Fed Holds Rates; Saudi Arabia's Giga Spending | Horizons Middle East & Africa 1/29/2026

Key Concepts

• Federal Reserve (The Fed): The central banking system of the United States, responsible for monetary policy.
• Interest Rates: The cost of borrowing money, a key tool used by central banks to influence economic activity.
• Inflation: A general increase in prices and a fall in the purchasing value of money.
• Geopolitical Risk: Risks arising from political instability or conflicts that can impact financial markets.
• Commodities: Raw materials or primary agricultural products, such as gold, copper, and oil.
• Capital Expenditure (CAPEX): Funds used by a company to acquire, upgrade, and maintain physical assets.
• HBM (High Bandwidth Memory): A type of dynamic random-access memory (DRAM) used in high-performance applications like AI.
• IFRS (International Financial Reporting Standards): A set of accounting standards used globally.
• Non-IFRS: Financial measures that are not in accordance with IFRS.
• PIF (Public Investment Fund): Saudi Arabia’s sovereign wealth fund.

Market Overview & Central Bank Policy

The broadcast opens with a review of key market movements and central bank decisions. The Federal Reserve held interest rates steady, with Jerome Powell signaling a positive outlook for the U.S. economy but advising his successor to avoid political involvement. The FOMC voted 10-2 to maintain rates in the 3.5%-3.75% range. Despite no rate cuts, the language from the Fed was “slightly more positive,” leading to a slight uptick in the S&P 500 futures (up 0.1%) and NASDAQ (up 0.2%). Analysts at BNP Paribas have adjusted their forecasts, no longer expecting any rate cuts this year, citing the Fed’s newfound optimism regarding the labor market and sticky inflation. The discussion highlights a potential race between Rick Rieder and Kevin Warsh for the next Fed Chair position, with Chris Waller’s odds increasing after dissenting at the meeting.

Corporate Earnings Reports

A significant portion of the broadcast focuses on recent corporate earnings reports.

• SAP: Reported cloud revenue of $5.61 billion (slightly below the $5.64 billion estimate) and provided 2026 revenue guidance of $25.8-$26.2 billion. The stock is down 27% over the past year. SAP’s profit margin is expected to remain at prior year levels.
• Meta: Received a positive market reaction following its earnings report, driven by a better-than-expected sales outlook and strong ad revenue. Meta is also expanding its capital spending.
• Microsoft: Faced investor punishment despite solid earnings, due to concerns about slowing growth in its Azure cloud service and increased capital expenditure. Azure growth, while still strong at 38%, was slower than the previous quarter.
• Tesla: Experienced a positive stock reaction despite a decline in EV sales, attributed to a pledge to pivot towards robotics and AI, and a capital expenditure of $20 billion.
• SK Hynix & Samsung: Both companies reported strong earnings, with SK Hynix achieving its strongest quarterly earnings on record and Samsung exceeding expectations with a fivefold profit gain. However, both stocks experienced a dip due to institutional selling.

A key theme emerging from these reports is the surge in capital expenditure across the tech sector, coupled with the critical importance of demonstrating a return on investment (ROI) for these expenditures. The discussion also highlights a potential “overheated sentiment” in the tech sector.

Commodity Market Surge

Commodity prices are experiencing a significant rally. Gold hit another record high (up 2.6%), silver is also surging (up 60% in January), and copper jumped 5%. This is attributed to a weaker dollar and rising geopolitical tensions. Martin Ritchie, reporting from Shanghai, notes a surge in copper trading volume on the Shanghai Futures Exchange, driven by expectations of supply shortages due to demand from industries like robotics and AI. He also points to lower liquidity in precious metals markets, potentially exacerbating price volatility.

Geopolitical Factors & Currency Movements

Geopolitical risks are playing a significant role in market movements. Donald Trump issued a warning to Iran, and the possibility of intervention in the Yen market was discussed (denied by Treasury Secretary Janet Yellen). Parisha, a strategist at BNP Paribas, suggests a downside risk for the dollar, driven by unpredictability surrounding U.S. administration policy and investor hedging. She recommends a long Euro-Yen trade, citing the strengthening Euro and concerns about the fiscal position in Japan. The Euro is approaching 120, a level that could cause discomfort for ECB policymakers.

Asian Markets & China’s Property Sector

Minmin Low, reporting from Hong Kong, highlights strong tech earnings in Asia, particularly from SK Hynix and Samsung. However, the lack of a broad-based tech rally suggests potential overheated sentiment. A significant development in China is the easing of regulations for property developers, removing the requirement to submit monthly redline indicators (metrics introduced in 2021 to control the sector). This has led to a positive reaction in the Chinese property market, with developers like Vanke up 8%.

Saudi Arabia’s Economic Recalibration

The broadcast discusses Saudi Arabia’s recalibration of its ambitious Vision 2030 projects. The 2029 Asian Winter Games project is being reassessed, reflecting a broader trend of prioritizing projects and adjusting to lower oil prices and rising costs. Monica Malik suggests that this recalibration is a positive step, allowing for a more measured and sustainable pace of growth. The focus is shifting towards technology and revenue-generating sectors, with an increased emphasis on attracting private capital and forming public-private partnerships. The opening up of capital markets and real estate to foreign ownership is also seen as a positive development.

Other News & Closing Remarks

Other news items covered include:

• Putin’s meeting with Assad in Moscow, discussing economic support and Russian military bases in Syria.
• Talks between the U.S., Denmark, and Greenland regarding a stronger U.S. presence in the Arctic.
• News that Liv Golf is seeking to sell minority stakes, targeting a $300 million valuation.
• African central banks’ upcoming interest rate decisions, with several countries expected to cut rates due to cooling inflation.

Conclusion:

The broadcast paints a picture of a complex and dynamic global economic landscape. Central banks are navigating a delicate balance between controlling inflation and supporting economic growth. Corporate earnings are mixed, with tech companies facing increased scrutiny regarding capital expenditure and ROI. Commodity prices are surging, driven by geopolitical risks and a weakening dollar. Saudi Arabia is recalibrating its ambitious economic plans, prioritizing sustainability and attracting private investment. Overall, the market is characterized by uncertainty and volatility, requiring careful monitoring of economic data and geopolitical developments.