Markets were volatile, though strong corporate earnings results overshadowed the soft data releases, especially the muted GDP growth in US, and the S&P downgrade of Spain’s sovereign debt last Thursday. Regional markets were mixed, with Q1 profits announcements key; many UAE listed companies, including real-estate firms, announced better-than-expected earnings. The US$ weakened on soft US data though the euro held surprisingly strong in spite of the downgrade; the pound, meanwhile, hit a 22-month high against the euro. Gold prices were up and EIA’s announcement that increased Saudi output helped global oil supply exceed demand by 500k bpd in Feb-Mar also led to some minor fluctuation in oil prices.
Markets were volatile and choppy. US Shares rallied for most of the week, buoyed by corporate earnings, while Eurozone worries persist in the background, somewhat alleviated by increased IMF funding of $430 bn. Regional markets were mixed, with Saudi’s Tadawul rising the most from a week ago on strong Q1 profits. Euro had a good week, helped by German IFO & ZEW numbers, while the yen fell on speculation of additional stimulus from the BoJ. Oil price was gliding down while gold posted a weekly drop.
Easter mood did not sedate markets, which were generally weak especially after FOMC minutes reinforced the message that the Fed is not contemplating additional monetary stimuli. It is worrisome that stock markets are again primarily influenced by expectations of central bank liquidity injections like an addict mesmerized by the perspective of another shot, and not focusing on economic fundamentals. Bond markets on the contrary were retrenching to safe havens while spreads on Italian and Spanish bonds widened sharply again. The bad number on US payrolls added to gloom. Regional markets were mostly down, though Oman and UAE outshone their counterparts, buoyed by specific stocks. The combined effect of Fed hawkishness and Draghi remarks on 'downside risks' in Euroland hit the euro and lifted the dollar. Likewise gold tumbled after hopes of QE3 were dashed. Oil was hit by the dollar strength but remained broadly resilient.
After the speech by Bernanke, which was interpreted as an announcement of loose monetary policy and possible QE3, equity markets were marking time, with the mood generally negative especially in Asia. Regional markets were mixed though optimistic sentiment continued in the Saudi bourse, where the index lifted to levels not seen since the collapse of Lehman. The euro rallied against the dollar and the yen after Spain announced budget cuts; also, the GBP rose to a 4-month high and the yen was boosted by its fiscal year-end repatriation flows. Talks by some of the biggest global oil buyers over the possible release of emergency reserves and a ventilated intervention by Saudi Arabia spooked oil prices while gold prices rose.
Volatility has dominated trading. Global market suddenly awoke to the harsh reality of the fiscal crisis when S&P put the US public debt on negative outlook and Greek austerity plans failed convince investors. Regional markets were mixed, with DFM hitting a 19-week high on investor optimism while Qatar slipped as Q1 earnings failed to impress. Euro slid on fresh sovereign debt fears while yen benefits from safe haven effect (which is in itself rather worrying). Positive earnings reports led to a rebound in most markets, though not everybody is convinced by the optimistic mood. Meanwhile, gold broke the 1500 $/ounce barrier.
Global markets were weighed down by weak data. The G20 finance chiefs met last week, agreeing on greater coordination efforts and indicators for an early warning system. Regional markets were mixed; the UAE hit an 11-week high on bullish Q1 results and speculation that MSCI will upgrade the market to “emerging” status given the introduction of Delivery versus Payment. Dollar index hit a 16-month low as Fed officials backed its loose monetary policy – also helping gold rise higher to a record $1,479.01 an ounce. Meanwhile oil continues to gain in spite of the IEA & IMF warning that higher crude oil prices could erode demand and threaten global recovery.
Markets have regained ground as the effects of the Japan earthquake fade and the Middle East tensions are factored in. Regional markets are still mixed but valuations in most Gulf bourses are extremely attractive, with Dubai among the cheapest in the world in terms of fundamentals. Dollar hit a 15-month low last week while ECB’s hike pulled back the Euro from its 14-month high. Commodities continued to rally as the dollar weakened – oil prices hit a fresh 2-year peak of $124.84; gold rose to a record high above $1,470 per ounce; silver was at a 31-year high of $40.46 an ounce and tin hit a record high at $33k per tonne.
Markets cheered the US strong jobs report and China PMI data in a week that began with low liquidity - a symptom of market uncertainty caused by instability in the Middle East and the continued fall out from Japan's earthquake. Regional markets showed a mixed picture, with Egypt slowly gaining ground after last week's sharp dip. Dollar rose to a 3-month high against JPY while oil prices continued to climb on concerns of Libya oil supply interruptions, while gold edged down alongside a firm dollar.