Global stock markets were mixed at the end of the first trading week of 2024, with Wall Street carving out a gain yesterday that was not enough to prevent its first weekly loss in 10 weeks despite strong US jobs data.
Employers in the world's biggest economy added 216,000 jobs in December, up from 199,000 in November, with the unemployment rate unchanged at 3.7 per cent, the Labour Department reported on Friday.
The data prompted Treasury Secretary Janet Yellen to declare that the country has achieved a soft landing – or bringing down inflation without plunging the economy into recession – after recent jobs data showed continued economic strength in the face of high interest rates.
However, investors remain wary that the Federal Reserve might not be convinced enough to begin easing off on its rate rises throughout 2024, even with inflation cooling down in the US.
The US central bank said it had made “clear progress” in bringing down inflation towards its 2 per cent goal, but officials were less certain on when it may start cutting interest rates, minutes released from their December 12-13 meeting on Wednesday showed.
Major global stock markets ended 2023 trading with mixed results, but Wall Street posted its best annual rise since 2019, entering the new year against the backdrop of economic and political uncertainty.
“Buying stocks with price expectations based on the assumption that the Federal Reserve will cut interest rates by 150 basis points in the next year, alongside strong final demand and company profits, does not seem easy or logical,” said Rania Gule, a market analyst at XS.com.
On Wall Street, the S&P 500 rose 0.2 per cent, while the Dow Jones Industrial Average and Nasdaq Composite both inched up 0.1 per cent – dragging them down 1.5 per cent, 0.6 per cent and 3.2 per cent, respectively for the week.
The benchmark S&P 500 settled more than 24 per cent higher in 2023, thanks to a stellar run in megacap technology stocks. It was also just a little short of its record closing high it recorded on January 3, 2022.
The Dow rose 13.7 per cent, and the tech-heavy Nasdaq surged 13.7 per cent and 43.4 per cent, respectively, last year.
Shares in technology giant Apple declined 0.4 per cent on Friday, taking its weekly loss to nearly 6 per cent, the iPhone-maker's worst since September. The California-based company's stock surged by more than 48 per cent in 2023.
In Europe, London's FTSE 100 settled down 0.4 per cent, driving its weekly loss to 0.6 per cent to snap a six-week winning streak, as the market curbed expectations of aggressive monetary policy after the government reported economic data that was better than anticipated.
Paris's CAC 40 gave up 0.4 per cent, and Frankfurt's DAX shed 0.1 per cent.
In Asia, major bourses were mixed. Hong Kong's Hang Seng index declined 0.7 per cent, while the Shanghai Composite retreated 0.9 per cent.
Tokyo's Nikkei 225 ended up 0.3 per cent. The yen posted its worst weekly decline against the dollar in 16 months, on expectations the Bank of Japan will ease up on its monetary policy as it assesses the economic damage stemming from a 7.6-magnitude earthquake that hit the Japan on New Year's Day.
In commodities, oil prices settled higher at the end of the first trading week of 2024 as supply concerns continue to rise on mounting tension in the Middle East and a disruption in production in Opec member Libya.
Brent rose 1.51 per cent to close at $78.76 a barrel, while West Texas Intermediate surged 2.24 per cent to settle at $73.81 a barrel.
Gold, meanwhile, barely budged after an up-and-down session, but posted its first weekly drop in four as the dollar rose. The precious metal was virtually flat and settled at $2,049.80 an ounce.
Palestine and Israel - live updates
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
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