Global Markets Update QNB Economics 12 November 2017

Transcription

1 Global Markets Update QNB Economics 12 November 2017

2 Executive Summary Key Takeaways Advanced economy 10-year yields rose on expectations of reduced quantitative easing; Saudi Arabia s corruption probe raised yields in MENA The dollar fell after the US Senate proposed Trump s corporate tax cut plan could be delayed until 2019 or scaled down European stocks dropped on weak mining shares; Saudi Arabia s corruption probe also impacted GCC equities Oil prices edged up on geopolitical tensions in the Middle East This week markets will likely focus on activity data from Europe and Asia and US inflation Sources: Bloomberg and QNB Economics 2

3 Advanced economy 10-year yields rose on expectations of reduced quantitative easing; Saudi Arabia s corruption probe raised yields in MENA Global Benchmark Yields (%, local currencies) Maturity 03-Nov 10-Nov Change in Yield (bps) Advanced Economies Week MTD* YTD* US 10 yrs Germany 10 yrs France 10 yrs Italy 10 yrs Japan 10 yrs UK 10 yrs Emerging Markets Bahrain** 11 yrs Brazil 10 yrs China 10 yrs Egypt 9 yrs NA India 10 yrs Indonesia 10 yrs Nigeria 9 yrs NA Qatar** 9 yrs Russia 9 yrs Saudi Arabia** 9 yrs South Africa 10 yrs Turkey 10 yrs Abu Dhabi** 10 yrs NA NA Dubai** 3 yrs Yields in advanced economies rose on a global sell off as investors expect policy support from the Fed and ECB for long-dated securities to gradually fade, bidding up their yields Legend > 2 standard deviation fall in yields > 1 standard deviation fall in yields < 1 standarad deviation change in yields > 1 standard deviation rise in yields > 2 standard deviation rise in yields Sources: Bloomberg and QNB Economics; *Month to Date and Year to Date; **USD denominated 3

4 The dollar fell after the US Senate proposed Trump s corporate tax cut plan could be delayed until 2019 or scaled down Global Exchange Rates vs USD 03-Nov 10-Nov Change (%) Advanced Economies Week MTD YTD US Dollar Index Euro Area* Japan UK* Emerging Markets Brazil China Egypt Indonesia 13,498 13, India Kuwait Nigeria Russia Turkey South Africa UAE Bahrain Oman PEGGED Qatar Saudi Arabia Most global currencies were stable Legend > 2 standard deviation strengthening of currency > 1 standard deviation strengthening of currency < 1 standarad deviation change in currency > 1 standard deviation weakening of currency > 2 standard deviation weakening of currency Sources: Bloomberg and QNB Economics; * Exchange rate quoted as amount of USD per currency unit in line with market convention, other exchange rates are amount of currency per USD 4

5 European stocks dropped on weak mining shares; Saudi Arabia s corruption probe also impacted GCC equities Global Equity Indices 03-Nov 10-Nov Change (%) Advanced Economies Week MTD YTD US (S&P 500) 2,588 2, Europe (STOXX 50) 3,690 3, Japan (Nikkei 225) 22,539 22, UK (FTSE 100) 7,560 7, Emerging Markets Bahrain (BB) 1,279 1, Brazil (IBOVESPA) 73,915 72, China (Shanghai ) 3,388 3, Egypt (EGX 30) 14,277 14, India (CNX NIFTY) 10,424 10, Indonesia (Jakarta) 6,038 6, KSA (Tadawul) 6,957 6, Kuwait (KSE) 6,530 6, Nigeria (All Share) 36,877 37, Oman (Muscat 30) 5,040 5, Qatar (Doha 20) 8,146 7, Russia (MICEX) 2,081 2, S.Africa (J'burg 40) 53,199 53, Turkey (Istanbul 100) 111, , UAE (Abu Dhabi) 4,485 4, UAE (Dubai) 3,635 3, European mining stocks fell due to weaker mining commodity prices; some view the fall as profit-taking after strong outperformance Legend > 2 standard deviation rise in equity index > 1 standard deviation rise in equity index < 1 standarad deviation change in equity index > 1 standard deviation fall in equity index > 2 standard deviation fall in equity index Sources: Bloomberg and QNB Economics 5

6 Oil prices edged up on geopolitical tensions in the Middle East Commodity Prices* 03-Nov 10-Nov Change (%) Energy Week MTD YTD Brent WTI Precious Metals Gold 1,270 1, Silver Industrial Copper 6,895 6, Aluminum 2,185 2, Wheat Corn Cocoa 2,061 2, Other Bitcoin 7,229 6, US crude inventories rose by 2.4m barrels (-2.2m expected and -2.4m in the prior week) US gasoline inventories fell by 3.3m barrels (-1.9m expected and -4.0m in the prior week) Legend > 2 standard deviation rise in price > 1 standard deviation rise in price < 1 standarad deviation change in price > 1 standard deviation fall in price > 2 standard deviation fall in price Sources: Bloomberg and QNB Economics; * Spot prices or nearest expiring future 6

7 This week markets will likely focus on activity data from Europe and Asia and US inflation Data Review Date Country Event Period Consensus Actual Previous Nov 06 Euro Area Markit Eurozone Composite PMI Oct Nov 06 Japan Nikkei Japan PMI Composite Oct Nov 09 US Initial Jobless Claims Nov 232k 239k 229k Nov 09 China PPI YoY Oct 6.6% 6.9% 6.9% Nov 10 US University of Michigan Sentiment Nov Forthcoming Economic Events Date Country Event Period Consensus Actual Previous Nov 14 Euro Area GDP YoY Q3 2.5% 2.5% Nov 14 China Industrial Production YoY Oct 6.2% 6.6% Nov 15 Japan GDP YoY Q3 1.5% 2.5% Nov 15 US Retail Sales Advance MoM Oct 0.0% 1.6% Nov 15 US CPI YoY Oct 2.0% 2.2% Nov 16 US Initial Jobless Claims Nov k 239k Sources: Bloomberg and QNB Economics * A stands for advance, P for preliminary, S for second and F for final 7

8 Two-Year Performance of Major Asset Classes Sovereign 10-Year Bond Yields 3 US Germany /15 02/16 05/16 08/16 11/16 02/17 05/17 08/17-1 Exchange Rates Advanced Economies* (left axis) Equities Emerging Markets** (right axis) /15 02/16 05/16 08/16 11/16 02/17 05/17 08/17 Commodities Dollar Index (left axis) EUR:USD (right axis) Oil (left axis) Food*** (right axis) /15 02/16 05/16 08/16 11/16 02/17 05/17 08/ /15 02/16 05/16 08/16 11/16 02/17 05/17 08/ Sources: Bloomberg and QNB Economics; * MSCI World Index; ** MSCI Emerging Markets Index;; ***S&P GSCI Agricultural Index, which includes wheat corn, soybeans, coffee, sugar, cocoa and cotton 8

9 Disclaimer and Copyright Notice All the information in this report has been carefully collated and verified. However, QNB Group accepts no liability whatsoever for any direct or consequential losses arising from its use. Where an opinion is expressed, unless otherwise cited, it is that of the authors which does not coincide with that of any other party, and such opinions may not be attributed to any other party. The report is distributed on a complimentary basis to valued business partners of QNB Group. It may not be reproduced in whole or in part without permission. QNB Economics Team Rory Fyfe Acting Head of Economics Ali Jaffery Economist Nancy Fahim Economist Abdulrahman Al-Jehani Research Analyst - Trainee