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UK Prime Minister Boris Johnson survives confidence vote

Khatija Haque - Head of Research & Chief Economist
Published Date: 07 June 2022


  • UK Prime Minister Boris Johnson narrowly won a no-confidence vote by Conservative Party MPs last night by 211-148.  While he has tried to draw a line under the issue and move on, the narrow margin of his victory shows a significant rebellion by his MPs which will likely undermine Johnson’s ability to lead the party going forward. His predecessor, Theresa May, won a no-confidence vote by a wider margin but was still forced to step-down months later.
  • The Reserve Bank of Australia is expected to hike rates for the second month in a row today, taking the Cash Rate Target to 0.6% from 0.35%. This would be the first back to back increase in interest rates in more than a decade, as it seeks to curb inflation.
  • The UAE central bank’s annual report shows an upward revision to the UAE’s 2020 GDP growth to -4.8% from an initial estimate of -6.1%.  The upgrades were to non-oil growth estimates which now stand at -4.3%.  Non-oil growth accelerated to 5.3% in 2021, showing a full recovery from the pandemic-related contraction.  Real oil GDP was broadly unchanged from 2020 levels last year, with headline GDP reaching 3.8% in 2021. The sector breakdown of the GDP data has not been published yet, but the rebound last year was likely led by the wholesale & retail trade sector, hospitality, utilities and real estate services. The UAE economy is on track to exceed pre-pandemic GDP by the end of this year.
  • Turkish PM Ergodan has said his government will not raise interest rates, despite the highest inflation in decades. The lira weakened on his comments bringing year-to-date depreciation to around 20%.

Key economic data and events today

  • 08:30 RBA rate decision, forecast 25bp rate hike to 0.6%
  • 10:00 German factory orders (Apr) forecast 0.4% m/m
  • 12:30 UK composite PMI (May) forecast 51.8
  • 16:30 US trade balance (Apr) forecast -US89.5bn

Fixed Income

  • US treasuries slumped yesterday as markets await the crucial US CPI data due later this week. Yields on the 2yr UST added 7bps to 2.7262% while the 10yr rose 11bps to close at 3.0399, back above the 3.0% level for the first time in several weeks.
  • There was a similar story in the UK, where yields on 2yr gilts added 10bps to 1.780% while the 10yr added 9bps to 2.247%.


  • The dollar index added 0.3% yesterday as it benefitted from Friday’s strong NFP report to end at 102.437 and is moving higher again this morning – although it remains off the near two-decade highs seen in May.
  • The Euro fuelled the dollar’s gains as it lost -0.2% to EURUSD 1.0696.
  • GBP shrugged off the political noise in the UK yesterday to gain 0.4% against the greenback to a close of USDGBP 1.2532.


  • The FTSE 100 was unphased by the no-confidence vote in Boris Johnson as it returned from the four-day jubilee weekend. It closed up 1.0%, while elsewhere in Europe the CAC also added 1.0% and the DAX 1.3%.
  • Locally, the DFM gained 0.1% but the ADX closed -0.7% lower.
  • DP World is selling a stake in its key Dubai assets to Canadian pension fund CDPQ for USD 5bn.  The deal includes a stake in Jebel Ali port and freezone and National Industries Park, another freezone. Other stakes worth up to USD 3bn could be sold to other investors, with the proceeds of the sales used to reduce the companies debt.  The deleveraging would strengthen the balance sheet and could lead to a ratings upgrade in the future.
  • In the US, all three major benchmark indices closed up on the day, as the Dow Jones, the S&P 500 and the NASDAQ gained 0.1%, 0.3% and 0.4% respectively.
  • The Shanghai Composite closed up 1.3% yesterday. Chinese stocks are recovering as authorities there ease the restrictive lockdowns that have characterized recent months.


  • Both benchmarks closed down modestly yesterday. WTI dropped -0.3% to close at USD 118.5/b, while Brent futures fell -0.2% to USD 119.5/b. Both are trading up once again this morning as expectations of increased Chinese demand as lockdowns ease buoys markets.

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