Weekly Market Review. 26 th May to 31 st May 2013

Transcription

1 Weekly Market Review 26 th May to 31 st May 2013

2 Contents International Equity Markets GCC Equity Markets Currencies Commodities Interest Rates

3 International Equity Markets S&P posted to its first back-to-back weekly decline since November, as investors speculated the FED will consider cutting the stimulus efforts. DJI lost about 1.2% for the week after hitting an all-time high. While economic growth was weaker than forecast and jobless claims rose, other data showed consumer confidence climbed to the highest level since 2007 and home values jumped the most in 7 years. Europe Stoxx fell for the second week led by a selloff in real estate, food and health care companies on concern that US FED will curb its stimulus measures on signs of strengthening US economy. UK stocks posted two consecutive weekly losses and the benchmark index climbed 2.4 percent in May, for a 12th month of gains and the longest winning streak since the gauge was formed. The nation s economy will grow faster than previously forecast over the next three years, the British Chambers of Commerce said last week. Shanghai Composite gained slightly last week. The index climbed about 5.6 percent in May, the biggest monthly gain since December. The index dropped during the week after the Economic Information Daily reported Hangzhou city may impose property taxes on existing homes. MSCI Emerging Markets post the biggest monthly decline in about a year as Brazilian stocks plunged after policy makers increased the benchmark interest-rate more than forecast. Indian shares plunged on speculation a weakening currency may fuel inflation and prompt foreign investors to cut holdings of local shares. S&P DJI Nasdaq Comp Euro Stoxx FTSE Dax CAC Nikkei Hang Seng Brazil - Bovespa Russia - Micex BSE Sensex Shanghai Comp Nikkei Index 1 Year Chart DJI Index 1 Year Chart

4 GCC Equity Markets MAF has delayed plans to raise at least $500 million from a hybrid bond sale to fund its recent buyout of Carrefour's stake in a joint venture. The company has picked Goldman Sachs and HSBC Holdings as joint structuring advisers on the planned sale, together with BofA Merrill Lynch, J.P. Morgan and Standard Chartered Bank as joint book runners. France has blacklisted 17 countries, including the UAE, that do not help investigate foreign aid fraud, and has banned the use of their banks to help distribute development funds, reported French news agency AFP. The blacklist expands on an already-established register of eight non-cooperative states and territories. Moody's cut Tunisia's sovereign credit rating to Ba2, citing political uncertainty and the risk of instability as well as weak finances at government owned banks and substantial external pressures on its balance of payments. Mubadala Development and Investment Corp of Dubai said they agreed to merge the United Arab Emirates two aluminum smelters to create a $15 billion joint venture that will be the fifth-largest producer. Turkish bond yields surged the most since 2006 as the lira and stocks tumbled after a weekend of demonstrations against Prime Minister s government. DFM Equity YTD Chart Dubai Abu Dhabi Saudi Tadawul* Qatar Index Kuwait Price Index Oman MAM Bahrain All Share Egypt EGX Istanbul 100 Index RBS Mena TR * Saturday to Wednesday. All others Sunday to Thursday Istanbul 100 Index YTD Chart

5 Currencies Euro was weaker than USD last month. The currency remained lower after declining last month before data forecast to show manufacturing in the region contracted for a 22 nd month, adding pressure on the ECB to cut rates. GBP strengthened versus USD for the week as data showing house prices and consumer confidence increased added to evidence of an improving economy and spurred demand for UK assets. Data last month confirmed the economy grew 0.3% in the first quarter. AUD declined for the week and versus USD the currency posted its biggest monthly slide since It rebounded after the Chinese data showed manufacturing accelerated, easing concern a slowdown in China will reduce demand for commodities. South African rand slipped about 11% versus USD last month and the RSI technical indicator signaled that the currency was oversold. The drop in the currency pushed the 14 day relative RSI to 86, above the 70 threshold. Yen strengthened versus the USD as Japanese stocks slid on concern the FED will curd stimulus, boosting demand for haven assets. Asian currencies dropped for the week as investors pulled money from regional assets after FED said that it may taper its stimulus measures in the US. Dollar Index YTD Chart EUR / USD GBP / USD AUD / USD USD / JPY USD/ CHF USD/ CAD USD/ BRl USD/ RUB USD/ INR USD/ CNY DXY Index AUD/USD YTD Chart

6 Commodities Brent dropped about 2% during the last week. The OPEC maintained its output ceiling of 30 million barrels a day at a meeting last week. WTI dropped about 2.4% for the week. The Crude output increase by 34,000 barrels in the week ending May 24. Gold Spot posted its fourth back to back weekly gain as outflow in investor holdings slowed and dollar retreated. The assets in the SPDR Gold Trust were unchanged for a second day on 31 st May after expanding on 29 th May. Copper declined for the week by about 0.35% on concern that slowing manufacturing will curb demand in china. However an official manufacturing index released on 1 st June showed a growth a day after President Xi Jingping said that the expansion is on a more stable footing. Wheat advanced during the week as wet weather raised the risk of damage to the US winter crop. The export sales advanced for three weeks to 23 rd may, the US department of agriculture said on 31 st May. Sugar dropped last month, the biggest monthly decline since about 9 months as the amount of sugar to be loaded at ports in Brazil rose 13% in a week. Rubber dropped for the fourth month on weaker Chinese data and dropping oil prices cut the appeal of the commodity as an alternative to synthetic products used in tires. Gold spot Silver spot Copper-CMX Brent - ICE WTI - Nymex Wheat- CBOT Corn- CBOT Soybean- CBOT S&P GSCI Spot Index Baltic Dry Index S&P GSCI Spot YTD Chart WTI crude YTD Chart

7 Interest Rates The Global Broad Market Index of bonds declined last month as employment gains and increases in housing and consumer confidence added to the case that the US economy is gaining momentum, prompting traders to increase bets the Fed will scale back its $85 billion in monthly debt purchases later this year. Euro Corporate index dropped for the first time in four months in May on signs the global economy is recovering. FED Chairman Ben Bernanke said last week the pace of asset purchases could taper off if there is continued and sustained improvement in economic growth, while economic confidence in the euro region increased in May. German 10 year bonds dropped for a second week and yields rose to a three-month high. French yields climbed and Italian bonds performed better than their German peers as the nation met its target amount at a debt auction on May 30, signaling demand for the securities had picked up despite losses last month. UK 10-year yields posted the biggest monthly increase in more than three years, as a report showed consumer confidence improved in May. A UK sentiment index increased to minus 22 from minus 27 in April. USD- 1w Libor USD - 3m Libor USD - 6m Libor USD - 10yr AED-1m EIBOR AED-3m EIBOR AED-12m EIBOR UK - 10yr Japan - 10yr ADCB has repaid the full amount of its AED2.6bn outstanding loan to the Ministry of Finance after receiving the necessary approvals from the UAE Central Bank and the MOF. U.S. 10 year generic bond yield YTD Chart Generic 10 Year generic gilt yield YTD Chart

8 Important notice This report was prepared by the Private Banking Unit of Mashreqbank psc ( Mashreq ) in the United Arab Emirates ( U.A.E. ). Mashreq is regulated by the Central Bank of the U.A.E. This report is provided for informational purposes and private circulation only and should not be construed as an offer to sell or a solicitation to buy any security or any other financial instrument or adopt any hedging, trading or investment strategy. Prior to investing in any product, we recommend that you consult with a professional financial advisor, taking into consideration investment objectives, financial circumstances and tax implication. While based on information believed to be reliable, we do not guarantee and make no express or implied representation as to the accuracy of this report or complete description of the securities markets or developments referred to in this report. The information, opinions, forecasts (if any), assumptions or estimates contained in this report are as of the date indicated and are subject to change at any time without prior notice. The stated price of any securities mentioned in this report is as of the date indicated and is not a representation that any transaction can be effected at this price. The risks related to investment products described in this report are not all encompassing and investors should refer to the relevant investment offer document for detailed information and applicable terms and conditions. Investment products, including treasury products, are not guaranteed by Mashreq or any of its affiliates or subsidiaries unless stated otherwise and are subject to investment risk, including loss of principal. Investment products are not government insured. Past performance is not an indicator of future performance. US persons (US Citizens; US Green Card Holders; Resident Aliens subject to US income taxes for IRS purposes) are not eligible for any of the investment products introduced by Mashreq unless stated otherwise. This report is for distribution only under such circumstances as may be permitted by applicable law. Neither Mashreq nor its officers, directors or shareholders or other persons shall be liable for any direct, indirect, incidental or other damages including loss of profits arising in any way from the information contained in this report. This report is intended solely for the use by the intended recipients and the contents shall not be reproduced, redistributed or copied in whole or in part for any purpose without Mashreq s prior express consent.