US approves advanced AI chip exports to UAE and KSA

The US has authorised the export of 70,000 advanced AI chips to the GCC, with 35,000 each allocated for the UAE’s G42 and Saudi Arabia’s Humain, assuming they meet ‘rigorous security and reporting requirements.’ The decision will provide a potential boost to the development of the AI sectors in the two countries, both of which have earmarked the industry as an integral part of diversification and economic development programmes.

September’s long-delayed nonfarm payrolls report from the US came in significantly stronger than predicted with a net gain of 119,000, compared to the expected 51,000, though the August reading was revised down from an initial gain of 22,000 to a loss of 4,000. The jobless rate meanwhile rose to 4.4%, up from 4.3% previously and the highest level since 2021. The mixed report, and the ongoing absence of the October data, means that the division at the FOMC that the minutes from the last meeting released earlier this week showed will likely continue. The market pricing for a December cut rose to 39% on the back of the release, up from 27% earlier in the day, reflecting the expectation that the Fed will focus on the unemployment rate as the most useful barometer for demand.

There was also a slew of delayed weekly initial jobless claims figures for the US released yesterday, which have stayed around the 220,000 level despite heightened uncertainty. Continuing claims have continued to tick higher, however, hitting a new four-year high and suggesting a low-fire, low-hire environment.

The Central Bank of Egypt opted to keep its interest rates on hold yesterday, leaving the benchmark overnight deposit rate at 21.00%. Consensus expectations had been for a 100bps cut, a position we shared, but the CBE opted for a more cautious approach after CPI inflation ticked back up to 12.5% y/y in October, up from 11.7% the previous month. The bank expects some further upwards pressure on prices through year-end on the back of energy price increases before declining once more in H2 2026 and as such it ‘has favoured a wait-and-see approach.’

Today’s Economic Data and Events

12:15 France manufacturing PMI, November. Forecast: 49.0

12:30 Germany manufacturing PMI, November. Forecast: 49.8

13:00 Eurozone manufacturing PMI, November. Forecast: 50.1

13:30 UK manufacturing PMI, November. Forecast: 59.2

18:45 US manufacturing PMI, November. Forecast: 52.0

Fixed Income

• US treasuries gained yesterday after the mixed jobs report, appearing to focus on the higher unemployment figure and raising expectations of a December rate cut. Yields on the 2yr fell 6bps to 3.5327%, while the 10yr ended the day 5bps lower at 4.0845%.

FX

• The dollar index closed down by less than 0.1% yesterday against its basket of peers. Rate cut expectations rose once more and paused the greenback’s recent gains, though it closed higher against a number of key currencies.
• GBP was the notable gainer as it ended the day at 1.3073, up 0.1% and snapping four straight days of losses. EUR closed down 0.1% at 1.1528.
• The Japanese Yen weakened further yesterday, closing at 157.47, up 0.2% against the dollar. The currency has been on a downward track amidst concerns over the potential size of any new government stimulus package. It has strengthened by 0.1% in trading this morning after the government offered a rebuke to foreign traders and said that it would intervene where it saw fit.

Equities

• The previous day’s respite for stock markets was short lived, and US equities sold off once again yesterday, with tech stocks bearing the brunt as valuations remained in question. The NASDAQ closed down 2.2% while the Dow Jones and the S&P 500 fell 0.8% and 1.6% respectively.
• There were gains in local markets yesterday, as the ADX climbed 0.3% and the DFM added 0.8%. Saudi Arabia’s Tadawul gained 0.1% on the day but ended its trading week 1.5% lower than the previous Thursday’s close.

Commodities

• Reports that Ukraine was preparing to talk with the US about the new peace plan weighed on oil prices yesterday. Both benchmarks closed lower given the chance that any resolution could see sanctions on Russian energy eased, though given the plan reportedly includes Ukraine ceding land not held by Russia, there is scepticism around its chances of success.
• Brent futures ended the day down 0.2% at USD 63.4/b, while WTI closed 0.5% lower at USD 59.1/b.