Analysts are screaming rate cuts after lower-than-expected inflation figures: US inflation fell under the 3% mark in July for the first time since March 2021, strengthening the case for the Federal Reserve to cut interest rates at its next meeting in September. The consumer price index fell to 2.9% last month, down from 3% in June, according to Bureau of Labor Statistics figures (pdf) released yesterday. The figure undercut economists’ expectations that inflation would hold steady at 3%.

(Tap or click the headline above to read this story with all of the links to our background as well as external sources.)

Another cue for the Fed to cut rates: The slowdown in price growth should give the Fed “further confidence” that inflation is heading towards its 2% target, JPMorgan Asset Management Chief Global Strategist David Kelly told the Financial Times. “The bottom line is this keeps the Fed on track for 25 basis points in September,” Point72 chief economist Dean Maki told the FT.

What are the odds? CME Group's FedWatch tool sees a 64% chance of a 25 bps rate cut at the Fed's upcoming 17-18 September policy meeting.

Incoming labor data will also play a role in what the Fed does next: “This is now a labor data-first Fed, not an inflation data-first Fed, and the incoming labor data will determine how aggressively the Fed pulls forward rate cuts,” Evercore’s Krishna Guha told Bloomberg, adding that the Fed is looking at the bigger picture rather than plain data.

Remember: The US unemployment rate rose to a near three-year high of 4.3% in July, raising recession fears and concerns that the central bank is behind in cutting interest rates and contributing to a market meltdown a day later.

Market reax: Stock markets rose on the news, with the S&P 500 continuing to rise for a fifth consecutive day, marking its longest winning streak in over a month. The gains echoed across the board, the Nasdaq closed up 0.1% and the Dow Jones rose 0.6%.

ALSO FROM PLANET FINANCE- The biggest transaction of the year: Candy giant Mars will acquire Kellogg spinoff company Kellanova in a USD 36 bn transaction — 2024’s largest. (Statement)

MARKETS THIS MORNING-

Asian markets are in the green this morning after better-than-expected growth figures from Japan and inflation figures from the US. The Nikkei is up 0.9% this morning, while the Hang Seng is looking at gains of 0.2% and the Kospi is up 0.9%.

EGX30

29,567

+0.8% (YTD: +18.8%)

USD (CBE)

Buy 49.03

Sell 49.17

USD (CIB)

Buy 49.05

Sell 49.15

Interest rates (CBE)

27.25% deposit

28.25% lending

Tadawul

11,850

+0.5% (YTD: -1.0%)

ADX

9,226

+0.6% (YTD: -3.7%)

DFM

4,213

+0.7% (YTD: +3.8%)

S&P 500

5,455

+0.4% (YTD: +14.4%)

FTSE 100

8,281

+0.6% (YTD: +7.1%)

Euro Stoxx 50

4,728

+0.7% (YTD: +4.6%)

Brent crude

USD 77.35

+0.5%

Natural gas (Nymex)

USD 2.23

+0.3%

Gold

USD 2,486

+0.2%

BTC

USD 58,968

-3.4% (YTD: +39.8%)

THE CLOSING BELL-

The EGX30 rose 0.8% at yesterday’s close on turnover of EGP 4.7 bn (31.5% above the 90-day average). Regional investors were the sole net sellers. The index is up 18.8% YTD.

In the green: Juhayna (+19.4%), Mopco (+10.3%) and Abu Qir Fertilizers (+5.0%).

In the red: Elsewedy Electric (-6.2%), Eastern Company (-2.9%) and Edita (-2.5%).

CORPORATE ACTIONS-

Orascom Construction will pay out a dividend of EGP 9.6944 per share on its 2023 earnings, the company said in an EGX disclosure (pdf). Dividends will be paid out on 21 August.

Tags: