{"id":546257,"date":"2022-05-10T04:00:42","date_gmt":"2022-05-10T04:00:42","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2022\/05\/10\/this-morning-worst-day-for-global-stocks-since-june-2020-its-inflation-day-here-in-egypt\/"},"modified":"2022-05-10T04:00:42","modified_gmt":"2022-05-10T04:00:42","slug":"this-morning-worst-day-for-global-stocks-since-june-2020-its-inflation-day-here-in-egypt","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2022\/05\/10\/this-morning-worst-day-for-global-stocks-since-june-2020-its-inflation-day-here-in-egypt\/","title":{"rendered":"THIS MORNING: Worst day for global stocks since June 2020; It\u2019s inflation day here in Egypt"},"content":{"rendered":"

Good morning, friends, and happy hump day. <\/strong>We have a really packed issue for you today, so let\u2019s jump right in:<\/p>\n

<\/a> THE BIG STORY EVERYWHERE THIS MORNING- <\/strong>The global market sell-off <\/strong>looks like it is getting serious.<\/strong> Global equities suffered their heaviest one-day losses since June 2020 yesterday. Investors are worried that some of the world\u2019s largest economies are heading towards recession at the same time as when central banks are raising interest rates to curb soaring inflation. The FTSE gauge of global stocks fell 3% yesterday<\/strong>, hitting its lowest level since December 2020 as ominous economic data from China and Germany intensified the sell-off triggered last week by the Federal Reserve\u2019s 50-bps rate hike. The Financial Times<\/a> has more.<\/p>\n

The EGX30 fell at a slower pace yesterday <\/strong>than the FTSE\u2019s global gauge, losing 1.8% by the closing bell. The index is now down 8.7% year-to-date.<\/p>\n

Other emerging market indexes also took a hit yesterday: <\/strong>Emerging-market stocks hit their<\/a>lowest level in nearly two years<\/a> yesterday, and have fallen 29% from their peak in February 2021.<\/p>\n

US stocks picked up where they left off last week:<\/strong> US equities fell yesterday to their lowest level in 13 months as last week\u2019s broad-based sell-off continued. The S&P 500 tumbled 3.2% during trading. Tech stocks continued to see the heaviest losses though, with the Nasdaq closing 4.3% in the red.<\/p>\n

What are folks worried about?<\/strong> Risk of a global recession is increasing due to an oncoming economic downturn in Europe, covid-19 lockdowns in China, and rising bond yields in the US which are putting pressure on emerging markets, Institute for International Finance (IFF) chief economist Robin Brooks said yesterday<\/a>.<\/p>\n

None of this is good for emerging markets:<\/strong> The greenback hit its highest level in almost 20 years yesterday as investors respond to both rising yields and the darkening clouds by turning to safe haven assets, Reuters<\/a> reports. The USD index, which measures the greenback against a basket of currencies, has risen almost 9% this year, its highest since late 2002, the newswire says.<\/p>\n

And other asset classes are also suffering:<\/strong><\/p>\n

BTC dropped to its lowest level in almost a year<\/strong>, Reuters<\/a> reported. The world\u2019s largest digital currency fell below USD 30k yesterday for the first time since July 2021. It has tumbled 13% so far in May and is down nearly 33% year-to-date..<\/p>\n

Oil also fell yesterday,<\/strong> with Brent crude losing almost 6% as traders worried about China\u2019s lockdowns and the possibility of a global recession.<\/p>\n

Same again today?<\/strong> Asian shares are down sharply in heavy trading so far today, although shares in Shanghai have clawed back losses and were mounting a rally at dispatch time. Futures suggest major European benchmarks will face selling pressure at the opening bell later this morning \u2014 but imply that Wall Street could see the Nasdaq, Dow and S&P open in the green.<\/p>\n

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YOUR COP27 WARNING of the morning: The world is on track to break the 1.5\u00b0C <\/strong>warming threshold within five years<\/strong> because of record greenhouse gas levels, the FT writes<\/a>, suggesting we\u2019re nearing a critical point in the battle to not cook ourselves off planet. The salmon color paper warns that with \u201cscant policy action\u201d on net zero targets coming out of COP26 last year, there has now been \u201clittle progress toward improved national targets ahead of the next big summit in the Egyptian resort of Sharm El Sheikh later this year.\u201d<\/p>\n

HAPPENING TODAY- <\/strong><\/p>\n

IT\u2019S INFLATION DAY: <\/strong>Figures for April are due out today. Consumer prices accelerated at their fastest rate in almost three years<\/a> in March as the spillover effects from the war in Ukraine fed through to the Egyptian economy. With commodity prices still feeling the effects of the conflict, the devaluation of the EGP, and the traditional Ramadan inflationary hit, we\u2019re not expecting the figures to have been any better in April. We\u2019ll have the rundown for you in tomorrow\u2019s EnterpriseAM.<\/p>\n

WATCH THIS SPACE- <\/strong>Where\u2019s that policy statement<\/strong>?<\/strong> We\u2019re still waiting for Prime Minister Moustafa Madbouly to unveil his government\u2019s plans to boost private sector involvement in the economy. Cabinet said Saturday<\/a> that the PM would hold a presser \u201cat the beginning of next week\u201d to announce new details on how the government intends to attract more FDI and private-sector investment in Egypt, but so far there has been radio silence.<\/p>\n

MEANWHILE- Yesterday was budget day:<\/strong> Monday might not have been the perfect day to deliver a major policy announcement, given that all eyes were fully trained on the House of Representatives, where Finance Minister Mohamed Maait was unveiling the details of the draft FY 2022-2023 budget. We have the key details of the budget in the news well, below.<\/p>\n

Whether or not we get word of the state\u2019s privatization plans this week, we now have a rough idea of what it wants to achieve in the coming fiscal year:<\/strong> The draft budget shows that the government wants to raise EGP 6 bn from selling shares in state-owned companies in the coming fiscal year. Which companies and how many shares will be up for grabs, we still don\u2019t know. But the government has sought to convey its seriousness about privatizing state assets in recent days, pledging to resume its privatization program in September<\/a> and offer shares in several military-owned firms by the end of the year<\/a>.<\/p>\n

ALSO TODAY- The EBRD\u2019s annual meeting and business forum get underway in <\/strong>Marrakech<\/strong> and will wrap up on Thursday. Among the day-one highlights:<\/p>\n