Markets tumbled and oil prices sank to their lowest levels since May on concerns the US Federal Reserve may taper its quantitative easing programme before the end of the year.
Brent, the international benchmark, fell 3.03 per cent to trade at $66.16 per barrel at 3.46pm UAE time. West Texas Intermediate, which tracks US crude grades, plunged 3.59 per cent to $63.11 per barrel. Abu Dhabi's Murban crude futures contract for October settlement also trended low, down 3.5 per cent at $65.52 per barrel at 3.30pm UAE time.
Brent and WTI fell 8.2 per cent and 10.4 per cent respectively, this month as the highly-transmissible Delta variant of coronavirus has forced new lockdowns in some parts of the world.
Fresh outbreaks including a case at the world's third-busiest container port at Ningbo-Zhoushan in China have further dampened demand for crude from the world's top importer of crude.
Chinese demand for the third quarter is expected to decline by 250,000 barrels per day, while consumption in the US, the biggest consumer of oil is set to fall 220,000 bpd.
"But our downgrades are more modest than consensus because we believe concerns around China are overblown. Cases have likely already peaked," Energy Aspects said in a note.
Oil's latest decline follows the release of the minutes of Fed’s July meeting, which indicated a roll back of the US central bank's quantitative easing policy that has been in place since the onset of the pandemic to support the economy.
"Most participants remarked that they saw benefits in reducing the pace of net purchases of Treasury securities and agency MBS [mortgage-backed security] proportionally in order to end both sets of purchases at the same time," according to the minutes of the Fed meeting.
The easing of the monetary policy hinges on labour market recovery. Should the US economy continue to add around a million jobs per month, the Fed can ease its purchases of around $120 billion per month from November, according to Mansoor Mohi-uddin, Bank of Singapore’s chief economist.
The Fed is expected to slow purchases by $15bn in December, including $10bn of US treasuries and $5bn of mortgage-backed security bonds.
"This is one month earlier than we had previously thought," Mr Mohi-uddin said.
"Afterwards, however, we expect the Fed will keep slowing its bond-buying by $15bn only at each further meeting with its final taper announced in September 2022," he added.
The US' apex financial institution will continue to print money through to the final quarter of 2022, supporting the world's largest economy's recovery from the pandemic.
The comments by the Fed have boosted the dollar index, exerting downward pressure on oil.
Crude trades in inverse proportion to the dollar. The higher the dollar, the lower the price of crude, and vice versa.
"The US dollar index rallied upwards to 0.1 per cent, its highest mark since April. As crude oil is priced in dollars, oil prices move opposite to the dollar index," Naeem Aslam, chief market analyst at AvaTrade, said.
"So, when the American dollar appreciates in value, oil becomes more expensive for international buyers. This pushes oil prices down with the appreciation of the US dollar."
Contracts on the S&P 500 Index fell about 1.1 per cent while European stocks also tumbled on concerns over US monetary policy and the spreading of the coronavirus Delta variant.
London’s FTSE 100 dropped about 2 per cent, Europe's Stoxx 600 fell 1.4 per cent, Frankfurt’s Dax slipped 1.3 per cent and France's Cac 40 was down 1.8 per cent in the morning trading sessions on Thursday.
Copper, considered the most critical metal for global economies, dropped to a four-month low below $9,000 a tonne. Iron ore futures fell more than 10 per cent on concerns of slowing steel production in China.
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What you as a drone operator need to know
A permit and licence is required to fly a drone legally in Dubai.
Sanad Academy is the United Arab Emirate’s first RPA (Remotely Piloted Aircraft) training and certification specialists endorsed by the Dubai Civil Aviation authority.
It is responsible to train, test and certify drone operators and drones in UAE with DCAA Endorsement.
“We are teaching people how to fly in accordance with the laws of the UAE,” said Ahmad Al Hamadi, a trainer at Sanad.
“We can show how the aircraft work and how they are operated. They are relatively easy to use, but they need responsible pilots.
“Pilots have to be mature. They are given a map of where they can and can’t fly in the UAE and we make these points clear in the lectures we give.
“You cannot fly a drone without registration under any circumstances.”
Larger drones are harder to fly, and have a different response to location control. There are no brakes in the air, so the larger drones have more power.
The Sanad Academy has a designated area to fly off the Al Ain Road near Skydive Dubai to show pilots how to fly responsibly.
“As UAS technology becomes mainstream, it is important to build wider awareness on how to integrate it into commerce and our personal lives,” said Major General Abdulla Khalifa Al Marri, Commander-in-Chief, Dubai Police.
“Operators must undergo proper training and certification to ensure safety and compliance.
“Dubai’s airspace will undoubtedly experience increased traffic as UAS innovations become commonplace, the Forum allows commercial users to learn of best practice applications to implement UAS safely and legally, while benefitting a whole range of industries.”
French business
France has organised a delegation of leading businesses to travel to Syria. The group was led by French shipping giant CMA CGM, which struck a 30-year contract in May with the Syrian government to develop and run Latakia port. Also present were water and waste management company Suez, defence multinational Thales, and Ellipse Group, which is currently looking into rehabilitating Syrian hospitals.
Tributes from the UAE's personal finance community
• Sebastien Aguilar, who heads SimplyFI.org, a non-profit community where people learn to invest Bogleheads’ style
“It is thanks to Jack Bogle’s work that this community exists and thanks to his work that many investors now get the full benefits of long term, buy and hold stock market investing.
Compared to the industry, investing using the common sense approach of a Boglehead saves a lot in costs and guarantees higher returns than the average actively managed fund over the long term.
From a personal perspective, learning how to invest using Bogle’s approach was a turning point in my life. I quickly realised there was no point chasing returns and paying expensive advisers or platforms. Once money is taken care off, you can work on what truly matters, such as family, relationships or other projects. I owe Jack Bogle for that.”
• Sam Instone, director of financial advisory firm AES International
"Thought to have saved investors over a trillion dollars, Jack Bogle’s ideas truly changed the way the world invests. Shaped by his own personal experiences, his philosophy and basic rules for investors challenged the status quo of a self-interested global industry and eventually prevailed. Loathed by many big companies and commission-driven salespeople, he has transformed the way well-informed investors and professional advisers make decisions."
• Demos Kyprianou, a board member of SimplyFI.org
"Jack Bogle for me was a rebel, a revolutionary who changed the industry and gave the little guy like me, a chance. He was also a mentor who inspired me to take the leap and take control of my own finances."
• Steve Cronin, founder of DeadSimpleSaving.com
"Obsessed with reducing fees, Jack Bogle structured Vanguard to be owned by its clients – that way the priority would be fee minimisation for clients rather than profit maximisation for the company.
His real gift to us has been the ability to invest in the stock market (buy and hold for the long term) rather than be forced to speculate (try to make profits in the shorter term) or even worse have others speculate on our behalf.
Bogle has given countless investors the ability to get on with their life while growing their wealth in the background as fast as possible. The Financial Independence movement would barely exist without this."
• Zach Holz, who blogs about financial independence at The Happiest Teacher
"Jack Bogle was one of the greatest forces for wealth democratisation the world has ever seen. He allowed people a way to be free from the parasitical "financial advisers" whose only real concern are the fat fees they get from selling you over-complicated "products" that have caused millions of people all around the world real harm.”
• Tuan Phan, a board member of SimplyFI.org
"In an industry that’s synonymous with greed, Jack Bogle was a lone wolf, swimming against the tide. When others were incentivised to enrich themselves, he stood by the ‘fiduciary’ standard – something that is badly needed in the financial industry of the UAE."
Normcore explained
Something of a fashion anomaly, normcore is essentially a celebration of the unremarkable. The term was first popularised by an article in New York magazine in 2014 and has been dubbed “ugly”, “bland’ and "anti-style" by fashion writers. It’s hallmarks are comfort, a lack of pretentiousness and neutrality – it is a trend for those who would rather not stand out from the crowd. For the most part, the style is unisex, favouring loose silhouettes, thrift-shop threads, baseball caps and boyish trainers. It is important to note that normcore is not synonymous with cheapness or low quality; there are high-fashion brands, including Parisian label Vetements, that specialise in this style. Embraced by fashion-forward street-style stars around the globe, it’s uptake in the UAE has been relatively slow.
Gifts exchanged
- King Charles - replica of President Eisenhower Sword
- Queen Camilla - Tiffany & Co vintage 18-carat gold, diamond and ruby flower brooch
- Donald Trump - hand-bound leather book with Declaration of Independence
- Melania Trump - personalised Anya Hindmarch handbag
