NBK Capital Global Markets Commentary – April 2017

Kuwait: May 3, 2017

Global equities had mixed performance in the month of April. The MSCI All Country Index was up 1.4%. For sub-indices, the MSCI Emerging Market Index was the largest gainer followed by the Eurozone and Nikkei. The FTSE 100 and Shanghai Composite were the largest losers, each shedding in excess of 1.0%. US equities were up, with the S&P 500 posting a gain of 0.9%. During the month, Trump completed his first 100 days in office with continued attacks on the political norms mixed with successes and failures in terms of campaign promises. Across the Atlantic, UK’s May called for snap elections and the French completed their first round of voting narrowing the race to two candidates, the far right and center left. Commodities also had mixed performances with Gold up 1.5% and Brent down 2.1%.

In the US, the preliminary reading for the Q1 GDP Index is positive at 2.2%. On an annualized basis, the reading is 0.7%, which is below the consensus of 1.2%. The Unemployment Rate for April improved, decreasing by 0.2% to 4.5%. Markit US Manufacturing and Services PMI are preliminarily both down for the month of April, although still above 50 at 52.8 and 52.5, respectively. The Consumer Price Index for the month of March, on a year on year basis, is at 2.4% slightly lower than the previous month reading of 2.7%. Initial jobless claims for the first three weeks came in at 257K compared to the previous reading of 243K. Durable Goods Orders for March was at 0.7% lifted mainly by transportation, specifically aviation. Housing Starts came in for March slightly lower than the previous month at 1.215 million while New Home Sales and Existing Home Sales both came in slightly higher than the previous month, increasing 4.4% and 5.8%. Unemployment Rate

In the UK, the Markit Manufacturing and Services PMI for March were both above 50 indicating growth. The Manufacturing PMI was flat compared to the previous month while the Services PMI was slightly higher at 55 compared to 53.3. GDP on a preliminary basis increased by 0.3% quarter on quarter and 2.1% year on year. Consumer Confidence for April was slightly lower than March at -7 versus -6. Retail Sales in March decreased by 1.8% month on month whereas the Consumer Price Index in March increased by 0.4% from February.

UK equities ended the month down 1.6%, as measured by the FTSE 100.

Within the Eurozone, Markit Manufacturing and Services PMI, on a preliminary basis, indicate continued growth through the month of April. The Markit Manufacturing PMI is estimated at 56.8 compared to 56.2, while the Markit Services PMI is estimated at 56.2 compared to 56.0. The Consumer Price Index’s preliminary reading for April is up 1.9% year on year, while Consumer Confidence is unchanged at -3.6.

European equities closed up for the month by 1.6%, as measured by the Stoxx Europe 600.

Japan’s imports and exports have both increased in March on a year on year basis by 15.8% and 12.0%, respectively. The Nikkei Manufacturing PMI for April was flat at 52.7 when compared to March’s reading of 52.8 yet still above 50 indicating continued growth. Housing Starts in March grew 0.2% on year on year basis. The National Consumer Price Index also grew 0.2% in March on a year on year basis.

Japanese equities were up in April, as measured by the Nikkei 225, increasing 1.5%.

China in March reported increased imports and exports. On a year on year basis, imports and exports increased by 20.3% and 16.4%, respectively, resulting in a Trade Balance surplus of CNY 164.34B versus the previous month’s deficit of CNY 60.4B. The Consumer Price Index for March was slightly down at -0.3% compared to -0.2%. The non-manufacturing PMI for April was 54, slightly below March’s 55.1 while the Caixin Manufacturing PMI for March also came in above 50 at 51.2.

The MSCI Emerging Market Index was positive for the month of April gaining 2.0%, while Chinese equities, as measured by the Shanghai Stock Exchange Composite, closed down 2.1%.

The GCC equity markets were for the most part negative for the month of April with MSCI GCC Index posting a loss of 1.2%. Abu Dhabi’s market was the largest gainer increasing 1.8% while Saudi Arabia was flat with a minimal gain of 0.2%. In terms of losses, Egypt was the largest at -4.3%, followed by Qatar at -3.1%, followed by Dubai at -1.9%, and followed by Bahrain and Kuwait at -1.5% and -1.2%, respectively. Oman’s market was also negative, but shed less than 1.0%.