The odds of a US Federal Reserve rate cut took another hit after inflation came in hotter than expected in January, with the consumer price index rising 3% y-o-y, the highest increase since June, according to Bureau of Labor Statistics data. While only marginally higher than December’s 2.9%, the uptick was enough for traders to dial back projections of a 2025 rate cut, pushing Treasury yields above 4.6%, CNBC reports.

What’s driving inflation? Shelter costs accounted for nearly 30% of January’s price increase, rising 0.4%. Gasoline jumped 1.8%, contributing to a 1.1% increase in overall energy costs. Food prices also ticked up 0.4%, with grocery costs rising 0.5%. Meanwhile, used car prices climbed 2.2%, and motor vehicle insurance jumped 2%. Excluding food and energy, core CPI rose 3.3% y-o-y.

REMEMBER- Donald Trump’s tariffs are expected to stoke inflation further. US President Donald Trump reiterated earlier last week that rates “should be lowered, something which would go hand in hand with upcoming tariffs,” CNBC reports. Some 90% of the economists in Reuters’ October 2024 and February 2025 polls raised their inflation estimates for 2025 following Trump’s election victory.

ICYMI- Trump has already imposed a 10% tariff on USD 450 bn worth of Chinese goods and 25% tariffs on steel aluminum imports and vowed to impose reciprocal tariffs matching those imposed by other US trade partners. He has also threatened to impose 25% tariffs on US imports from Mexico and Canada, with the measures on hold until 1 March as the neighboring countries continue to negotiate over border security. White House Press Secretary Karoline Leavitt also signaled that more trade actions could be announced soon, CNBC reports.

Are cuts still possible? A Reuters poll of 101 analysts suggests that Fed officials will adopt a wait-and-see approach as they assess how tariffs and other policy changes could affect the economy before making any further rate cuts.

TASI

12,385

-0.01% (YTD: +2.9%)

MSCI Tadawul 30

1,538

-0.1% (YTD: +1.9%)

NomuC

31,615

+1% (YTD: +0.4%)

USD : SAR (SAMA)

USD 3.75 Sell

USD 3.75 Buy

Interest rates

5.0% repo

4.5% reverse repo

EGX30

29,997

+1.1% (YTD: +0.9%)

ADX

9,626

-0.3% (YTD: +2.2%)

DFM

5,362

+0.8% (YTD: +3.9%)

S&P 500

6,116

-0.01% (YTD: +4%)

FTSE 100

8,733

-0.4% (YTD: +6.8%)

Euro Stoxx 50

5,493

-0.1% (YTD: +12.2%)

Brent crude

USD 74.74

-0.37%

Natural gas (Nymex)

USD 3.73

+2.67%

Gold

USD 2,900.70

-1.52%

BTC

USD 97,485

0.0% (YTD: +4.3%)

THE CLOSING BELL: TADAWUL-

The TASI fell 0.01% yesterday on turnover of SAR 5 bn. The index is up 2.9% YTD.

In the green: Nice One (+10%), Medgulf (+7.8%) and Jamjoom Pharma (+4%).

In the red: Albabtain (-4.2%), SRMG (-3.3%) and UCA (-2.9%).

THE CLOSING BELL: NOMU-

The NomuC rose 1% yesterday on turnover of SAR 58.8 mn. The index is up 0.4% YTD.

In the green: Intelligent Oud (+16.4%), Dar Almarkabah (+12%) and WSM (+9.3%).

In the red: Knowledge Tower (-8.9%), Alhasoob (-6.6%) and FAD (-4.6%).

CORPORATE ACTIONS-

#1- Saudi Industrial Investment Group (SIIG) submitted a request to the Capital Market Authority to reduce its capital from SAR 7.5 bn to SAR 6.8 bn by way of canceling 75.5 mn shares, it said in a disclosure to Tadawul. The move is pending shareholder and regulatory approvals.

#2- Anaam International Holding Group’s shareholders approved a reverse stock split, raising the nominal share value for SAR 0.50 to SAR 10 a piece, it said in a disclosure to Tadawul. The company will consolidate every 20 shares into one, keeping total capital unchanged at SAR 315 mn.

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