Dollar Strong, Stocks Creep Higher as Second Trump Term Dawns

A teller sorts US dollar banknotes inside the cashier's booth at a forex exchange bureau in downtown Nairobi, Kenya February 16, 2024. REUTERS/Thomas Mukoya/File photo
A teller sorts US dollar banknotes inside the cashier's booth at a forex exchange bureau in downtown Nairobi, Kenya February 16, 2024. REUTERS/Thomas Mukoya/File photo
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Dollar Strong, Stocks Creep Higher as Second Trump Term Dawns

A teller sorts US dollar banknotes inside the cashier's booth at a forex exchange bureau in downtown Nairobi, Kenya February 16, 2024. REUTERS/Thomas Mukoya/File photo
A teller sorts US dollar banknotes inside the cashier's booth at a forex exchange bureau in downtown Nairobi, Kenya February 16, 2024. REUTERS/Thomas Mukoya/File photo

The dollar was firm and Asia's stock markets were cautiously positive on Monday as investors waited for an expected flurry of policy announcements in the first hours of Donald Trump's second presidency and eyed a rate hike in Japan at the end of the week.
Trump takes the oath of office at noon Eastern Time (1700 GMT), and promised a "brand new day of American strength" at a rally on Sunday, Reuters said.
He has stoked expectations he will issue a slew of executive orders right away and, in a reminder of his unpredictability, launched a digital token on Friday, which soared to trade above $70 at one point for a total market value north of $15 billion.
Monday is a US holiday, so the first responses to his inauguration in traditional financial markets may be felt in foreign exchange, where traders are focused on Trump's tariff policies, and then in Asian trade on Tuesday.
US equity futures were a fraction weaker in the Asian morning on Monday while the dollar, which has rallied since September on strong US data and as Trump's ultimately successful political campaign gained momentum, held steady.
Japan's Nikkei rose 1%.
Last week the S&P 500 notched the biggest weekly percentage gain since early November and the Nasdaq its largest since early December on some benign inflation data.
The dollar is up around 8% on the euro since September and at $1.0273 is not far from last week's two-year high. But so much is priced in that some analysts feel a more gradual start to US tariff hikes may draw out some sellers.
"A forceful start to Trump's new term could rattle nerves and give the dollar more support," said Corpay currency strategist Peter Dragicevich.
"By contrast, based on what already looks baked in, we think a more measured approach may ease fears and see the dollar lose ground, as it did after Trump took charge in 2017."
Trump has threatened tariffs of as much as 10% on global imports and 60% on Chinese goods, plus a 25% import surcharge on Canadian and Mexican products, duties that trade experts say would upend trade flows, raise costs and draw retaliation.
The Canadian dollar touched a five-year low of C$1.4486 per dollar on Monday. The Mexican peso hit a 2-1/2 year low of 20.94 per dollar on Friday.
Bitcoin dipped in the early part of the Asian day but remained above $100,000. Benchmark 10-year Treasury yields closed out Friday at 4.61%, up nearly 100 basis points in four months.
CHINA FOCUS
China is in focus as the target of the harshest potential trade levies. Investors lately cheered better-than-expected Chinese growth data and a Friday phone call between Trump and Chinese President Xi Jinping that left both upbeat.
"Basically everyone is waiting for these trade negotiations to begin and see what kind of attitude Xi Jinping takes with Trump," Ken Peng, head of Asia investment strategy at Citi Wealth told reporters in Singapore at an outlook briefing.
"That relationship between the two gentlemen has become very important as a leading indicator of policies."
Chinese equity markets rose last week and futures pointed to modest gains for Hong Kong shares at the open.
The yuan is seen likely to slowly adjust to any shifts in trade policy and was marginally firmer at 7.3355 per dollar in offshore trade.
The Australian dollar, sensitive to trade flows and China's economy, has scraped off five-year lows and, according to Commonwealth Bank strategist Joe Capurso, could test resistance at $0.6322 if Trump's policy changes fall short of market expectations. It was last at $0.62.
Japan's yen rallied last week as remarks from Bank of Japan policymakers were taken as hints that a rate cut is likely on Friday.
It was last steady at 156.17 per dollar and rates markets priced about an 80% chance of a 25 basis point rate hike.
In commodities gold hovered at $2,694 an ounce and Brent crude futures ticked higher to $81.21 a barrel.



Arab Automotive Sector Attracts $25 Billion in Foreign Investments Over 22 Years

 A parking lot in Saudi Arabia (Asharq Al-Awsat)
 A parking lot in Saudi Arabia (Asharq Al-Awsat)
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Arab Automotive Sector Attracts $25 Billion in Foreign Investments Over 22 Years

 A parking lot in Saudi Arabia (Asharq Al-Awsat)
 A parking lot in Saudi Arabia (Asharq Al-Awsat)

The Arab Investment and Export Credit Guarantee Corporation (Dhaman) announced that the automotive sector in Arab countries has attracted 184 foreign projects, with a cumulative investment exceeding $25 billion and creating over 102,000 jobs from 2003 to October 2024.
Kuwait-based Dhaman explained, in its fourth sector report for 2024 issued on Sunday, that five Arab countries; Saudi Arabia, Morocco, UAE, Algeria, and Egypt accounted for 79% of the total projects in the automotive sector.
These projects represent an investment cost of more than $22 billion, with a share of 89% of the total sectoral investment, and have created over 91,000 jobs, with a share of 89% of the total.
The report focuses on four key aspects; the development and future of vehicle sales until 2028, foreign trade in vehicles and their components for 2023, in addition to foreign projects in the automotive sector, and assessing investment and business risks related to car sales activity in 2024.
China topped the list of investors in the Arab region, implementing 27 projects between 2003 and 2024, with an investment cost of nearly $8 billion and creating about 20,000 new jobs.
The report highlighted that the top 10 companies in the sector accounted for 41% of the new projects, with a share of 67% of total capital investments, and 58% of the new jobs created.
Japan's Nissan topped the number of new projects reaching 18 projects, with a share of 10% of the total.
However, the Chinese company Human Horizon Group topped in investment value, contributing $5.6 billion with a share of 22% of the total.
Meanwhile, the French company Renault topped in job creation, generating approximately 15,000 positions, with a share of 15% of the total jobs created in the sector.
The report also ranked investment incentives and risks in 16 Arab countries based on Fitch ratings, with Gulf Cooperation Council (GCC) countries leading the list.
Vehicle sales in the Arab region (16 countries) are expected to grow by over 5%, exceeding 2.3 million units by the end of 2024, with a share of 2.4% of global vehicle sales. This figure is expected to reach 3 million units by 2028.
Saudi Arabia, the UAE, Algeria, Morocco, and Kuwait collectively account for approximately 75% of total regional sales.
Private Cars
Private car sales in 12 Arab countries are forecasted to exceed 1.8 million units by the end of 2024, marking a 4.5% rise compared to 2023. Saudi Arabia leads this category with a 45% share of the market. The region's sales are expected to surpass 2.2 million vehicles by 2028, according to Fitch ratings.
The report indicated an increase in the regional vehicle fleet index, reaching an average of 307 vehicles per 1,000 inhabitants by the end of 2024, up by nine points.
This figure is expected to further rise to 353 vehicles per 1,000 inhabitants by 2028, with Libya and many GCC countries exceeding the regional average.
Arab foreign trade in road vehicles and their components increased by 23% in 2023, reaching $126 billion.
This growth was driven by a 29% rise in exports, totaling $29 billion, (bolstered by vehicle re-export activities valued at $14 billion in the GCC separately).
Imports increased by 21%, reaching $97 billion, with 82% of the total trade concentrated in five countries: the UAE, Saudi Arabia, Morocco, Iraq, and Kuwait, collectively accounting for $103 billion.
Japan topped the largest exporter of vehicles and components to the Arab region, recording exports valued at $17 billion, representing 17% of the total. Iraq emerged as the largest importer from the region, accounting for $10 billion 34% of total imports.
Personnel transport vehicles topped Arab imports of vehicles and components in 2023, valued at $63 billion, exceeding 65% of total imports. Vehicle parts and accessories followed, valued at $14 billion, contributing 14% to total imports.