Sunday, Aug 06, 2017

DUBAI: The focus is back on economic data.

The dollar index gained as much as 0.8 per cent on Friday, reversing the declines witnessed in the past few weeks, due to better-than-expected jobs data.

The US non-farm payrolls exceeded market expectations in June, and the unemployment rate fell even as average hourly earnings rose the most in five months.

“The data last week contained some worrying signs including a lack on inflation and wage growth in the United States. As the second quarter earnings season comes closer to the end, investors next week will focus on breaking down the past week’s economic data,” said Vaqar Zuberi, head of hedge funds at Mirabaud Asset Management.

S&P 500

Zuberi expects markets to remain at current levels. The S&P 500 index closed 0.19 per cent higher at 2,476.83 on Friday, while the Dow Jones Industrial Average closed 0.30 per cent higher at 22,092.81.

Luke Bartholomew, investment strategist at Aberdeen Asset Management Investment, needs more data points to convince him of a rate hike in December.

“This should keep the chances of a December rate rise alive. The next rate rise really boils down to whether inflation picks up and this requires stronger wage growth. While far from spectacular, especially given the further fall in unemployment, the wage numbers are just about enough for now,” Bartholomew said.

Brent crude gained 0.8 per cent as better-than-expected jobs data pointed to expectations of an improved outlook for oil demand. It closed at $52.42 (Dh192.38) per barrel after gaining last week due to falling stockpiles in the US and falling rig counts of shale.

The Organisation of the Petroleum Exporting Countries (Opec) and non-Opec countries will meet in Abu Dhabi today and tomorrow to find out why some members are falling behind the targets of production cuts.

“All eyes this week will be on the news coming out of the upcoming Opec meeting in Abu Dhabi. Saudi Arabian officials are expected to again press for stronger compliance with the production cuts agreed at the end of last year, but no other major agreements are expected from the meeting,” Zuberi said.

In the absence of any geopolitical flare up, Zuberi expects Brent oil prices to remain in the trading range of $47-$52 (Dh173-Dh191) per barrel.

By Siddesh Suresh Mayenkar Senior Reporter

Gulf News 2017. All rights reserved.