Indian inflation moderates in December

Consumer prices in India grew at a pace of 5.2% y/y in December, down from the 5.5% recorded in November and below consensus expectations for growth of 5.3%. A moderation in inflation rates in the past two months had boosted hopes of a cut by the RBI, however, the recent depreciation of the rupee, together with the prospect of rising energy prices may hamper the central bank’s scope to cut rates.

The Abu Dhabi sovereign wealth fund, ADQ, has put forward an offer to buy all Aramex shares not currently owned by Abu Dhabi Ports. The deal, which would value Aramex at USD 1.2bn, could see existing shareholders receive three dirhams per share.

Kuwaiti local media has reported that officials are weighing plans to introduce Value-added Tax (VAT). If implemented the tax would provide Kuwait with an additional diversified revenue stream, and follow similar VAT measures introduced across Saudi Arabia, the UAE, Oman and Bahrain

Today’s Economic Data and Events

17:30 US PPI final demand (Dec). Forecast: 0.4% m/m

Fixed Income

US treasuries saw further small losses on Monday, on the back of higher oil prices and the continued impact of markets digesting the higher-than-expected NFP print. The 2yr yield was largely flat on the day, at 4.3792%, while the 10yr yield rose 2bps to close at 4.7779%.

European bond yields once again saw broad-based rises on Monday. The 10yr Bund yield gained 2bps to 2.612%. The 10yr UK Gilt yield continued to rise, gaining 5bps to reach 4.8832%. The UK Chancellor has reiterated that she plans to stick to fiscal rules.

FX

Moves in the US dollar against major peers was mixed on Monday. The dollar spot closed the day 0.28% higher, with the largest gains against the Swedish Krona and Swiss Franc. At the close, EURUSD was broadly unchanged at 1.0245, while GBPUSD fell by 0.04% to 1.2202. USDJPY fell 0.15% to 157.48.

Commodity currencies were stronger against the dollar on Monday. AUDUSD gained 0.5% to 0.6177, NZDUSD rose by 0.46% to 0.5583, and USDCAD fell 0.3% to 1.4379.

The dollar has fallen in early morning trade on the back of reports suggesting President-elect Trump is considering a gradual implementation of tariff hikes.

Equities

Moves in major US equity markets were mixed on Monday. Both the Dow Jones and the S&P 500 reversed some of Friday’s losses as energy shares rose, gaining 0.86% and 0.16%, respectively. Technology stocks in contrast declined, leaving the tech-heavy NASDAQ 0.38% lower.

European equity markets were generally lower on Monday. The Eurostoxx 50 fell 0.46%, the CAC 40 declined by 0.3%, the FTSE 100 dropped 0.29%, and the DAX declined by 0.4%.

Locally, the ADX fell 0.5% on Monday, while the DFM gained 0.08%. The Tadawul fell 0.14%.

Commodities

Oil markets rose on Monday, with continued reaction to news of additional US sanctions on Russian oil producers and vessels used for shipping Russian oil. Brent futures rose 1.57% on Monday to reach USD 81.01/b, while WTI added 2.9% to USD 78.82/b.