Markets began the new year in a buoyant mood, continuing the strong trends that characterised the end of last year. Even though equities and currencies ended with some profit-taking, the week overall saw relatively strong gains, underpinned by renewed optimism about the outlook for 2021 amid a rollout in coronavirus vaccines and the prospect of greater political stability.
Among other markets, oil prices climbed during the week following the Opec meeting, which saw Saudi Arabia make voluntary additional cuts of 1 million barrels per day, while cryptocurrencies also continued their recent stellar rise with Bitcoin breaching $40,000.
Eyes were fixed mostly on Washington and the Senate race in Georgia, where the Democrats’ victory gave them control of Congress, raising expectations of even more fiscal spending on top of the $900 billion agreed earlier by lawmakers. This, combined with the ongoing rollout of Covid-19 vaccines, supported market expectations of a boost in growth, especially over the second half of the year. This reflation trade also added to rising inflation expectations that pushed bond yields higher.
These themes were little affected by the violent clashes in Washington last week, with investors focusing on the bigger picture. In fact, Donald Trump conceding the US presidential election and promising a peaceful handover of power may have reinforced the overall positive mood.
To some extent, markets also ignored the US jobs figures for December, which disappointed expectations with a 140,000 fall in non-farm payroll employment, compared with an expected rise of around 70,000. This was the first decline since April, although the unemployment rate remained steady at 6.7 per cent. With average hourly earnings rising by a higher-than-expected 0.8 per cent, this took the yearly rate up to 5.1 per cent from 4.4 per cent previously, and perhaps encouraged those looking for inflation to make a return.
The UK also continues to be in particular focus following the Brexit deal that was achieved at the end of last year, and sterling has held up well at least initially in the aftermath of that deal. There were no significant border disruptions in the first effective week of Brexit, although there have been warnings from UK government ministers that these could start to be seen in coming weeks once business starts to pick up after the new year.
While uncertainty about trade in goods has been largely resolved, there are still questions regarding services, which constitute a much bigger part of the UK economy. One interesting development in financial services last week was the news that the UK will launch legislation to bring back trading in Swiss shares on to the London Stock Exchange, having lost the ability to trade European Union shares due to Brexit.
While the EU is holding out for the UK to make its regulatory standards “equivalent” to EU standards, this latest step suggests that the UK is far from willing to fall into line with the EU and will seek opportunities elsewhere in the world rather than become a “rule-taker” in financial services from Brussels.
These are issues for the future, however, and the race to beat the coronavirus is the more immediate concern. The UK has stolen a march on other European countries when it comes to starting a vaccination programme, aiming to have nearly 25 per cent of the UK population vaccinated by mid-February, including all of the most at-risk groups. In contrast, many EU countries have been slow to get their programmes under way, creating impatience among populations about governments' responses.
Should this divergence continue being seen, it may start to show up in forecasts for growth this year, which, in turn, could be reflected across currency markets. This could see sterling rallying further, especially if the Brexit risk premium continues to unwind. If the reflation trade in the US continues, which seems likely, this should keep the dollar under some strain –and lead to a tussle between the euro and the pound over who wins out.
Tim Fox is a prominent regional economist and financial markets analyst, and an adviser to Switzerland-based St Gotthard Fund Management
BIGGEST CYBER SECURITY INCIDENTS IN RECENT TIMES
SolarWinds supply chain attack: Came to light in December 2020 but had taken root for several months, compromising major tech companies, governments and its entities
Microsoft Exchange server exploitation: March 2021; attackers used a vulnerability to steal emails
Kaseya attack: July 2021; ransomware hit perpetrated REvil, resulting in severe downtime for more than 1,000 companies
Log4j breach: December 2021; attackers exploited the Java-written code to inflitrate businesses and governments
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
GOLF’S RAHMBO
- 5 wins in 22 months as pro
- Three wins in past 10 starts
- 45 pro starts worldwide: 5 wins, 17 top 5s
- Ranked 551th in world on debut, now No 4 (was No 2 earlier this year)
- 5th player in last 30 years to win 3 European Tour and 2 PGA Tour titles before age 24 (Woods, Garcia, McIlroy, Spieth)
COMPANY PROFILE
Name: Xpanceo
Started: 2018
Founders: Roman Axelrod, Valentyn Volkov
Based: Dubai, UAE
Industry: Smart contact lenses, augmented/virtual reality
Funding: $40 million
Investor: Opportunity Venture (Asia)
UAE currency: the story behind the money in your pockets
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TO A LAND UNKNOWN
Director: Mahdi Fleifel
Starring: Mahmoud Bakri, Aram Sabbah, Mohammad Alsurafa
Rating: 4.5/5
Most sought after workplace benefits in the UAE
- Flexible work arrangements
- Pension support
- Mental well-being assistance
- Insurance coverage for optical, dental, alternative medicine, cancer screening
- Financial well-being incentives
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
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UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
How has net migration to UK changed?
The figure was broadly flat immediately before the Covid-19 pandemic, standing at 216,000 in the year to June 2018 and 224,000 in the year to June 2019.
It then dropped to an estimated 111,000 in the year to June 2020 when restrictions introduced during the pandemic limited travel and movement.
The total rose to 254,000 in the year to June 2021, followed by steep jumps to 634,000 in the year to June 2022 and 906,000 in the year to June 2023.
The latest available figure of 728,000 for the 12 months to June 2024 suggests levels are starting to decrease.
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
Our legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants
COMPANY%20PROFILE
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RESULTS
5pm: Handicap (PA) Dh70,000 1,400m
Winner: AF Tathoor, Tadhg O’Shea (jockey), Ernst Oertel (trainer)
5.30pm: Handicap (TB) Dh70,000 1,000m
Winner: Dahawi, Antonio Fresu, Musabah Al Muhairi
6pm: Maiden (PA) Dh70,000 2,000m
Winner: Aiz Alawda, Fernando Jara, Ahmed Al Mehairbi
6.30pm: Handicap (PA) Dh70,000 2,000m
Winner: ES Nahawand, Fernando Jara, Mohammed Daggash
7pm: Maiden (PA) Dh70,000 1,600m
Winner: Winked, Connor Beasley, Abdallah Al Hammadi
7.30pm: Al Ain Mile Group 3 (PA) Dh350,000 1,600m
Winner: Somoud, Connor Beasley, Ahmed Al Mehairbi
8pm: Handicap (PA) Dh70,000 1,600m
Winner: Al Jazi, Fabrice Veron, Eric Lemartinel
Pros%20and%20cons%20of%20BNPL
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MISSION: IMPOSSIBLE – FINAL RECKONING
Director: Christopher McQuarrie
Starring: Tom Cruise, Hayley Atwell, Simon Pegg
Rating: 4/5
Electoral College Victory
Trump has so far secured 295 Electoral College votes, according to the Associated Press, exceeding the 270 needed to win. Only Nevada and Arizona remain to be called, and both swing states are leaning Republican. Trump swept all five remaining swing states, North Carolina, Georgia, Pennsylvania, Michigan and Wisconsin, sealing his path to victory and giving him a strong mandate.
Popular Vote Tally
The count is ongoing, but Trump currently leads with nearly 51 per cent of the popular vote to Harris’s 47.6 per cent. Trump has over 72.2 million votes, while Harris trails with approximately 67.4 million.
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
VEZEETA PROFILE
Date started: 2012
Founder: Amir Barsoum
Based: Dubai, UAE
Sector: HealthTech / MedTech
Size: 300 employees
Funding: $22.6 million (as of September 2018)
Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC
Washmen Profile
Date Started: May 2015
Founders: Rami Shaar and Jad Halaoui
Based: Dubai, UAE
Sector: Laundry
Employees: 170
Funding: about $8m
Funders: Addventure, B&Y Partners, Clara Ventures, Cedar Mundi Partners, Henkel Ventures
Name: Peter Dicce
Title: Assistant dean of students and director of athletics
Favourite sport: soccer
Favourite team: Bayern Munich
Favourite player: Franz Beckenbauer
Favourite activity in Abu Dhabi: scuba diving in the Northern Emirates
Race card
4pm Al Bastakiya Listed US$300,000 (Dirt) 1,900m
4.35pm Mahab Al Shimaal Group 3 $350,000 (D) 1,200m
5.10pm Nad Al Sheba Turf Group 3 $350,000 (Turf) 1,200m
5.45pm Burj Nahaar Group 3 $350,000 (D) 1,600m
6.20pm Jebel Hatta Group 1 $400,000 (T) 1,800m
6.55pm Al Maktoum Challenge Round-3 Group 1 $600,000 (D) 2,000m
7.30pm Dubai City Of Gold Group 2 $350,000 (T) 2,410m
The National selections:
4pm Zabardast
4.35pm Ibn Malik
5.10pm Space Blues
5.45pm Kimbear
6.20pm Barney Roy
6.55pm Matterhorn
7.30pm Defoe
