Abu Dhabi non-oil trade up 8% in 2023

Non-oil trade in Abu Dhabi grew 8% last year, bolstered by a 19% rise in imports and an 11% gain in re-exports. This took total non-oil trade to AED 282bn, with base metals, machinery, transport equipment and precious metals all contributing.

The UAE signed off on its CEPA agreement with Colombia on Friday, which is the second deal with a Latin American country this year following that with Costa Rica. Colombia hopes to attract USD 700mn in investment from the UAE, into the fields of green hydrogen and the digital economy in particular.

UK retail sales fell short of expectations in March in data released Friday. On the headline measure, growth was flat m/m, missing the predicted 0.3% growth and down from 0.1% in February (revised up from 0.3% on the initial print). The miss was greater on the core measure stripping out auto fuel, which contracted 0.3% m/m, down from 0.3% in February and significantly weaker than the predicted 0.3% growth. Poor weather in March and the ongoing effects of a cost-of-living crisis weighed on demand last month, and while the UK looks set to see positive GDP growth in Q1 after two consecutive contractions in H2 2023, this is likely to be weak still.

There was a run of hawkish commentary from Fed officials at the close of last week, which set for the tone for markets as concerns over geopolitical tensions moderated. Raphael Bostic, president of the Atlanta Fed, said that cuts were unlikely until the end of the year, and that the Fed could afford to be ‘patient.’ John Williams, New York Fed president, cautioned that rate hikes were possible even if not the baseline expectation, and Neel Kashkari told media that the Fed could remain on hold.

Today’s Economic Data and Events

No significant data releases are scheduled today

Fixed Income

• US treasuries lost ground across the yield curve last week as strong data and hawkish messaging from Fed speakers pushed back bets on rate cutting from the FOMC. While yields fell sharply initially on the back of geopolitical developments in the Middle East at the close of the week, these gains were swiftly rolled back.
• Yields on the 2yr ended Friday up 9bps over the week to close at 4.9858%, compared to 4.3201% at the start of the year when rate cut expectations were far higher. It has been a similar story for the 10yr which added 10bps last week to end Friday at 4.6207%.
• Yields on other major DM treasuries also tracked higher last week. In the UK, inflation came in moderately higher than expected in the week, contributing to a 9bps rise in the 10yr gilt yield to 4.230%, while 10yr bund yields closed 14bps higher at 2.499%.
• Central bank decisions are scheduled this week from Japan, Turkey, Hungary, and Russia.

FX

• The US dollar gained against its basket of peers last week, driven by a haven play around geopolitical tensions, and the diminishing likelihood of an imminent rate cut from the FOMC. The DXY index closed up 0.1% w/w and is now up 4.8% since the start of the year.
• Sterling closed down 0.7% w/w to close at 1.2370 on Friday, its lowest level since November last year. EUR gained against the greenback, however, adding 0.1% to end the week at 1.0656.
• JPY lost a further 0.9% over the week to close Friday at 154.64.

Equities

• Geopolitical tensions at the close of last week weighed on equity markets globally, and almost all major indices closed lower compared to the previous Friday. In Asia, the Shanghai Composite was an outlier as it ended the week up 1.4%, but the Hang Seng lost 3.2%. In Japan a 2.7% decline on Friday contributed to a weekly drop of 5.9%, its biggest since June 2022.
• In Europe, the CAC was the outperformer as it closed 0.1% higher w/w, but the DAX dropped 1.1% and the FTSE 100 1.3%. In the US, the Dow Jones managed to close flat after a 0.6% gain on Friday but the S&P 500 ended the week 3.1% lower after closing down for six straight sessions, and the NASDAQ dropped 5.5% as tech stocks fell ahead of earnings results next week.
• Locally, the DFM ended Friday down 0.9% w/w, while the ADX dropped 0.6%. On Thursday, Saudi Arabia’s Tadawul closed 1.6% lower w/w, while Egypt’s EGX30 bucked the trend with a 0.6% gain.

Commodities

• Brent crude prices initially rose sharply higher Friday morning after the news of an air strike in Iran was reported, but with moderate voices the loudest in the aftermath, prices soon gave up most of those gains and in the end Brent closed up just 0.2% on Friday, at USD 87.29/b. This was actually 3.5% lower than the previous Friday as concerns around demand persisted.
• WTI ended Friday at USD 83.1/b, 2.9% lower over the week.