Dubai sees record visitor numbers in H1

Dubai saw a record 9.31mn overnight guests over the first six months of 2024, up 9% on the 8.55mn visitors logged over the corresponding period last year. The emirate has continued to see strong growth in the tourism sector even as pre-pandemic levels have now been exceeded, in a positive for economic growth. According to the press release, visitors from Western Europe accounted for 20% of the total, followed by South Asia (17%), and CIS and Eastern Europe (15%). GCC visitors made up 14%, while the rest of MENA contributed 12%. Average occupancy was 78.7%, up from 77.7% in H1 2023, while revenue per available room (REVPAR) was up 6% y/y to AED 439.

This week is a big week for central bank meetings, with three G10 rate-setting committees set to announce their latest policy stances. The FOMC is expected to hold the Fed funds rate steady with the upper bound at 5.5% on Wednesday, and we hold to our view that the first rate cut from the Fed will come at the next meeting in September. The consensus view for the Bank of England is that it will enact its first cut on Thursday, cutting the bank rate by 25bps to 5.0%, although we still think the first move will more likely follow at the September meeting. In Japan, the BoJ is anticipated to hold the upper bound of the target rate at 0.1%. Other central banks meeting this week include Brazil’s, Czechia’s, Chile’s, and Colombia’s.

On Friday, US data showed that the Fed’s preferred measure of inflation, the core PCE price index, rose 0.2% m/m in June, in line with expectations and up from 0.1% the previous month. The annual measure was 2.6% y/y, unchanged from May. The quarterly data had already been released the previous day. Meanwhile, personal income growth slowed to 0.2% m/m in June, down from 0.4% in May (revised down from 0.5% on the initial print), and missing expectations that growth would remain at the same level. Personal spending was in line with predictions at 0.3% m/m, down from 0.4% the previous month) revised up from 0.2% initially.

Key Economic Data and events

No major data releases scheduled today

Fixed Income

• The PCE data at the close of last week saw USTs rally as traders saw a greater chance of a September rate cut from the Fed, which would mark the first in this cycle. Yields on the 2yr dropped 5bps on Friday to 4.3832%, down 13bps over the week. The 10yr also saw a 5bps drop on yield on Friday to 4.1939%, but this was also the difference between last Friday’s close, leaving the bear steepening trend intact.

FX

• The dollar was little changed against its basket of peers at the close of the week, with the DXY index down just 0.1% w/w on Friday.
• The biggest story in FX markets last week was a 2.4% rally by JPY which closed Friday at 153.76, its strongest close in several months as bets are placed on the BoJ hiking rates at its MPC meeting this week.
• This was offset by some weakness in EUR and GBP which lost ground against the greenback, falling by 0.2% and 0.4% respectively, to close at 1.0856 and 1.2867.

Equities

• Despite some partial recoveries on Friday, last week was largely a difficult one for Asian equity markets, as most major indices closed in the red. The Nikkei was the standout loser as it closed down 5.3% w/w on Friday, weighed down by the general risk-off tone compounded by a strengthening yen. The Hang Seng ended the week 2.2% lower, while the Shanghai Composite dropped 3.4% as concerns around China’s growth outlook remained to the fore even after the PBOC’s rate cut.

• In Europe, strong gains on Friday were sufficient to push some of the major indices back into the black to close the week with the DAX adding 1.4% w/w and the FTSE 100 1.6%, although France’s CAC still closed down 0.2% w/w.

• In the US, the tech-heavy NASDAQ ended the week down 2.1% as some of the big tech stocks had a difficult week. The S&P 500 also closed down, by 0.8%, while the Dow Jones added 0.8%.

• There was a stronger performance in local equity markets as the DFM ended the week up 1.6% w/w on Friday, while the ADX closed 0.8% higher. On Thursday, Saudi Arabia’s Tadawul closed down 1.3% w/w, while Egypt’s EGX 30 added 2.7%.

Commodities

• Oil prices were under pressure last week, clocking the largest weekly decline in several months. Brent futures ended the week down 1.8% at USD 81.1/b, while WTI lost a greater 3.7% to USD 77.2/b. The general risk-off tone of the week compounded residual concerns around China’s growth outlook which have offset an ongoing draw in US crude stocks.

• Egypt announced over the weekend that its oil ministry had signed deals with oil majors Shell, Petronas, and Cheiron Energy to invest USD 340mn in order to boost oil and gas production in the Mediterranean and the Gulf of Suez.