable to fully capitalise on the shift, and the political and fiscal problems emerging from France are largely to blame. French borrowing costs are hovering around 24-year highs, with yields on the 10-year bond edging dangerously close to 5%. Exploding debt-to-GDP ratios have soured lending appetite for the country in recent years, creating a 150-bps premium for French debt compared to that of its German neighbour. Credit is being squeezed hard and many different facets of the French economy are beginning to feel the pinch. To make matters worse, Moody’s will review France’s credit worthiness on Friday and is expected to carry out a downgrade, in line with fellow rating agencies Fitch and S&P Global. France’s situation lies in stark contrast to that of the UK, which showed surprisingly resilient labour market conditions on Tuesday after the ONS revealed an additional 102k jobs in August, causing the unemployment rate to unexpectedly fall to 4.7%. The report briefly pushed the pound up to $1.34 yesterday before a modest pull back took hold, but more interestingly, cable has now risen to 1.19 against the euro, a 17-month high for the pair. This morning, UK inflation came in marginally higher than expected at 3.5% year-over-year. The increase further cements the Bank of England’s case for raising the main bank rate from 3.75% to 4% on the 5th of November, which would fully close the interest rate gap with the US dollar. #SPCX #DOW #FRANCE About the Author Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment.

Indonesia is currently battling its worst wildfire season in a decade. Millions of hectares of highly flammable peat swamp have been burning for months, devastating the islands of Borneo and Sumatra, and blanketing much of South-East Asia in thick, toxic smog. Unfortunately for Indonesia, its agricultural lands are not the only part of the country in flames. The Indonesian stock market was set ablaze late last week after MSCI – formerly Morgan Stanley Capital International – announced that it would launch a consultation to downgrade Indonesia’s market classification from ‘emerging’ to ‘standalone’. The announcement triggered a 15% selloff in the IDX Composite last week, marking the worst weekly downturn for the index since the 1998 Asian financial crisis. MSCI routinely revises the status of different countries, reflecting their changing economic and financial conditions, but as a rule, downgrades are uncommon. What makes the Indonesia downgrade even more surprising is that MSCI will potentially demote the country by two full ranks instead of one. The MSCI classification is not a reflection of the size or strength of a given country, but rather an indication of how easy it is for foreign capital to invest in its domestic market. The classification has four separate ranks: Developed markets: highly developed economies, at least five companies with large market caps and trading volumes, unrestricted foreign access and fully convertible currencies. E.g.: United States, United Kingdom, Japan, etc. Emerging markets: three large companies required, decent accessibility to foreign investors but with notable exceptions. E.g.: Brazil, Greece, China, etc. Frontier markets: only one large company necessary, at least partial capability of moving capital in and out of the country. E.g.: Iceland, Vietnam, Kenya, etc. Standalone markets: isolated, difficult to invest, typically plagued by strict capital controls. Indonesia’s downgrade, if implemented, would relegate the country to the absolute lowest ranking within the system. The IDX Composite has been in a prolonged drawdown since the start of the year. The index successfully breached 9,000 points back in January, but saw lows of just 4,900 points this week as a result of the proposed downgrade. It was in fact a similar announcement that triggered the initial selloff earlier in the year, when MSCI issued a warning to clients regarding the integrity of the Indonesian stock exchange. Opaque corporate ownership structures, price manipulation and insider trading were all cited as reasons for concern, prompting billions of dollars in foreign capital to withdraw and reduce their exposure to the apparent structural risk. The subsequent oil crisis did even more damage during the spring months, erasing the country’s trade surplus and draining Indonesia’s dollar reserves, tanking the local currency in the process. Aggressive spending policies by the current administration have also set alarms bells ringing, lifting the debt service ratio to a staggering 36%, meaning over a third of Indonesia’s foreign revenue goes straight to repaying external debt obligations. A double demotion in the MSCI ranks is an extremely rare event, occurring only five times in the last 25 years. Russia suffered the same fate back in 2022 following harsh international sanctions and retaliatory capital controls. Argentina was also demoted to standalone status after the government imposed strict capital controls in 2021. Venezuela, Pakistan and Sri Lanka were also thrown to the back of the bus at various points, for much of the same reasons. In all cases, the MSCI’s own rulebook forced the company into performing the downgrades, due to the complete freeze on foreign capital entering or exiting the markets in question. Indonesia’s situation is different. The Indonesian government is not implementing capital controls, nor is the country subject to international sanctions, nor are price floors being enforced. The problem is simply that the entire stock market is a financial hall of mirrors because no one knows the fair value of any of the companies listed within it. Massive conglomerates claim to have large public floats on paper, but in reality, most of the shares are held by founders, shell companies and hidden affiliates. In such low-liquidity conditions, wash trading become very easy. A small number of market participants were able to manipulate prices to entirely fictional levels, tricking foreign funds into buying ridiculously inflated assets. To make matters worse, local regulatory bodies turned a blind eye to all of the above, eventually causing analysts at MSCI to collectively throw up their hands in frustration. Once foreign institutional money realised that it had been duped, everyone ran for the exit, hence the 15% collapse observed last week. MSCI will not perform the actual downgrade until mid-2027. The Indonesian government has until then to provide concrete proof that is has successfully eradicated the opaque ownership structures and wash trading practices. Should it fail to do so, the demotion will likely proceed as announced. In the meantime, Indonesian stocks will essentially be quarantined from global markets until a decision has been reached. About the Author Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment.

● Memory manufacturers suffer ● Asian markets stabilise ● Earnings season ramps up Semiconductor selloff reaches US markets The semiconductor fear trade finally spilled over into US markets in earnest last Friday, triggering a 4% drop in the SOX semiconductor index (SOX) and saddling the Nasdaq-100 (NDX) with a 2.5% daily loss. The memory sector bore the brunt of the selloff, as Micron (MU) shed 5.6%, Western Digital (WDC) and SanDisk (SNDK) both fell 6.9%, while Seagate (STX) fared worst of all with a 7.5% decline. Advanced Micro Devices (AMD) also felt the pain, losing 5.9% by the end of the session, and even Nvidia (NVDA) incurred a minor 1.4% slump. Despite the relative size of the tech sector in US equities, the S&P 500 (SPX) escaped with only a 1% loss on Friday, while the Dow (DJI) took a mere 0.3% hit. Asian markets hold steady The Korean stock market is still reeling from the semiconductor selloff, although the Kospi index (KOSPI) managed to stabilise on Friday and appears to be digging its feet in once again this morning. With that said, SK Hynix (000660) opened 4% lower earlier today and showed very little strength going into today’s session. Over in Japan, the Nikkei 225 (NI225) has so far managed to hold on to 64,000 points, but remains in a similarly precarious position.Meanwhile, for entirely unrelated reasons, the Indonesian stock market is currently undergoing a full-on meltdown, plunging over 10% on Friday and falling another 5% as of this morning. The recent drawdown cements the Indonesian stock market as one of the worst performers of the year, while the local currency is in the midst of collapsing to historic lows of 18,000 per USD. The major trigger for the selloff was the double downgrade from MSCI (MSCI), which demoted Indonesia from ‘emerging’ to ‘standalone’ market, which is essentially Morgan Stanley’s bottom of the barrel classification. Financial and legal jargon aside, the reasoning behind the decision is that the Indonesian state is simply too corrupt to take any of the published figures seriously. Crude oil subject to international pressures Crude oil prices are certainly not helping. The Brent Crude (BRENT) benchmark tapped $110 per barrel on Friday as escalation fears gripped oil markets. Unusual military movements in Iran prompted rumours of pre-emptive strikes against its neighbours, while Ukrainian attacks against Russian refineries continue unabated. Thousands of drones hit Saint Petersburg facilities late last night, setting ablaze a major oil terminal. Crude oil prices fell somewhat earlier today however after President Trump waived sanctions on Russian oil, potentially easing the strain on global petroleum deliveries. The week ahead Higher oil prices are translating to higher inflation rates around the world, and this week the UK and Japan will show the extent of such pressures. On Wednesday, the latest batch of UK inflation data is expected to show a rise to 3.4% year-over-year, from 3.1% over the prior reading. Japanese figures are likewise forecast to show an upswing to 2.3% on Friday. UK and Canadian retail sales may make a minor dent on Friday, but overall the economic calendar is relatively quiet this week. The earnings schedule is a different story. On Tuesday, SpaceX (SPCX), GE Aerospace (GE) and Netflix (NFLX) will all report their third quarter earnings; Wednesday brings Magnificent Seven members Meta Platforms (META) and Tesla (TSLA) to the table; Thursday will see Procter & Gamble (PG) and Lockheed Martin (LMT) deliver their latest financial reports, before Friday gives way to American Express (AXP) to close out the week. #SOX #INDONESIA #EARNINGS

  ●  Kospi index down 40% from record high   ●  Nikkei 225 incurs historic loss   ●  US markets shrug off bad inflation data Semiconductor selloff crushes Asian markets South Korean and Japanese stocks got hammered yesterday, as investors fled from an increasingly fragile regional semiconductor market. The Korean Kospi index fell over 9% at one point on Thursday, triggering yet another circuit breaker – the tenth of the year so far – before settling for a more modest 7.5% daily loss. The index has fallen 40% from its record high registered in June and yesterday marked the lowest daily close since April. Samsung and SK Hynix, which together account for half the index, lost 9.5% and 11% respectively. The selloff in semiconductors hit Japanese markets just as hard; Tokyo Electron suffered an 8% loss; Kioxia Holdings fell over 12%; Advantest suffered a 15% drop; the list goes on. The Nikkei 225, having a greater breadth of industry to draw from than its Korean counterpart, only incurred a 5% loss when all was said and done, which is nevertheless one of the worst drops in the index’s history. Over in Taiwan, TSMC also experienced minor selling pressure, dragging the company to a 2% loss, despite publishing record-breaking profits in the third quarter. Markets are beginning to worry about the long-term viability of the semiconductor trade, not necessarily in terms of demand but more so in terms of profitability. The sector is expected to face increased competition from China and other parts of the world over the coming years, expanding the pool of manufacturers vying for the same buyers. On top of that, recent inflation data in the US points to elevated rates on the dollar, which affects local exchange rates and borrowing costs. Most raw materials still need to be purchased in dollars, directly impacting the bottom line of chipmakers, to say nothing of the increase in energy and shipping costs. International investors are well aware of the structural problems facing the South Korean stock market and many are now looking for the exit. Foreign capital poured into Korean semiconductor firms earlier in the year, which helped to propel the Kospi index to a colossal 120% rise between January and June, but those same pools of money are currently being rotated back out. Domestic demand is clearly insufficient to prop up prices any longer, as evidenced by the 40% drawdown in the Kospi index. US markets shrug off inflation data US markets have completely shrugged off this week’s CPI and PPI readings, despite the inflation data itself being absolutely terrible. Wednesday’s CPI data revealed a sizeable uptick in both headline and core inflation, while Thursday’s PPI report indicated a massive rise in wholesale inflation to 6.3% year-over-year. Markets completely absorbed the bad news, so much so that interest rate expectations barely flinched. Everyone knows that rate hikes on the dollar are coming and yesterday’s awful PPI figures do not make such adjustments any more likely than they already were. The dollar currency index actually dropped on Thursday, while US equities rose higher, despite the contagious selloff in the tech sector. The Dow Jones and S&P 500 gained 1.1% and 0.3% respectively, while the Nasdaq-100 remained flat on the day. US growth remains strong, giving the economy far more leeway to tolerate the problems that usually come with sticky inflation. Yesterday’s retail sales figures smashed expectations, showing a 6.3% year-over-year increase in activity, further diminishing the impact of the rough inflation print. In a fireside chat this morning in Bangkok, Fed Chairman Kevin Warsh soothed investor fears even further by highlighting robust structural growth in the US economy and refusing to panic over the recent PPI release. #KOSPI #NI225 #SEMICONDUCTOR About the Author Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS. Reviewed by RADEX MARKETS Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment.