The ECB is raising red flags about Eurozone instability: The European Central Bank (ECB) has warned of risks to the Eurozone’s financial stability, with its annual Financial Stability Review pointing to high public debt, low growth, and political uncertainty as key issues. Rising borrowing costs in some countries — notably France — and growing concerns over debt sustainability and fiscal health could lead to renewed instability reminiscent of past Eurozone debt crises.

High borrowing costs in more-indebted EU countries are giving the ECB pause: While borrowing costs for some of the southern European epicenters of the EU’s last round of sovereign debt crises remain well below their historic highs, rising borrowing costs for countries like France are driving concerns that the continent’s more-indebted countries might be facing serious threats to debt sustainability. Recent financial volatility has only exacerbated this, with ECB Vice President Luis de Guindos noting that during recent episodes “the funding costs of countries with debt-to-GDP ratios of more than 100% widened notably,” in comments to reporters picked up by the Financial Times.

EU budgets are going to feel the pinch: A combination of weak growth and elevated debt levels will make it harder for governments to finance defense spending and climate initiatives — both necessities if the incoming Trump administration remains bent on rolling back the US’ commitments to NATO and climate action. Higher refinancing costs for maturing debt are also adding to the pressure, the ECB noted.

Big Tech also may be a cause for concern: The ECB warned that a potential AI-linked assetprice bubble could have a significant impact on an already precarious Eurozone, noting that the stock market’s increasing reliance on just a few US tech giants poses the risk of global market disruptions should earnings for these firms not meet expectations.

MARKETS THIS MORNING-

Asian markets are a mixed bag in early trading this morning as traders assess Nvidia’s latest earnings, led by Japan’s Nikkei in the red at -0.8%, while Korea’s Kospi and China’s Shanghai index are both up 0.4% and Hong Kong’s Hang Seng is in the green at 0.1%.

TASI

11,868

-0.1% (YTD: -0.8%)

MSCI Tadawul 30

1,491

0.0% (YTD: -3.8%)

NomuC

29,859

+1.0% (YTD: +21.7%)

USD : SAR (SAMA)

USD 3.75 Sell

USD 3.75 Buy

Interest rates

5.25% repo

4.75% reverse repo

EGX30

30,588

-0.3% (YTD: +22.9%)

ADX

9,405

-0.2% (YTD: -1.8%)

DFM

4,761

+0.6% (YTD: +17.3%)

S&P 500

5,917

0.0% (YTD: +24.1%)

FTSE 100

8,085

-0.2% (YTD: +4.6%)

Euro Stoxx 50

4,730

-0.5% (YTD: +4.6%)

Brent crude

USD 73.08

-0.3%

Natural gas (Nymex)

USD 3.23

+7.6%

Gold

USD 2,653.40

+0.9%

BTC

USD 94,432.57

+2.1% (YTD: +113.7%)

THE CLOSING BELL: TADAWUL-

The TASI fell 0.1% yesterday on turnover of SAR 4.8 bn. The index is down 0.8% YTD.

In the green: Albaha (+7.1%), Saudi Cable (+5.1%) and MBC Group (+4.4%).

In the red: Chemical (-2.9%), Miahona (-2.8%) and Ades (-2.6%).

THE CLOSING BELL: NOMU-

The NomuC rose 1% yesterday on turnover of SAR 89.6 mn. The index is up 21.7% YTD.

In the green: Dar Almarkabah (+15.5%), Alnaqool (+10.8%) and Fesh Fash (+10.4%).

In the red: Almodawat (-5.4%), Group Five (-2.7%) and Amwaj International (-2.2%)

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