Equity markets have had a mixed start in May. Despite stronger-than-expected first quarter earnings, the upward momentum in US equities has seemingly stalled after a strong April.
While the Dow Jones Industrial Average was marginally up at 0.5 per cent, the tech-driven Nasdaq and S&P500 were trading lower in the early days of May. This is despite some stellar earning results last week.
Cupertino-based technology giant Apple smashed quarterly revenues, coming in at $89.6 billion and up more than 54 per cent compared with last year. E-commerce giant Amazon also overshot revenue expectations, coming in at $108.5bn on the quarter.
Most of the recent upward moves in stock markets have been triggered by stronger-than-expected earnings across US equities and an improving economic picture.
Data from last week showed that the US economy grew 6.4 per cent in the first quarter of this year, following a weaker 4.3 per cent in the prior quarter. Consumer spending has been robust. Personal consumption, a key metric of output, ballooned to 10.7 per cent on an annualised basis.
While the picture looks promising in the US, worsening Covid-19 cases elsewhere have cast a shadow on the global growth story. Increasing cases in emerging markets such as India and Brazil, coupled with a slowdown in Chinese manufacturing, point to a drain in investor sentiment in the early days of May.
Despite the slow start to the month, the S&P500 has risen 11.37 per cent from the start of the year and the Nasdaq is up 7 per cent year to date.
It remains to be seen how quickly markets rebound from the current Covid-19 wave, but I would not be surprised if we are in for some more choppy trading sessions in the first half of this month.
With earnings continuing throughout the next two weeks, beating expectations will continue to drag equity markets higher. One particular earnings report I am watching closely is Paypal, which is expected to announce after market close on Wednesday. I expect good things from one of the world’s largest FinTech companies.
Most of the recent upward moves in stock markets have been triggered by stronger-than-expected earnings across US equities and an improving economic picture
The rebound in US personal consumption has already benefited competitors such as Visa and Mastercard, which reported earnings that topped expectations in April.
I expect Paypal to show continued growth in its user base (377 million active accounts at the end of December) and the current facilitation of the platform to support cryptocurrencies will further enhance its appeal. Earnings should beat estimates at $0.73 a share, which should position this stock for a proper run through to $275 by the end of the second quarter.
Currency and commodity markets also benefited through April, with the US dollar selling off heavily as risk appetite returned to markets. EUR/USD on the Dubai Gold and Commodities Exchange broke through 1.20, retracing its entire sell-off in March, while GBP/USD also made a move towards the 1.40 level.
Gold also benefited from a weaker greenback, rallying as high as $1,790 levels. While we may be on the top end of the move, I expect to see some downside depending on how risk moods play out. A further deterioration of the new Covid-19 wave could boost the US dollar index, but I cannot see a move past 93.
Coming up on the economic calendar, we have the US non-farm payrolls jobs report on May 7. Expectations are for payroll jobs to have grown by 980,000 during April, with the overall unemployment rate ticking lower to an expected 5.8 per cent from the previous 6 per cent.
Finally, Ethereum broke through $3,000 this week, up more than 21 per cent in the first four trading days of May and 356 per cent year to date. The move takes the market cap of cryptocurrencies past $300 billion. To put this in perspective, this makes it larger than the likes of Exxon Mobil, Intel, Neflix and Pfizer.
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 specs
Engine: 3.9-litre twin-turbo V8
Transmission: seven-speed
Power: 720hp
Torque: 770Nm
Price: Dh1,100,000
On sale: now
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
Developer: Ubisoft Montreal / Ubisoft Toronto
Publisher: Ubisoft
Platforms: Playstation 4, Xbox One, Windows
Release Date: April 10
THE BIO
Ms Davison came to Dubai from Kerala after her marriage in 1996 when she was 21-years-old
Since 2001, Ms Davison has worked at many affordable schools such as Our Own English High School in Sharjah, and The Apple International School and Amled School in Dubai
Favourite Book: The Alchemist
Favourite quote: Failing to prepare is preparing to fail
Favourite place to Travel to: Vienna
Favourite cuisine: Italian food
Favourite Movie : Scent of a Woman
MATCH INFO
Uefa Champions League, Group B
Barcelona v Inter Milan
Camp Nou, Barcelona
Wednesday, 11pm (UAE)
How to avoid crypto fraud
- Use unique usernames and passwords while enabling multi-factor authentication.
- Use an offline private key, a physical device that requires manual activation, whenever you access your wallet.
- Avoid suspicious social media ads promoting fraudulent schemes.
- Only invest in crypto projects that you fully understand.
- Critically assess whether a project’s promises or returns seem too good to be true.
- Only use reputable platforms that have a track record of strong regulatory compliance.
- Store funds in hardware wallets as opposed to online exchanges.
