Oil prices slumped on Tuesday amid worries over demand and concerns of further monetary tightening.
Brent, the benchmark for two thirds of the world’s oil, was 2.44 per cent lower at $84.08 a barrel at 9.46pm UAE time.
West Texas Intermediate, the gauge that tracks US crude, was down 2.83 per cent at $78.18 a barrel.
Crude futures closed higher on Monday after falling by about 2 per cent earlier in the session as China set a lower-than-expected economic growth target for 2023.
Brent settled up 0.4 per cent at $86.18 a barrel while WTI was up 1 per cent at $80.46.
“Traders were clearly not deterred by China's modest growth target for long,” said Craig Erlam, senior market analyst at Oanda.
“Against that backdrop, it may well be the case that Brent and WTI are about to test the upper end of their trading ranges that they've remained within since early December.”
US Federal Reserve chairman Jerome Powell is set to appear before Congress in a key meeting on Tuesday.
This will be followed on Wednesday with a session before the House Financial Services Committee, which oversees America's financial services industry.
“Today, all eyes and all ears are on the Fed chair and what he thinks about the latest set of economic data,” said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.
“Since the latest FOMC [Federal Open Market Committee] meeting, we saw a blowout NFP [non-farm payrolls] number, an uptick in inflation figures, lower-than-expected decline in the S&P 500 earnings and overall encouraging economic activity data,” said Ms Ozkardeskaya.
Minutes released by the Fed last month showed that policymakers expect continuing interest rate increases to bring inflation back down to their long-term goal of 2 per cent.
Most officials agreed to reduce the pace of rate increases to 25 basis points but a few recommended an increase of 50 bps to bring the Fed Funds rate to a level they consider “sufficiently restrictive”.
Last month’s US economic data pointed to stubborn inflation in the world’s largest economy, making a case for larger interest rate raises.
After its February meeting, the Fed raised interest rates by 25 bps — the eighth increase since March 2022. The Fed's next meeting is scheduled for March 21 to March 22.
Brent gained 3.6 per cent last week on positive economic data from China, which has been gradually reopening its economy after following a zero-Covid policy for about three years.
Despite the recent price rally, Fitch Solutions has reduced its 2023 Brent forecast to $90 a barrel from $95, citing “weaker-than-expected” price performance.
The rating agency also lowered its next year’s Brent estimate by $5 to $83 a barrel.
The International Energy Agency expects global oil demand to surge to record levels this year, driven by China’s economic recovery.
Demand is projected to rise by two million barrels per day to 101.9 million bpd in 2023, the Paris-based agency said in its February oil market report. It previously forecast a growth of 1.9 million bpd.
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THE BIO
Ambition: To create awareness among young about people with disabilities and make the world a more inclusive place
Job Title: Human resources administrator, Expo 2020 Dubai
First jobs: Co-ordinator with Magrudy Enterprises; HR coordinator at Jumeirah Group
Entrepreneur: Started his own graphic design business
Favourite singer: Avril Lavigne
Favourite travel destination: Germany and Saudi Arabia
Family: Six sisters
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Brief scores:
Manchester United 4
Young 13', Mata 28', Lukaku 42', Rashford 82'
Fulham 1
Kamara 67' (pen),
Red card: Anguissa (68')
Man of the match: Juan Mata (Man Utd)
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
UAE currency: the story behind the money in your pockets
Four reasons global stock markets are falling right now
There are many factors worrying investors right now and triggering a rush out of stock markets. Here are four of the biggest:
1. Rising US interest rates
The US Federal Reserve has increased interest rates three times this year in a bid to prevent its buoyant economy from overheating. They now stand at between 2 and 2.25 per cent and markets are pencilling in three more rises next year.
Kim Catechis, manager of the Legg Mason Martin Currie Global Emerging Markets Fund, says US inflation is rising and the Fed will continue to raise rates in 2019. “With inflationary pressures growing, an increasing number of corporates are guiding profitability expectations downwards for 2018 and 2019, citing the negative impact of rising costs.”
At the same time as rates are rising, central bankers in the US and Europe have been ending quantitative easing, bringing the era of cheap money to an end.
2. Stronger dollar
High US rates have driven up the value of the dollar and bond yields, and this is putting pressure on emerging market countries that took advantage of low interest rates to run up trillions in dollar-denominated debt. They have also suffered capital outflows as international investors have switched to the US, driving markets lower. Omar Negyal, portfolio manager of the JP Morgan Global Emerging Markets Income Trust, says this looks like a buying opportunity. “Despite short-term volatility we remain positive about long-term prospects and profitability for emerging markets.”
3. Global trade war
Ritu Vohora, investment director at fund manager M&G, says markets fear that US President Donald Trump’s spat with China will escalate into a full-blown global trade war, with both sides suffering. “The US economy is robust enough to absorb higher input costs now, but this may not be the case as tariffs escalate. However, with a host of factors hitting investor sentiment, this is becoming a stock picker’s market.”
4. Eurozone uncertainty
Europe faces two challenges right now in the shape of Brexit and the new populist government in eurozone member Italy.
Chris Beauchamp, chief market analyst at IG, which has offices in Dubai, says the stand-off between between Rome and Brussels threatens to become much more serious. "As with Brexit, neither side appears willing to step back from the edge, threatening more trouble down the line.”
The European economy may also be slowing, Mr Beauchamp warns. “A four-year low in eurozone manufacturing confidence highlights the fact that producers see a bumpy road ahead, with US-EU trade talks remaining a major question-mark for exporters.”
SPEC%20SHEET
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Secret Nation: The Hidden Armenians of Turkey
Avedis Hadjian, (IB Tauris)
