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2015 will likely be a very interesting year on the financial markets with the UK election, probable further quantitative easing from the European Central Bank (ECB), and potentially the first interest rate rises since the financial crisis for both the UK and the US, likely to be the main focus points. The weaker oil price is also likely to play its part in the global recovery. Date Release Last Expected* 6/1 UK Services PMI 58.6 58.5 6/1 UK Composite PMI 57.6 57.4 8/1 UK MPC Meeting 7-­‐2 7-­‐2 9/1 UK Manufacturing Prod. YoY 1.7% 2.3% In the UK, uncertainty over the election will likely weigh on sterling, and a hung parliament would drag on growth over the next couple of years. There is also clearly still a huge amount of fiscal consolidation to be done. Inflation is likely to remain weak, though employment should remain strong and earnings will gradually improve. The market expects the Bank of England to raise rates in the fourth quarter. 9/1 UK Industrial Production YoY 1.1% 1.6% 9/1 US Non-­‐Farm Payrolls 240k In the Eurozone huge structural problems remain, domestic demand is very weak, and deflation remains a real threat. The market expects the ECB to ease further in the first quarter by widening its asset purchase program. The US looks set to continue to outperform, with a first rate rise forecast for June this year. EUR/USD – 1 Year Chart
5th January 2015
321k *Bloomberg survey Foreign Exchange
At the end of 2014, the Dubai index ended up 11%, in line with a general trend across the Middle East. The declining oil price created considerable volatility in 2014 for ME markets and this is expected to continue into 2015. However according to Reuters, sources among Arab OPEC producers are indicating a return to $70-­‐$80 a barrel towards the end of the year due to a reduction in non-­‐
conventional production and an increase in global demand. A budget figure of DH41 billion has been announced for Dubai in 2015 – 9% higher than in 2014 and with a considerable focus away from oil revenues (-­‐5% revision from 2014). It is also expected that 2015 will generate a budget surplus. In general GCC Market news, Bloomberg sources have revealed that the Saudi stock exchange is expected to open its doors to foreign investors in April and the UAE stock market regulator is expected to impose tighter restrictions on start-­‐up IPOs in 2015. Currency Last Currency Last EUR/USD 1.1955 AUD/USD 0.8080 GBP/USD 1.5300 USD/AED 3.6730 GBP/EUR 1.2800 GBP/AED 5.6220 London Office +44 (0)20 7012 2500 USD/CHF 1.0050 EUR/AED 4.3925 Dubai Office +971 (4) 377 0902 USD/JPY 120.25 XAU/USD 1195 Click here to view Arbuthnot Latham’s deposit rates. Equity Indices
Indices Friday’s Close YTD % Change FTSE 100 6547 -­‐0.74% S&P 2058 -­‐0.03% EUROSTOXX 3126 -­‐0.43% DFM GENERAL INDEX 3689 -­‐2.16% UK Benchmark Rates
Libor Swap Mid 3 month 0.56338% 2 year 0.93% 6 month 0.68488% 3 year 1.13% 12 month 0.97525% 5 year 1.44% [email protected] [email protected] The information given in this document is for information purposes only and is not a solicitation, or an offer to buy or sell any security or any other investment or banking product. It does not constitute investment, legal, accounting or tax advice, or a representation that any investment or service is suitable or appropriate to your individual circumstances. You should seek professional advice before making any investment decision. The value of investments and the income from them can fall as well as rise. An investor may not get back the amount of money invested. P ast performance is not a guide to future performance. Fluctuations in exchange rates may affect the value and any returns from investments. The facts and opinions expressed are those of the author of the document, as of the date of writing and are liable to change without notice. We do not make any representations as to the accuracy or completeness of the material and do not accept liability for any loss arising from the use hereof. We are under no obligation to ensure that updates to the document are brought to the attention of any recipient of this material. Please note that this commentary may not be reproduced, distributed, disseminated, broadcasted, sold, published or circulated without prior consent from Arbuthnot Latham & Co., Limited. Arbuthnot Latham & Co., Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Arbuthnot Latham & Co., Limited DIFC Branch is regulated by the Dubai Financial Services Authority.