Time to batten down the hatches: The business press is warning of coming storms on all fronts. Investors should prepare for
potentially extreme movements in the markets as central banks end years of
easy monetary policy to curb inflation, writes James Mackintosh in the
Wall Street Journal. As the US Federal Reserve focuses on fighting inflation, Chairman Jerome
Powell said he wouldn’t “declare victory” over inflation until it has been
falling for months and spoke of the need to figure out which level of interest
rates will slow the economy.
This likely means that the Fed will continue hiking rates until “something
breaks,”
Mackintosh writes.

Don’t expect any quick fixes: One Fed official yesterday said
it could take “a couple of years” for inflation to fall back to the US central
bank’s 2% target, the
Financial Times
reports.

This is more than just a strategy shift — its a sea change for policy: The Fed’s move to hike rates marks an end to decades of easy money policy
ready to back the markets whenever they wobbled, the
Washington Post
says, heralding the start of tougher times ahead for almost every asset class
and corner of the economy.

And it’s not just VCs who are bunkering down for the nuclear winter:
Private equity giants are getting nervous, too, as the cheap borrowing used by the industry to fund a transactions spree
over the past two years comes to an end, the
Financial Times
reports. New buyout funds are now struggling to find new cash, while listed
firms have seen their share prices fall heavily since November.
“This is a time of reckoning for our industry,” said Phillip
Freise, co-head of European PE at KKR.

None of this bodes well for stock markets: IPOs are on track
for the weakest first half since 2005, according to data compiled by
Bloomberg, which counts just USD 198 bn worth of IPOs and follow-on sales raised so
far this year.

On the bright side: Many see M&A activity continuing in earnest despite
fears of a recession because companies cannot afford to ignore
disruptions in their industries from new technologies, experts at one of Wall
Street’s top investment banks, Centerview, tell the
Financial Times. Centerview expects M&A activity this year to match the record USD 4 tn
achieved in 2021, as companies look to add new, innovative products and
services to their portfolio to stay ahead of the competition, representatives
from the bank tell the salmon-colored paper. Global M&A volumes hit USD 1.88
tn in the first five months of the year, down from USD 2.92 tn in 2021 but
still above pre-pandemic levels of USD 1.57 tn, Refinitiv data shows.

Also worth noting:

  • Eni gets a piece of Qatar’s mega gas project: Italian
    energy firm Eni has acquired a stake in Qatar’s USD 29 bn North Field East
    (NFE) expansion project, becoming the second foreign firm to invest in the
    expansion project after
    TotalEnergies. (Statement)

EGX30

9,728

-1.4% (YTD: -18.6%)

USD (CBE)

Buy 18.71

Sell 18.79

USD at CIB

Buy 18.73

Sell 18.79

Interest rates CBE

11.25% deposit

12.25% lending

Tadawul

11,824

-1.3% (YTD: +4.8%)

ADX

9,457

-0.5% (YTD: +11.4%)

DFM

3,262

-0.6% (YTD: +2.1%)

S&P 500

3,675

+0.2% (YTD: -22.9%)

FTSE 100

7,016

-0.4% (YTD: -5.0%)

Euro Stoxx 50

3,438

+0.3% (YTD: -20.0%)

Brent crude

USD 113.12

-5.6%

Natural gas (Nymex)

USD 6.94

-7.0%

Gold

USD 1,840.60

-0.5%

BTC

USD 20,662

+8.1% (YTD: -55.9%)

THE CLOSING BELL-

The EGX30 fell 1.4% at yesterday’s close on turnover of EGP
431 mn (48.7% below the 90-day average). Foreign investors were net sellers.
The index is down 18.6% YTD.

In the green: Abu Dhabi Islamic Bank Egypt (+3.5%), Cleopatra
Hospitals (+2.3%) and Housing and Development Bank (+0.5%).

In the red: Qalaa Holdings (-4.7%), GB Auto (-4.5%) and MM
Group (-4.2%).

Asian markets are showing a mixed picture in early trading this
morning
and futures suggest a similarly checkered start for European markets, while
Wall Street looks set to open in the green across the board later on today.

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