Goldman Sachs raised the probability of recession in the US economy to 45%, up from the 35% it penciled in just last week, Reuters reports. The second adjustment came after the sharper-than-expected tariffs implemented by US President Donald Trump triggered a major sell-off in global markets.

The outlook is turning bearish across the board: Other major investment banks have also revised their recession forecasts in the wake of the tariff-induced market turmoil, the newswire reported separately. JPMorgan now sees a 60% chance of a US recession by year-end. HSBC isn’t far behind, putting the odds at 40%, while S&P Global pegs the probability at 30-35%.

Federal Reserve Chair Jerome Powell had added to the panic earlier, labeling Trump’s tariffs as “larger than expected” and warning it could put the brakes on growth. He also flagged a “highly uncertain outlook,” noting the risk of both higher unemployment and price pressures.

Rate cuts to come sooner? Goldman now expects the Fed’s three interest rate cuts — by 25 basis points each — to start in June, revised from July. JPMorgan seconds the notion, while expecting the benchmark rate to fall to 3% by January of the next year.

Traders went all in on rate cuts in yesterday’s session, expecting the Fed to cut rates by an average of 116 basis points this year over four of the five remaining meetings, Reuters reported, citing data compiled by LSEG. The wager on “emergency” meetings — where rates are going to be cut further — remains far-fetched for now, with the unusual measures last used during the pandemic. Still, it remains to be seen how far the impact of the trade war on inflation will be, as stagflation is currently the best-case scenario for the US economy, Bill Dudley, former New York Fed president, told Bloomberg.

MARKETS THIS MORNING-

Asian markets are opening higher today, recouping some of yesterday’s steep losses. Japan’s Nikkei is up 6.2%, while Hong Kong’s Hang Seng is inching up 2.2%, and Korea’s Kospi is up 1.6%. Wall Street futures also indicate a slight recovery on market open.

EGX30

30,454

-0.6% (YTD: +2.4%)

USD (CBE)

Buy 51.33

Sell 51.47

USD (CIB)

Buy 51.34

Sell 51.44

Interest rates (CBE)

27.25% deposit

28.25% lending

Tadawul

11,194

+1.1% (YTD: -7.0%)

ADX

8949

-2.6% (YTD: -5.0%)

DFM

4799

-3.1% (YTD: -7.0%)

S&P 500

5062

-0.2% (YTD: -13.9%)

FTSE 100

7702

-4.4% (YTD: -5.8%)

Euro Stoxx 50

4656

-4.6% (YTD: -4.9%)

Brent crude

USD 64.21

-2.1%

Natural gas (Nymex)

USD 3.64

-0.3%

Gold

USD 2973.60

-2.0%

BTC

USD 79,239.70

+1.5% (YTD: -15.1%)

THE CLOSING BELL-

The EGX30 fell 0.6% at yesterday’s close on turnover of EGP 3.7 bn (6.4% above the 90-day average). Local investors were the sole net buyers. The index is up 2.4% YTD.

In the green: Alexandria Containers and Cargo Handling (+4.5%), Rameda (+3.6%), and Ibnsina Pharma (+2.3%).

In the red: Juhayna (-3.8%), TMG Holding (-3.2%) and Fawry (-2.9%).

CORPORATE ACTIONS-

Edita Food Industries will distribute a dividend of EGP 1.14 per share for its 2024 earnings, after its general assembly approved the move, according to a disclosure to the EGX (pdf).

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