High interest rates push businesses across the US, EU to shut their doors

Bankruptcies at almost a decade high in advanced economies: Corporate bankruptcies and insolvencies have risen across the US and EU on the back of a long stretch of high borrowing costs and a rollback of covid-19 financial support, the Financial Times reports. Bankruptcies in the US spiked by 30% y-o-y in the 12 months to September — after having been in decline for a decade — whilst corporate insolvencies in the EU bloc hit an eight-year high in the first nine months of the year.

The fallout is expected to continue, putting a strain on global growth and job creation in the medium-term: An environment of high interest rates will jeopardize “more promising startups and SMEs ... which could have longer-term consequences for growth,” an analyst at asset manager Hargreaves Lansdown told the salmon-colored paper.

ICYMI- The Federal Reserve suggested last week that it may be nearing the end of its two-year monetary tightening cycle, but we could be waiting until at least September 2024 before rates are cut, according to cautious analysts and Fed officials.

ALSO WORTH NOTING- Adobe scraps USD 20 bn acquisition of Figma after hitting a deadlock with regulators who voiced worries about how the acquisition would threaten competition. The news received wide coverage: Reuters | Bloomberg | The Guardian | FT | New York Times.

THE CLOSING BELL-

The DFM fell 0.3% yesterday on turnover of AED 228.99 mn. The index is up 19.6% YTD.

In the green: Al Firdous Holdings (+15.0%), Dubai National Ins. & Reins. (+13.3%) and Oman Ins. Company (+7.6%).

In the red: Orascom Construction (-8.0%), Shuaa Capital PSC (-2.3%) and Dubai Islamic Ins. and Reins. Co. (-2.0%).

The ADX fell 0.2% yesterday on turnover of AED 982.25 mn. The index is down 7.2% YTD.