Conditions in the financial markets went from bad to worse last week, as higher interest rates pushed everything from stocks to commodities to fresh lows amid weakening economic activity, rising inflation and a strengthening USD. The FTSE All-World index of global stocks lost 5.0% for its worst week since June, Europe’s Stoxx 600 officially entered bear market territory, and MSCI’s gauge of emerging-market stocks hit its lowest level in more than two years. In the US, the S&P 500 ended the week down 4.6%, the tech-dominated Nasdaq Composite shed 4.2%, and the Dow Jones dropped 4.0% to its lowest levels this year. Meanwhile, both US and UK government-bond yields hit their highest level in more than a decade, while data showing declining economic activity in Europe also raised fears of recession. (WSJ | FT | Reuters)

The USD hit an all-time high: The Bloomberg USD Spot Index — which tracks the performance of 10 leading global currencies vs. the USD — surged to a record high on Friday, the business newswire reported.

All is not well in the island kingdom: The GBP tumbled to its lowest level against the greenback since the mid-80s as a surprise round of tax cuts sent markets into a panic.

Oil did not escape the global risk-off sentiment: Brent futures fell 4.2% to close at USD 86.65 a barrel, its lowest close since late January. WTI futures fell below USD 80 per barrel for the first time since January — putting US crude on track for its first quarterly loss in more than two years, according to Bloomberg.

The recession talk is reaching fever pitch: Economists are warning of increased volatility and a “harsh landing” from the Fed’s aggressive tightening cycle. “This is going to be a very, very volatile last quarter,” Amrita Sen, chief oil analyst at Energy Aspects, said in a Bloomberg interview.

EMs will bear the brunt: Emerging and developing markets are now facing a “perfect storm with weak growth, very high interest rates and an extremely challenging external environment when it comes to trade and foreign direct investment,” Ayhan Kose, acting vice-president for equitable growth, finance and institutions at the World Bank, told the Financial Times. “That is why we are worried.”

THE CLOSING BELL-

The EGX30 fell 0.2% at Thursday’s close on turnover of EGP 821.18 mn (14% below the 90-day average). Foreign investors were net sellers. The index is down 16.9% YTD.

In the green: Orascom Construction (+5.8%), Eastern Company (+2.6%) and Talaat Moustafa Holding (+1.9%).

In the red: Madinet Nasr Holding (-4.6%), GB Auto (-4.2%) and e-Finance (-2.2%).