Careful now, big spenders: The US and China need to implement policies to address the imbalance between spending and revenues, which is adding to inflationary pressures and posing significant risks to the global economy, the IMF has warned in its latest Fiscal Monitor (pdf) out yesterday. Rampant spending from the world’s two largest economies could “have profound effects for the global economy and pose significant risks for baseline fiscal projections in other economies,” the Fund said.

How bad is it? The US will record a fiscal deficit of 7.1% in 2025, over three times the 2%average clocked in by other advanced economies, while China will record a deficit over twice the average of other EMs with 7.6%, the IMF said. The shortfall comes as both countries look set to face challenges ahead, with China dealing with weak domestic demand and a real estate crisis and the US entering a key year for fiscal policy in an election year that will see candidates pledging further tax cuts and increased state spending.

When the US spends, EMs pay: “Large and sudden increases” in US borrowing costs willlikely send global government bond yields soaring and exchange rates into murky waters in emerging markets and developing economies, the IMF said. “A 1 percentage point spike in US rates results in a 90 basis point rise in other advanced economies and an increase in EMs of 1 percentage point,” the salmon-coloured paper writes.

THE MARKETS THIS MORNING-

Asian markets are little changed in early trading this morning after Wall Street posted on Wednesday its first four-day string of losing days since the start of the year. The Kospi is the sole standout, up a bit more than 1.4% at dispatch time this morning. European and US equities futures were mostly unchanged overnight.

TASI

12,466

-0.3% (YTD: +4.2%)

MSCI Tadawul 30

1,569

-0.6% (YTD: +1.2%)

NomuC

26,402

+0.4% (YTD: +7.6%)

USD : SAR (SAMA)

3.75 Buy

3.75 Sell

Interest rates

6.5% repo

5.5% reverse repo

EGX30

29,668

+0.9% (YTD: +19.2%)

ADX

9,165

-0.3% (YTD: -4.3%)

DFM

4,173

-0.3% (YTD: +2.8%)

S&P 500

5,022

-0.6% (YTD: 5.3%)

FTSE 100

7,848

+0.4% (YTD: 1.6%)

Euro Stoxx 50

4,914

-0.1% (YTD: 8.7%)

Brent crude

USD 89.40

-0.7%

Natural gas (Nymex)

USD 1.72

+0.3%

Gold

USD 2,380

-0.3%

BTC

USD 61,397

-3.9% (YTD: +112.9%)

THE CLOSING BELL: TADAWUL-

The TASI fell 0.3% yesterday on turnover of SAR 9.6 bn. The index is up 4.2% YTD.

In the green: Sharqiyah Dev (+10%), Batic (+9.3%) and SGS (+9.1%).

In the red: Cenomi Retail (-5.2%), Astra Industrial (-3.7%) and Etihad Etisalat (-3.4%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.4% yesterday on turnover of SAR 30 mn. The index is up 7.6% YTD.

In the green: Future Care (+10.7%), Ladun (+10%) and Mayar (+7.9%).

In the red: AlQemam (-9.7%), SPC (-6.1%) and Clean Life (-5.7%)

CORPORATE ACTIONS-

Shareholders of Edarat Communication and IT have approved doubling the company’s capital to SAR 25.2 mn through a bonus issuance, it said in a disclosure to Tadawul yesterday. The capital hike will be made to support the cloud service provider’s capital base and future activities, it said.

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