What is Saudi Arabia’s expected non-oil growth in the medium term?

Saudi Arabia projects that its non-oil growth will surpass 5% in the medium term, as outlined by Finance Minister Mohammed Al Jadaan. This anticipated growth is based on current trends where the non-oil GDP has been expanding at rates around and above 4%.

Saudi Arabia’s Non-Oil Sector Outlook

Saudi Arabia’s non-oil sector is projected to experience a growth rate exceeding 5% in the coming years. Finance Minister Mohammed Al Jadaan underscored this at the Saudi Capital Markets Forum, emphasizing that non-oil GDP is already advancing at numbers above 4%.

Read: Gulf Markets Edge Higher in Anticipation of US Inflation Data

Diversification Efforts Bearing Fruit

The kingdom’s economy is showing signs of increased diversification, with the non-oil growth figures serving as a testament to the success of these efforts. While the shift away from oil reliance is promising, challenges remain, including the necessity for constant diversification and adaptation to global economic trends. However, market statistics and government initiatives—like the Saudi Vision 2030—support a sustained positive forecast for the Saudi economy.

Expert Perspectives on Economic Growth

Financial and economic experts echo Al Jadaan’s positive sentiment, pointing to Saudi Arabia’s strategic reforms and private sector expansion as critical components of the non-oil growth. Their insights further substantiate the kingdom’s approach to shaping a resilient and diversified economy.

Impacts and Expectations for the Future

The projected growth has meaningful implications for businesses and residents of Saudi Arabia. It promises more job opportunities, increased foreign investment, and a vibrant consumer market. When juxtaposed with other GCC countries, Saudi Arabia’s economic performance can be seen not only as a national success but also as a regional milestone.

Sustaining Momentum

Looking ahead, Saudi Arabia is expected to continue investing in non-oil sectors such as renewable energy and digital infrastructure, essential for maintaining the growth momentum. While the country’s economic forecast is positive, it remains subject to global economic conditions, oil market dynamics, and regional political shifts.

Story Snapshots:

• The pound reaches a near six-month high against the euro.
• UK wage growth slowed less than expected, potentially affecting BoE rate cut decisions.
• The unemployment rate dropped to 3.8%, defying forecasts.
• Markets are pricing in fewer BoE rate cuts compared to the ECB and Federal Reserve.

How have recent UK wage growth figures impacted the pound and investor expectations for Bank of England rate cuts? UK wage growth exceeding forecasts has strengthened the pound and led investors to reassess the likelihood of early rate cuts from the Bank of England.

In the United Kingdom, the pound sterling has shown remarkable resilience, reaching its highest point against the euro in nearly half a year. This surge came on the heels of wage growth data that outpaced analyst predictions for the final quarter of 2023.

Despite a slight deceleration in wage increases, the figures, excluding bonuses, grew by 6.2% in the October-November period year-on-year, dipping from a previous rate of 6.7%, yet surpassing the median forecast of a 6.0% rise. This slowdown was less significant than markets had anticipated, prompting a reconsideration of expected rate cuts by the Bank of England (BoE).

Furthermore, the UK’s unemployment rate has decreased to 3.8%, sitting below the projected 4.0%. Market analyst Kyle Chapman of Ballinger and Co. noted that although wages are trending towards a more sustainable level, the current pace is unlikely to justify immediate rate reductions by policymakers.

Read: US Senate Approves $95 Billion Aid Package for Ukraine, Israel, Taiwan

Sterling exhibited an uptick, registering a 0.3% increase to 85.04 pence per euro, marking its most robust performance against the single currency since late August. Similarly, the pound advanced against the dollar, reaching $1.2668, its peak since the beginning of February.

The shift in market sentiment is evident as short-term interest rate traders have scaled back the full pricing of a quarter-point rate cut from the BoE, extending expectations from April to June. Presently, markets are factoring in just under 75 basis points of easing from the BoE for this year, compared to the higher anticipated cuts from the European Central Bank and the Federal Reserve.

According to Sanjay Raja, chief UK economist at Deutsche Bank, the latest wage growth figures lean more towards a hawkish interpretation by the BoE. This sentiment echoes the market’s anticipation for the upcoming UK inflation data release, as it will play a pivotal role in shaping the potential for spring rate cuts.

Investors and analysts now keenly await the UK’s January inflation figures from the Office for National Statistics. Should consumer prices rise to the expected 4.2% from the previous 4.0%, this could pave the way for the BoE’s next moves. These economic indicators not only shape national monetary policy but also influence international financial markets, underscoring the interconnectedness of global economies and the significance of fiscal indicators in driving market dynamics.

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Story Snapshots:

• The Senate passed a $95.34 billion aid package for Ukraine, Israel, and Taiwan.
• The legislation received bipartisan support, with a 70-29 vote.
• Senate Majority Leader Chuck Schumer underscored the bill’s national security significance.
• Opposition from some Republicans centered on aid talks excluding U.S. border policy changes.
• The bill’s fate in the Republican-controlled House is uncertain.

What has been the U.S. Senate’s action regarding foreign aid to Ukraine, Israel, and Taiwan? The Democratic-led U.S. Senate passed a $95.34 billion aid package for Ukraine, Israel, and Taiwan, which now faces an uncertain future in the Republican-controlled House of Representatives.

In a decisive move, the U.S. Senate, led by the Democrats, has approved a significant aid package aimed at providing substantial support to Ukraine, Israel, and Taiwan. The bill, totaling $95.34 billion, managed to transcend partisan divides with twenty-two Republicans joining Democrats in a 70-29 vote. The noteworthy support for the legislation speaks to its perceived importance for not only U.S. national security but also the security of key allies and the notion of western democracy at large.

Read: European Stocks Climb as Focus Shifts from Earnings to Data

The urgency of this aid package has been highlighted by Senate Majority Leader Chuck Schumer, especially in light of recent geopolitical events. However, the passage of the bill by the Senate is only the preliminary step, as it now proceeds to the House of Representatives, where its outlook is more complex. Speaker Mike Johnson signaled reservations, pointing to the absence of amendments addressing immigration and border security—a prominent concern among House Republicans.

The package earmarks $61 billion for Ukraine as it continues to face aggression, $14 billion for Israel to bolster its defenses against Hamas, and $4.83 billion to support Indo-Pacific partners, including Taiwan, in the face of Chinese assertiveness. Additionally, it allocates $9.15 billion for humanitarian assistance across various global conflict zones.

This legislative effort occurs during a time when former President Donald Trump’s influence remains palpable, particularly over the Republican majority in the House. His call for foreign aid to take the form of loans rather than grants echoes within the chamber and adds another layer to the ongoing discourse.

With the bill’s journey only halfway complete, the eyes of international partners and domestic observers alike are fixed on the House. The next steps will not only determine the immediate fate of the aid but will also set a precedent for how the United States approaches foreign assistance during times of geopolitical tension and humanitarian crises.

As the nation awaits the House’s verdict, the aid package embodies more than just financial support—it represents a tangible expression of the United States’ commitment to global stability and democratic values. The Senate’s bipartisan backing sends a potent message of unity in foreign policy. However, the true measure of the legislation’s success will be its ability to navigate the political terrain of the House and emerge as a law that fortifies allies and upholds American interests abroad.

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Story Snapshots:

• Indian shares rose, driven by financial sector gains.
• Cooling domestic inflation and MSCI index weightage revision boost market sentiment.
• Retail inflation in India fell to a three-month low in January.
• MSCI index revision could result in over $1.2 billion in foreign inflows.

What factors have led to the rise in Indian shares? Indian shares have risen due to a rebound in the financial sector, easing domestic inflation, and the anticipation of increased foreign inflows following India’s higher weightage in the MSCI Global Standard index.

Indian financial markets experienced a notable upswing on Tuesday, with the NSE Nifty 50 index and the S&P BSE Sensex both registering gains. The optimism in the market was largely fueled by a rebound in financial stocks which had seen a drop in the previous session. Notably, eleven out of thirteen major sectors logged gains, showcasing a broad-based recovery.

Financials, which carry significant weight in the index, soared by 1.37%, seemingly buoyed by the cooling core inflation which dropped to a three-month low. This dip in inflation suggests a stabilizing macroeconomic environment, a crucial factor for market confidence. Furthermore, the global index provider MSCI’s decision to increase India’s weightage in its Global Standard index has sparked positive sentiment, potentially leading to a substantial influx of foreign portfolio investor (FPI) inflows.

Read: Allied Bank’s Profit Soars 95% in 2023

Analysts, including those from Sharekhan and Nuvama Alternative and Quantitative Research, anticipate that India could witness over $1.2 billion in FPI inflows due to the index revision. This could provide a significant boost to Indian shares as it indicates increased confidence in the Indian market by foreign investors.

Despite the rally in blue-chip stocks, the broader, more domestic-focused small-cap and mid-cap segments lagged behind, underperforming for the third consecutive session. According to experts, this recent correction is viewed as a healthy adjustment, clearing overvaluation in the segments and presenting new opportunities for entry into the market.

On the downside, the metals sector faced a downturn, with aluminium producer Hindalco taking a significant hit. The company’s shares fell sharply after reporting quarterly profits that fell short of expectations, impacted by sluggish aluminium sales and rising costs at its U.S. subsidiary, Novelis.

In contrast to the fortunes of the metal sector, fintech giant Paytm saw its shares plummet to a new low following a downgrade by brokerage Macquarie. Concerns about a potential customer exodus, exacerbated by the Reserve Bank of India’s recent clampdown on Paytm’s banking arm, contributed to the stock’s fall.

Asian markets also saw progress, with investors eagerly awaiting a key U.S. inflation report that could influence the Federal Reserve’s rate decisions. As global markets respond to these economic indicators, the Indian stock market’s current upturn could signal a period of growth, contingent on sustained macroeconomic stability and continued foreign investment.

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Story Snapshots:

• Indian rupee projected to open flat, with attention on US inflation data.
• Non-deliverable forwards indicate the rupee maintaining its previous close.
• US inflation figures critical for shaping Federal Reserve rate cut timelines.

What is the expected market opening for the Indian rupee, and how does the upcoming U.S. inflation data factor into this? The Indian rupee is expected to open nearly unchanged from its previous session, as markets await U.S. inflation data that is crucial for determining the timeline of the Federal Reserve’s interest rate cuts.

In Mumbai’s bustling financial landscape, the Indian rupee is on the verge of a meticulously still start, with traders and investors alike pausing for pivotal U.S. inflation data due later today. This data assumes a central role in shaping expectations around the Federal Reserve’s much-anticipated interest rate cut.

Forex traders are keeping a steady gaze on the non-deliverable forwards, which point to the rupee opening at a similar level to Monday’s close of 83.0025. The currency’s recent performance has been characterized by minor fluctuations—a mere 4 paisa range—reflecting the market’s current state of limbo.

Read also: Indian Bond Yields Climb as Traders Await US Inflation Figures

A sense of neutrality permeates the currency market as analysts and traders express a collective sentiment of uncertainty. “Markets just do not know what direction to take right now. The bias is more or less neutral,” a forex trader remarked, hoping for the U.S. inflation data to clear the fog surrounding the figure of 83.

The U.S. inflation report is expected to present a 0.2% month-on-month increase in consumer prices, with core inflation potentially rising by 0.3%. On an annual scale, headline inflation might see a decrease to 2.9% from 3.4%, and the core numbers could show a softening to 3.7% from 3.9%.

Following a strong U.S. monthly jobs report, the likelihood of near-term rate cuts by the Fed has diminished, shifting the market’s perspective on the rate trajectory for 2024 significantly from earlier predictions.

Societe Generale’s analysis underscores the Federal Reserve’s readiness to cut rates only with the confidence that inflation is moving towards a sustainable 2% target. This upcoming CPI update could either strengthen or undermine that confidence.

As the dollar index inches upwards and Asian currencies show mixed reactions, the financial world holds its breath for the U.S. inflation data—the forthcoming arbiter of interest rate expectations and a catalyst for potential shifts in global currency dynamics. In this financial interlude, the Indian rupee’s muted stance serves as a mirror to the broader market’s anticipation and the strategic patience that defines the prelude to economic recalibrations.

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Story Snapshots:

• KOSPI index hits its highest since January 2, boosted by chipmaker stocks.
• SK Hynix records a significant share price jump; Samsung Electronics also climbs.
• Analysts attribute semiconductor stock purchases to AI industry growth.
• Despite a dip in exports, foreign investors continue their buying streak.

What factors led to the rise in South Korean shares, and how did semiconductor stocks perform? The KOSPI index in South Korea reached its highest point in six weeks, influenced by significant gains in heavyweight chipmakers amid a broader global rally, with analysts linking the surge in semiconductor stocks to advancements in the artificial intelligence sector.

Seoul’s financial markets witnessed an impressive climb, reaching their highest levels in the past six weeks, with investor sentiment buoyed by substantial gains in heavyweight chipmaker stocks. The benchmark KOSPI index closed up 1.12% at 2,649.64, marking a notable rally led by industry giants.

Semiconductor stocks, in particular, saw a marked rise. SK Hynix, a key player in the market, experienced a 5.04% increase in its shares—a notable leap not seen since November of the previous year. The larger counterpart, Samsung Electronics, also enjoyed a 1.48% ascent. Analyst Seo Sang-young from Mirae Asset Securities points to a surge in artificial intelligence-related advancements as the impetus behind the enthusiastic acquisition of semiconductor stocks by foreign investors.

Read: Bitcoin Surpasses $50,000, Hits First High Since 2021

Meanwhile, despite the positively skewed trading session, South Korea’s exports for the first ten days of February showed a 14.6% decrease from the same period a year earlier, a dip attributed to calendar variations.

Yet, the broader share market remained on solid ground with advancements in 599 of the 936 traded issues. Foreign investors, undeterred by the export data, continued their streak of net buying for the eighth consecutive session, injecting 944.9 billion won ($711.40 million) into the main board.

The won concluded the onshore trade slightly stronger, while bond markets reflected a decline in futures on three-year treasury bonds and a rise in yields for both three-year and benchmark ten-year treasury bonds.

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Story Snapshots:

• SpiceJet initiates workforce reduction to save 1 billion rupees annually.
• Reports suggest 1,400 jobs may be cut, comprising 15% of their workforce.
• The exact number of job cuts remains unconfirmed by the airline.
• Fundraising efforts are part of SpiceJet’s turnaround strategy.

What cost-saving measures has Indian carrier SpiceJet undertaken, and what is the aim of these actions? SpiceJet has begun reducing its workforce as part of a cost-saving strategy, aiming to save 1 billion rupees annually, although the airline has not confirmed the specific number of jobs affected.

Bengaluru’s budget airline industry is witnessing significant shifts as SpiceJet, a notable Indian low-cost carrier, announced the commencement of workforce reduction measures. The airline’s decision is a strategic move to trim costs, with an objective to save up to 1 billion rupees annually.

Read: Turkish Unemployment Rate Falls to 8.8% in December

While a local business daily, Economic Times, reported earlier that approximately 1,400 jobs could be terminated—representing 15% of SpiceJet’s 9,000 employees—the airline itself has yet to verify these figures. This move comes at a critical juncture for the airline known for its budget-friendly services.

SpiceJet’s decision falls in line with its broader turnaround plan, which also includes a fund infusion strategy aimed at reviving its grounded aircraft. As a part of this financial overhaul, the airline managed to raise 7.44 billion rupees, contributing to a larger 22.50 billion rupees fundraising target through the sale of shares and warrants.

This initiative reflects the challenging operational landscape of the aviation industry, where carriers like SpiceJet must navigate financial turbulence. The airline’s restructuring efforts highlight its commitment to sustainable operations, despite the potential impact on its workforce.

The financial recalibration through workforce reduction, while difficult, is intended to strengthen the airline’s economic footing and ensure long-term viability in a competitive marketplace.

As the timeline for these workforce changes unfolds, the airline’s actions will be closely watched by industry stakeholders. SpiceJet’s ability to balance cost-saving measures with operational efficiency will be crucial to its future success within the Indian aviation sector.

In a broader context, SpiceJet’s strategies mirror the complexities faced by airlines globally as they grapple with the dual challenges of market competition and financial sustainability. The industry, which is integral to global connectivity, will likely continue to see such adjustments as carriers strive to adapt to an ever-evolving economic environment.

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Story Snapshots:

• Turkiye’s unemployment rate decreased to 8.8% in December.
• Labor force participation increased month-on-month.
• A seasonally adjusted measure of labor under-utilization saw a rise.
• October’s unemployment rate hit a decade-low at 8.5%.

What recent trends have been observed in Turkiye’s unemployment rate and labor force participation? In December, Turkiye’s unemployment rate fell slightly to 8.8%, with a noticeable increase in labor force participation, while a seasonally adjusted measure of labor under-utilization rose.

Istanbul’s latest economic figures bring attention to the state of Turkiye’s labor market, as the unemployment rate saw a modest decrease in December. The Turkish Statistical Institute reported a 0.1 percentage point drop from the previous month, positioning the unemployment rate at 8.8%. This shift nudges the figure closer to October’s decade-low of 8.5%.

Read: MSCI Upgrades 19 Pakistani Firms to Small Cap, 3 to Frontier Markets Indexes

This decline is accompanied by an uptick in labor force participation, which climbed to 53.5% in December, reflecting a more active labor market as more individuals sought employment. However, a seasonally adjusted measure which encapsulates labor under-utilization, including those who are not fully employed or who have ceased seeking employment, experienced a 2.1 percentage point increase to 24.7%.

The nuanced picture of Turkiye’s labor market highlights the importance of considering various metrics beyond the unemployment rate. While the decrease in unemployment suggests a strengthening job market, the rise in labor under-utilization points to persisting challenges within the economy, such as underemployment and discouraged workers.

Turkiye’s economic policies, which have included aggressive interest rate hikes to 45%, signal an end to tightening monetary policy. These measures are designed to stabilize the economy and have an impact on employment levels.

As the country’s job market shows signs of recovery, it becomes crucial to continue monitoring various labor indicators. The balance of employment rates, workforce participation, and under-utilization measures will provide a fuller understanding of economic health and the efficacy of policy measures.

Moving forward, the focus for policymakers will likely remain on fostering a labor environment that not only reduces unemployment but also addresses under-utilization. This implies creating quality jobs that can fully engage the workforce, contributing to sustained economic growth and stability.

In conclusion, Turkiye’s labor statistics from December reveal a promising trend towards decreasing unemployment and a more engaged workforce. Despite the challenges indicated by increased labor under-utilization, the economy exhibits signs of vigor. As the country’s job market continues to evolve, the interplay of varied economic measures will be pivotal in crafting a thriving labor landscape for the nation.

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Story Snapshots:

• Bitcoin exceeds $50,000 for the first time since 2021.
• The rise is driven by optimism over potential US exchange-traded funds (ETFs) for cryptocurrencies.
• Bitcoin has rallied roughly 25% since late January.
• The cryptocurrency’s ascent reflects a broader recovery from recent industry turmoil.

How has the prospective US approval of crypto ETFs influenced Bitcoin’s recent market performance? The anticipated US approval for broader trading in Bitcoin, particularly through ETFs, has sparked a surge in the cryptocurrency’s value, driving it above $50,000 for the first time in over two years.

On Tuesday, Bitcoin’s price soared, eclipsing the $50,000 threshold, a level unseen in more than two years. Investors have grown increasingly optimistic as the United States signals approval for more expansive trading in the digital currency. This milestone reflects the anticipation that the creation of exchange-traded funds (ETFs) will open the gates for a broader spectrum of investors to partake in the crypto market without the need for direct purchases.

Read: Japanese Futures Rise Amid Nikkei Surge, Yen Weakens

Bitcoin’s upward trajectory in recent months can be largely ascribed to the expectation that US lawmakers will greenlight ETFs tied to crypto pricing. This regulatory nod, granted last month by Washington, initially caused Bitcoin to stumble, but the digital currency has since rallied by about 25% from January 22. This rally propelled Bitcoin to a peak of $50,328, according to Bloomberg data—a height last seen in late 2021.

Observers maintain a bullish stance on Bitcoin’s future. Fadi Aboualfa of Copper Technologies highlights the momentum carried by the cryptocurrency, noting that the trend of upward movement attracts even more buyers. This dynamic suggests further potential for price increases, especially when weekly gains surpass the 10% mark.

Despite the recent surge, Bitcoin’s value still trails behind its all-time high of nearly $69,000, achieved in 2020. Yet, the current rally marks a significant rebound from the tumultuous events that have recently shaken the crypto industry. Notable incidents include the collapse of FTX, once the second-largest crypto exchange, and the legal woes of its former head, Sam Bankman-Fried.

Additionally, the resignation of Changpeng “CZ” Zhao as CEO of Binance, the largest crypto exchange, underlined the industry’s vulnerability with acknowledged violations of financial regulations.

Apart from industry developments, Bitcoin’s resurgence is also facilitated by expectations that the US Federal Reserve may reduce interest rates as inflation shows signs of easing. Another contributing factor is the upcoming “halving,” a scheduled event in the Bitcoin mining process where the reward for mining new blocks is halved, thus decreasing the rate at which new bitcoins are generated. This event is expected to occur in May, which traditionally creates a supply crunch, potentially driving up the asset’s value.

As Bitcoin navigates this complex landscape of regulatory anticipation, industry recovery, and economic trends, its recent performance spotlights the vitality and resilience of the cryptocurrency market. This resurgence is a testament to the enduring appeal of digital assets and the evolving landscape of financial technology.

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Story Snapshots:

• OSE rubber contract for July delivery rose by 0.18%.
• The rise correlates with the Nikkei’s peak since 1990 and the yen’s depreciation.
• Global markets await key U.S. inflation data, influencing cautious trading.
• Chinese loan extensions signal efforts to rejuvenate the economy, affecting commodity markets.

How are Japanese rubber futures responding to market dynamics, including equity performances and currency fluctuations? The Japanese rubber futures have seen an uptick, rising by 0.18% in response to the Nikkei’s robust performance and the yen’s weakening, even as markets exhibit caution ahead of significant U.S. economic data releases.

Singapore’s commodity markets witnessed a buoyant start to the week as Japanese rubber futures climbed, drawing strength from the country’s robust stock market performance and a depreciating yen. The Osaka Exchange (OSE) rubber contract for July delivery noticeably advanced by 0.5 yen or 0.18%, to stand at 278.5 yen per kilogram as of the early GMT hours on Tuesday.

The uptrend in futures follows a week of decline, where the contract saw a drop of 1.66%. Parallel to the rubber market, Japan’s benchmark Nikkei average surged 0.95% upon opening and continued its ascent to a striking 2% during the session, ultimately reaching a zenith not seen since February 1990.

Read: PSX Plunges Below 60k After IMF Disapproval, Later Recovers

The yen, on the other hand, flirted with the critical level of 150 against the dollar and maintained steadiness as markets braced for the release of U.S. inflation data. The Japanese currency’s year-to-date tumble exceeding 5% against the dollar has had considerable repercussions, invigorating Japanese equity markets and enhancing the appeal of yen-denominated assets to foreign investors.

Investors remain vigilant, with the U.S. January consumer price index report on the horizon, followed by the producer prices report and the much-anticipated U.S. retail sales report for January later in the week. These impending data releases have instilled a sense of caution among traders, setting the tone for the commodity markets.

In related industry news, tyre manufacturing giant Michelin unveiled record results but expressed prudence regarding the new fiscal year due to market uncertainties. Additionally, Chinese banks’ move to extend 4.92 trillion yuan in new loans in January, a significant increase from December, surpasses market forecasts and reflects the government’s intense focus on reigniting the economic engine.

Trading activity in Asia, however, was tempered due to the Lunar New Year holiday, with mainland China’s financial markets set to reopen on February 19. Despite the lull, the front-month rubber contract on the Singapore Exchange’s SICOM platform for March delivery edged up by 0.33%.

As investors navigate through a landscape dotted with economic indicators and policy decisions, commodity markets like that of rubber futures serve as a barometer of broader economic sentiment and international financial flows. With robust equities and weakened currencies shaping the trading environment, the rubber market’s resilience and adaptability are put to the test, delivering key insights into the intricate web of global commerce.

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