MENA MARKETS REVIEW: SEPTEMBER 2017

Kuwait: October 8, 2017

HIGHLIGHTS

• Trump announces tax reform plan and the Fed confirms it will start tapering its balance sheet in October
• US equity markets continue to rally hitting new highs during each month of this past quarter
• Emerging markets suffered first monthly loss in 2017 but close the quarter up 7.0%
• Brent has second best performing month of the year with a 20% gain for Q3 2017
• FTSE upgrades Kuwait to emerging status
• Saudi Arabia and Bahrain sell 12.5 and 3 billion dollar denominated bonds

SEPTEMBER 2017: STEADY ENOUGH GROWTH FOR CENTRAL BANKS TO ADJUST COURSE, BUT VERY SLOWLY

Going into the fourth quarter, the world economy and international markets appear to be on a steady, little changed, track. Stocks are moving up, making or nearing new highs in some cases (US, Germany, UK). Interest rates may be trending gradually and slowly higher, though they are lower than at the beginning of the year in some advanced economies. The USD remains under pressure, especially against the euro, and oil prices have stabilized somewhat in recent weeks, though they are lower on the year, and analysts are divided on their direction ahead.

Global Equities

Global equities continue to perform well posting a gain of 1.8% in September, as measured by the MSCI All Country World Index. US equities continue their positive run, closing up 1.9% and 2.1% for the S&P 500 and Dow Jones, respectively. Both indices, on a year to date basis, have returns in excess of 10%. US equity markets again reached new highs despite the natural disasters hitting the US mainland and North Korean tensions. Supporting the markets was President Trump’s announced tax reform, cutting the corporate tax rate from 35% to 20% and temporary resolution of the debt ceiling issue. In terms of monetary policy, the Federal Reserve did not hike rates and confirmed that it would begin unwinding its balance sheet as was previously signaled.

Read the rest of the report here.