Equity markets kicked off the week on the front foot, fuelled by optimism on the approval of US President Joe Biden's $1.9 trillion aid programme.
US stocks hit all-time highs, with the Dow Jones Industrial Average hitting a shade below 33,000 and putting the index up 6 per cent so far for March. Meanwhile, the S&P500 has 4,000 in its sights after gaining 3.9 per cent so far this month.
Despite the choppy price action in US tech stocks, the Nasdaq Index is treading in positive waters this month by holding above the 13,000 level.
The upward momentum in stocks has been impressive, despite US 10-year Treasury yields holding above 1.6 per cent. However, all eyes will now turn to this week's US Federal Reserve meeting, which begins late Wednesday UAE time.
The theme around rising US bond yields has been a source of concern for financial markets – they have been on an uptick since early February – a period in which yields on the 10-year bonds have risen from 1 per cent to the current 1.6 per cent.
Anaemic demand from international buyers is fuelling this move in bond yields, which has led to multiple poorly subscribed US bond auctions. Such pricing action would suggest that the Fed may have to step in to fill that gap in demand in a bid to flatten the yield curve.
It's worth noting that higher bond yields lead to lower equity markets – rising bond yields equate to higher borrowing costs, and this hurts future earnings of companies that rely on debt for their cash flow, ultimately hurting their stock prices.
The Fed has consistently stood by its aim to support markets and many see this week's meeting as an opportunity for it to step in, similar to what we saw the European Central Bank do last week, when it announced a plan to increase emergency bond purchases to address rising bond yields.
While I don't foresee any major changes to policy, recent data has shown that US inflation remains soft, with the February core consumer price index growing by just 0.1 per cent month-on-month, while year-on-year CPI eased to 1.3 per cent from 1.4 per cent in January.
After a stunning move above $60,000 in March, Bitcoin has retraced some of its recent gains to trade around the $50,000 handle
However, I will be taking note of just how dovish Fed chairman Jerome Powell's comments will be, along with his thoughts on inflation. I will also keenly watch the Fed's upcoming projections on the US economy and continue to keep an eye on the US 10-year Treasury yield in the weeks ahead.
If we continue to see stubbornly higher bond yields, this could lead to choppier stock prices with downward momentum picking up steam as a result through the end of March and into early April.
Rising yields have had a positive impact on the US Dollar Index, which is up 0.98 per cent on the month. The EUR/USD has corrected below 1.20 levels as a result, while GBP/USD has settled below 1.40 levels. In my opinion, both currencies have been on a tear since 2020 and these moves are short term.
I expect EUR/USD to continue to find good support at 1.1820 levels with a 1.22 target on the cards through the middle part of the second quarter. Similarly for GBP/USD, I expect good buying support to come in at 1.3780 levels with the cross stabilising above 1.40 levels.
After a stunning move above $60,000 in March, Bitcoin has retraced some of its recent gains to trade around the $50,000 handle. Expect optimism in markets to fuel Bitcoin's gains higher in the short term, and I expect good buying support to come in the channel between $43,000 and $45,000.
And finally, the Dubai Gold & Commodities Exchange (DGCX) Gold contract picked up some momentum in March after falling below $1,680 levels this month.
Currently trading at $1,734, I still see some anaemic pricing action keeping gold bulls in check in the short to medium term. I would exercise caution for long positions as I feel the depth of this gold sell-off is not fully complete. I see the key support level for gold at $1,673 and this would need to hold to protect against a further downside move to $1,580.
Gaurav Kashyap is a market strategist at Equiti Global Markets. The views and opinions expressed in this article are those of the author and do not reflect the views of Equiti
The Written World: How Literature Shaped History
Martin Puchner
Granta
The alternatives
• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.
• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.
• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.
• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.
• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.
How to help
Send “thenational” to the following numbers or call the hotline on: 0502955999
2289 – Dh10
2252 – Dh 50
6025 – Dh20
6027 – Dh 100
6026 – Dh 200
The Uefa Awards winners
Uefa Men's Player of the Year: Virgil van Dijk (Liverpool)
Uefa Women's Player of the Year: Lucy Bronze (Lyon)
Best players of the 2018/19 Uefa Champions League
Goalkeeper: Alisson (Liverpool)
Defender: Virgil van Dijk (Liverpool)
Midfielder: Frenkie de Jong (Ajax)
Forward: Lionel Messi (Barcelona)
Uefa President's Award: Eric Cantona
A State of Passion
Directors: Carol Mansour and Muna Khalidi
Stars: Dr Ghassan Abu-Sittah
Rating: 4/5
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
SPECS
Mini John Cooper Works Clubman and Mini John Cooper Works Countryman
Engine: two-litre 4-cylinder turbo
Transmission: nine-speed automatic
Power: 306hp
Torque: 450Nm
Price: JCW Clubman, Dh220,500; JCW Countryman, Dh225,500
