UAE and India sign agreements on health and renewable energy

The UAE and India signed investment cooperation agreements covering the renewable energy, health and food processing sectors as president of the UAE, Sheikh Mohamed bin Zayed al Nahyan, visits India. The UAE and India entered into a comprehensive economic partnership agreement in May 2022 to enhance trade between both countries. Total bilateral trade between India and the UAE is estimated at about USD 85bn from April 2022-March 2023. For the first six month’s of India’s 2023 fiscal year, India’s total imports from the UAE stood at USD 24.9bn.

Industrial production in Turkey dropped 1.4% m/m in November with declines across mining, manufacturing and utilities production. On an annual basis output was just 0.2% higher in November, its slowest performance since June 2023.

Inflation in Egypt eased to 33.7% y/y in December, its slowest print since May last year. On a monthly basis the headline index rose by 1.4%. Food inflation remains elevated at 60.5% y/y in December though it has slowed from more than 70% y/y earlier in 2023. Inflation may be at risk of re-accelerating after higher prices for electricity were announced earlier this month along with increases in the cost of metro tickets and internet services. The outlook for the next several months will depend in large part on the scale of any potential further devaluation of the pound, although exchange rate pressures are likely already manifesting to a degree through the parallel exchange rate. Elsewhere, the IMF’s managing director Kristalina Georgieva said that the fund remains a “strong partner to Egypt” and that she had met the finance and international cooperation ministers.

Today’s Economic Data and Events

• 17:30 US CPI m/m Dec: forecast 0.2%
• 17:30 US core CPI y/y Dec: forecast 3.8%
• 17:30 US initial jobless claims Jan 6: forecast 210k

Fixed Income

• US Treasuries dropped ahead of the release of today’s CPI data. Yields on the 2yr UST ended the day near flat after giving up larger gains earlier in the session. The 10yr yield rose about 1bps to 4.0283%.
• New York Fed President John Williams said that the “current restrictive stance” of monetary policy was enough to get inflation down to the Fed’s 2% goal but that it would only “appropriate to dial back” on tight policy once the Fed was confident inflation was getting to 2% on a sustainable basis.

FX

• It was a mixed day for currency markets overnight. EURUSD rallied 0.4% to 1.0973 while GBPUSD also gained, up 0.3% at 1.2742. USDJPY, however, moved against the yen and rose by almost 0.9% to 145.76.
• Commodity currencies also showed a mixed outcome. USDCAD tipped in favour of the loonie, down 0.1% at 1.3381 while AUDUSD gained 0.2% to 0.67 and NZDUSD fell 0.2% to 0.6277.

Equities

• Equity markets were generally positive overnight. The Dow Jones added 0.5% while the S&P 500 gained 0.6% and the NASDAQ rallied 0.8%. In Europe, the FTSE fell by about 0.4% while the Euro Stoxx index managed to close with a slight upward bias.
• Asian markets have opened strongly today with the Nikkei up 1.9% in early trading while the Hang Seng is up nearly 1%.
• Local markets ended the day on a strong footing. The DFM gained 0.3% while the ADX added 0.4%. The Tadawul closed lower, however, down by 0.5%.

Commodities

• Oil futures fell overnight with Brent down 1% at USD 76.80/b and WTI falling 1.2% to USD 71.37/b. Data from the EIA showed a 1.3m bbl build in commercial crude stockpiles along with an 8m bbl build in gasoline inventories. Distillate stockpiles were also higher, up 6m bbl last week. Oil production was unchanged at 13.2m b/d while product supplied improved after last week’s sharp reported drop.