NBK Capital Global Markets Commentary – March 2017

Kuwait: April 3, 2017

Global equities ended the month of March with mixed performances. The MSCI All Country Index was slightly positive at 1.0%. The Eurozone was the largest gainer followed by Emerging Markets. US equities were flat for the month with a minimal loss of 0.04%, as measured by the S&P 500. The Fed increased interest rates signaling the economy was sound but equities held back as Trump was unable to secure the necessary votes to repeal and replace Obamacare which caused some to worry he would be unable to deliver on other campaign promises. Commodities for the month of March were as follows, Gold up 0.06% and Brent Oil down 4.96%.

US Manufacturing PMI and US Services PMI, preliminarily, are down for the month of March compared to the previous month, yet still showing signs of growth at 53.4 and 52.9, respectively. The Consumer Price Index for the month of February increased by 0.1% compared to the previous month, while initial jobless claims came in slightly above expectations at 258,000 for the month of March. Durable goods orders fell to 1.7% in February from 2.3% in January. Housing starts grew in February by 3% from the previous month to 1.288m, although building permits dropped by 6.2%. Existing home sales also saw a drop in February to 5.5m from January’s 5.7m. In retail, sales were flat at 0.1% and lower than the prior month. Consumer confidence was up with a reading of 125.6 in March vs 116.1 in February.

In the U.K., the Markit Manufacturing PMI for February came in at 54.6 which is slightly below the previous month’s reading of 55.9. The Services PMI for February also came in slightly below the previous month’s reading at 53.3. The Consumer Price Index (CPI) for the month of February came in significantly higher at 0.7% compared to last month’s reading of -0.5%. On a year on year basis, the CPI increased from 1.6% in January to 2.0% in February. Retail sales bounced back up to 1.4% in February from -0.5% in January, while March’s consumer confidence reading held stable at -6 unchanged from the previous month’s reading.

UK equities ended the month up 0.8%, as measured by the FTSE 100.

Manufacturing and services activities in the Eurozone area continue to grow month on month. The Eurozone Markit Manufacturing PMI preliminary reading for March is 56.2 compared to 55.4 in February, while the preliminary reading for the Eurozone Markit Services PMI came in at 56.5 compared to last month’s 55.5.

Consumer confidence in March was unchanged from the previous month at -5. The Consumer Price Index for the month of March on a year on year basis had decreased to 1.5% compared to the previous month’s 2.0%.

European equities closed up for the month by 2.9% as measured by the Stoxx Europe 600.

Japan’s exports in February increased 11.3% year on year compared to the 1.3% in January. Imports on the other hand grew year on year in February by 1.2% which is lower than January’s reading of 8.5%. The Nikkei Manufacturing PMI preliminary reading for March indicates continued growth with a reading of 52.6 yet slightly lower than the previous month’s reading of 53.3. Housing starts, year on year for the month of February, was reported as -2.6% compared to January’s positive growth rate of 12.8%.

Japanese equities were down in March, as measured by the Nikkei 225, decreasing 1.10%.

China’s imports, measured in local currency, increased by 44.7% in February on a year on year basis compared to last month’s reading of 25.2%. Exports also grew during the month of February by 4.2%, significantly lower than the growth recorded in January at 15.9%. For the month of February, China reported a trade deficit of CNY 60.4B compared to the surplus in January of CNY 345.5B. The Consumer Price Index came in at -0.2% for the month of February compared to the 1% in January. The Consumer Price Index, year on year, for February was reported at 0.8% coming in below expectations and the previous month’s reading of 2.5%.

The MSCI Emerging Market Index was positive for the month of March gaining 2.4%, while Chinese equities, as measured by the Shanghai Stock Exchange Composite, closed in the red 0.6%.

The GCC equity markets for the most part ended the month in red. The MSCI GCC Countries Index was down 1.3%. Dubai’s market was the largest loser at -4.1% followed by Qatar at -2.9%, Kuwait at -2.5%, and Abu Dhabi at -2.4%. Two regional markets closed out the month with positive performance; Bahrain with a gain of 0.5% and Saudi Arabia with a gain of 0.4%. For the month of March, Egypt reversed its negative performance in February with a gain of 8.4%.