Chips and pharmaceuticals next in focus

The US government has launched new national security investigations into semiconductor chips, semiconductor manufacturing equipment, and pharmaceutical goods and their ingredients, which are expected to lead to new tariffs on their imports. On the other hand, President Trump has signaled that he could consider a temporary reprieve on his 25% tariff on automotive imports in order to allow companies time to move manufacturing to the US.

Egypt and Qatar have announced that they are working towards a new USD 7.5bn investment package from the Gulf state. The support from Qatar follows similar pledges from other GCC states over the past several years including the USD 35bn Ras el-Hikma investment by the UAE and a USD 5bn investment pledge from Saudi Arabia.

Turkey’s current account deficit widened to USD 4.41bn in February from a deficit of USD 4.00bn the previous month, revised from USD 3.80bn on the initial print. Reserves fell by USD 2.9bn in the same month. Goods exports were moderately higher in March compared with February but this was offset by a greater increase in imports.

Today’s Economic Data and Events

13:00 Germany ZEW survey expectations, April. Forecast: 10.0

16:30 Canada CPI inflation, % y/y, March. Forecast: 2.7%

Fixed Income

• USTs rallied on Monday, snapping the five-day sell-off of the previous week. Yields on the 2yr dropped 12bps to 3.8450% while the 10yr yield also ended the day down 12bps at 4.3739%.
• Mashreqbank has mandated banks for a 5yr USD 500m sukuk.
• The Central Bank of the UAE held an M-bill auction on April 14 across multiple tenors. The central bank sold AED 6bn of 28 bills at a yield of 4.57%, AED 2.7bn of 42 day bills at 4.58%, AED 3.5bn of 126 day bill at 4.52% and AED 12bn of 294 day bills at a yield of 4.44%. Total investor coverage of the auction was 1.4x of total issued weighted toward the middle maturities.
• Three-month EIBOR was set at 4.22098% as of April 14, lower than levels at the end of last week.

FX

• The dollar index weakened for the fifth straight session yesterday, dropping 0.5% to the lowest level since March 2022.
• While EUR broke its recent surge as it closed all but flat against the greenback at 1.1351, GBP added 0.8% on the day to 1.3190.
• In the commodity currencies CAD closed flat but there were strong gains for both AUD and NZD, up 0.6% and 0.8% respectively.

Equities

• There were gains in US equities at the start of the week as the Trump White House signaled the chance of more flexibility in tariffs. The NASDAQ added 0.6% while the Dow Jones and the S&P 500 both closed 0.8% higher.
• European equities started the week even stronger as they benefitted from the roll back on some tariffs. The DAX closed up 2.9%, followed by the CAC with a 2.4% gain and the FTSE 100 which added 2.1%.
• Locally, the ADX gained 0.9% while the DFM added 1.8%. The Tadawul closed all but flat.

Commodities

• Oil prices saw modest gains at the start of the week with uncertainty around tariffs and US policy on Iran preventing any more concrete moves in either direction. Brent futures closed up 0.2% at USD 64.9/b, while WTI added 0.1% to USD 61.5/b.

• OPEC revised its oil demand growth forecast for 2025 by 150k b/d to 1.30m b/d and by a similar amount for 2026 to growth of 1.28m b/d. The exporters’ alliance noted US trade policy in their downgrade of demand expectations for this year.