India Trade Deficit Narrows as Exports Surge to Three-Year High

The India’s trade deficit narrowed sharply to USD 24.53bn in November, down from a record USD 41.7bn in October and comfortably beating market expectations. Exports surged 19.4% y/y to USD 38.13bn, the fastest pace in over three years, supported by a 23% jump in shipments to the US despite elevated tariffs. Imports fell 1.9% to USD 62.66bn as gold imports plunged to USD 4.02bn from USD 14.7bn following the Diwali festival. Commerce Secretary Agrawal noted India is “very close” to signing a framework trade agreement with Washington, though US-India negotiations continue to progress slowly. India remains one of the few major economies yet to strike a trade deal with the US, and the delay continues to weigh on the rupee, which fell to a fresh record low against the dollar on Monday.

New York state factory activity unexpectedly contracted in December, with the Empire State Manufacturing Index falling 23 points to -3.9, well below expectations of 10.0. The decline followed two months of solid growth as new orders stalled and shipments retreated. However, price pressures eased notably, with the prices paid index dropping to its lowest level since January. Employment picked up slightly. Despite the current weakness, manufacturers turned more optimistic about the six-month outlook, with the future conditions index rising to its highest since early 2024.

Today’s Economic Data and Events

• UK ILO Unemployment rate 3mths Oct forecast: 5.1%
• 16:30 US nonfarm payrolls Nov: forecast 50k
• 17:30 US unemployment rate Forecast: 4.5%

Fixed Income

US Treasuries dipped on Monday. The 2yr UST yield fell by about 2bps to 3.50% while the 10yr yield declined 1bps to 4.17%.

FX

The dollar index slipped 0.09% to 98.309 on Monday after declining for three straight weeks as investors prepared for key US data releases. EURUSD added 0.11% to 1.1753 while GBPUSD edged up 0.04% to 1.3376. USDJPY pulled lower by 0.37% to 155.23 as the Japanese yen strengthened ahead of the Bank of Japan’s policy meeting later this week where markets anticipate a rate hike to 0.75%. USDCHF rose 0.05% to 0.7962.

Equities

US equity markets closed lower on Monday as key stocks in the artificial intelligence trade came under pressure. The S&P 500 lost 0.16% to 6,816.51 while the Dow Jones Industrial Average slipped 0.09% to 48,416.56 and the NASDAQ Composite fell 0.59% to 23,057.41.

European markets traded higher with the EuroStoxx 50 gaining 0.56% and the FTSE 100 rising 1.06%.

Local equities closed lower on Monday. DFM General Index declined down 0.13%. The ADX edged down by 0.1%. Saudi Arabia’s Tadawul closed flat

Commodities

Oil prices traded lower on Monday amid persistent concerns about oversupply. Brent crude fell 0.5% to USD 60.6/b. WTI declined 0.5% to USD 56.50/b.

Gold edged up 0.13% to USD 4,305.01/oz. Gold has surged over 60% year-to-date, on track for its strongest annual gain since 1979. Silver jumped 3.43% to USD 64.09/oz.