Oil Price Volatility Likely to Persist Amid U.S.-Iran Deal
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3 days ago
0mins
Source: CNBC
- Global Inventory Decline: Due to the prolonged closure of the Strait of Hormuz, global oil inventories have fallen to low levels, and further declines are expected before new supplies arrive, potentially putting pressure on the market.
- Market Optimism: While markets are optimistic about the U.S.-Iran peace deal, analysts caution that uncertainty remains high, particularly as rebuilding inventories will take time.
- Volatility Risks: Analysts indicate that while significant spikes in oil prices may be avoided if China halts inventory draws, high oil prices and their inflationary implications remain a significant risk.
- Economic Impact Emerging: The economic effects of the Middle East conflict are already impacting the most vulnerable economies, particularly in South Asia, which is expected to lead to increased market volatility.
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Analyst Views on HSBC
About HSBC
HSBC Holdings plc (HSBC) is a banking and financial services company. Its business segments include Hong Kong, UK, Corporate and Institutional Banking (CIB), and International Wealth and Premier Banking (IWPB). Its Hong Kong business comprises retail banking and wealth and commercial banking of HSBC Hong Kong and Hang Seng Bank. Its UK business comprises UK retail banking and wealth (including first direct and M&S Bank) and UK commercial banking, including HSBC Innovation Bank. The CIB segment is formed from the integration of its commercial banking business (outside the UK and Hong Kong) with its global banking and markets business. The IWPB segment comprises premier banking outside of Hong Kong and the UK, its global private bank, and its asset management, insurance and investment distribution businesses. Its customers worldwide through a network covering 58 countries and territories. Its customers range from individual savers and investors to companies, governments and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Market Optimism: While markets are optimistic about the U.S.-Iran peace deal, analysts caution that uncertainty remains high, particularly as rebuilding inventories will take time.
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- Internal Payment System Flaw: The court found that while HSBC implemented scam controls on some payment systems, it failed to apply key controls on the internal payment rail (IAT), where most customer losses occurred, indicating significant deficiencies in the bank's risk management practices.
- Investigation Delays: HSBC admitted to taking an average of 144 days to investigate customer scam reports, failing to act promptly and not adhering to the ePayments Code, which has led to unclear liability for losses between customers and the bank, undermining customer trust.
- Remediation Efforts: HSBC has initiated a large-scale remediation program, having paid approximately $21.5 million in compensation to date, with further payments expected before the end of July 2026, demonstrating the bank's commitment to addressing customer losses and improving its response mechanisms.
See More
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- AI Collaboration Outlook: HSBC's partnership with Google Cloud is expected to yield over $100 million in cost savings and new revenue streams through AI integration, marking a strategic shift for the bank in the AI domain.
- Task Automation Expansion: The collaboration aims to automate 200 new tasks using AI over the next two years, enhancing operational efficiency and reducing reliance on human labor, thereby strengthening the bank's competitive edge.
- Executives' Views on AI: HSBC CEO Elhedery emphasizes that AI will transform the job market, eliminating certain positions while creating new opportunities, reflecting the banking sector's adaptability to technological changes.
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See More
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- Dissenting Decision: The rate hike was approved with a 7-1 vote, with board member Toichiro Asada dissenting and advocating for a hold at 0.75%, reflecting differing views within the central bank on policy direction.
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- Technical Analysis Tool: Comparing the current stock price to the 200-day moving average can provide valuable insights for investors, aiding in market trend assessment.
- ETF Trading Mechanism: ETFs trade like stocks, where investors buy and sell 'units' that can be created or destroyed based on demand, impacting liquidity and market dynamics.
- Inflows and Outflows Monitoring: Weekly monitoring of changes in shares outstanding for ETFs highlights significant inflows (new units created) or outflows (old units destroyed), which can affect the underlying holdings and overall market performance.
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- Global Inventory Decline: Due to the prolonged closure of the Strait of Hormuz, global oil inventories have fallen to low levels, and further declines are expected before new supplies arrive, potentially putting pressure on the market.
- Market Optimism: While markets are optimistic about the U.S.-Iran peace deal, analysts caution that uncertainty remains high, particularly as rebuilding inventories will take time.
- Volatility Risks: Analysts indicate that while significant spikes in oil prices may be avoided if China halts inventory draws, high oil prices and their inflationary implications remain a significant risk.
- Economic Impact Emerging: The economic effects of the Middle East conflict are already impacting the most vulnerable economies, particularly in South Asia, which is expected to lead to increased market volatility.
See More
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- Sector Allocation Differences: IXUS allocates 21% of its assets to tech stocks compared to 11.3% for IEFA, which enhances IXUS's potential in emerging fields like AI but also increases exposure to risks associated with downturns in U.S. tech stocks.
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