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Sunday, 7 March 2021

What the markets are doing on 7 March 2021

Rising US treasury yields continued to hit tech stocks last week, as investor unease about sky-high valuations grew. The Nasdaq has lost USD 1.6 tn in market value over the past three weeks following its heaviest sell-off since October, according to Bloomberg. Despite inching up 1.6% on Friday, the tech-heavy equities gauge closed the week 1.9% lower, leaving it down nearly 10% from a February peak, though with valuations still well above the five-year average.

Tesla was among the biggest losers: Elon Musk has lost USD 27 bn since Monday as the company’s shares tumbled. Musk still retains his spot as the world’s second richest man, but he’s now USD 20 bn below Jeff Bezos after having overtaken the Amazon mogul last week.

Bond sell-off resumes: Bond traders have become increasingly anxious about the combined threat of inflation and an earlier-than-expected rate hike in past weeks, leading to a large sell off and spiking yields which is increasingly being felt in the equity markets. After a pause early in the week, the sell-off resumed after Fed Chairman Jerome Powell failed to reassure investors that the bank would step in should yields continue to rise. The 10-year note closed at 1.547% on Thursday, its highest closing level since February 2020.

Emerging markets are increasingly being caught in the cross-fire: Emerging markets saw daily outflows for the first time since October last week as fears of rising rates cause investors to pull back from risk assets. A tracker run by the Institute for International Finance using data from 30 EMs showed that investors pulled USD 290 mn each day last week, compared to USD 323 mn of net inflows in February, the Financial Times says.

IIF calls the Taper Tantrum 2.0: “Flows have turned negative and that’s really a surprise, as we were still early on in the rebound from a cataclysmic 2020,” said Robin Brooks, the IIF’s chief economist. “The honeymoon that began after positive vaccine headlines in November is unfortunately over. We are in a repeat of the 2013 taper tantrum.”

Oil spiked after OPEC+ votes to maintain supply curbs: Oil prices rose more than 5% on Thursday after the OPEC+ alliance of oil producers went against expectations and decided to maintain current curbs on supply. OPEC said in a statement that it would keep output at current levels through April, though Russia and Kazakhstan were allowed to increase the production by a small amount. Saudi Arabia will extend its 1 mn barrels per day voluntary production cut into April.

This caused prices to hit a near-two-year high: Brent futures climbed USD 2.68 to USD 66.73 per barrel and US crude rose USD 2.55 to USD 63.83 a barrel, according to Bloomberg.

Down

EGX30

11,334

-0.5% (YTD: +4.5%)

Up

USD (CBE)

Buy 15.63

Sell 15.73

Up

USD at CIB

Buy 15.63

Sell 15.73

None

Interest rates CBE

8.25% deposit

9.25% lending

Down

Tadawul

9,242

-0.7% (YTD: +6.4%)

Down

ADX

5,693

-0.1% (YTD: +12.8%)

Down

DFM

2,569

-0.8% (YTD: +3.1%)

Up

S&P 500

3,842

+2.0% (YTD: +2.3%)

Down

FTSE 100

6,631

-0.3% (YTD: +2.6%)

Up

Brent crude

USD 69.36

+3.9%

Down

Natural gas (Nymex)

USD 2.70

-1.6%

Down

Gold

USD 1,698.50

-0.1%

Up

BTC

USD 49,347.27

+1.8%

The EGX30 fell 0.5% on Thursday on turnover of EGP 1.16 bn (21.1% above the 90-day average). Local investors were net buyers. The index is up 4.5% YTD.

In the green: GB Auto (+2.9%), Orascom Investment (+2.7%) and Orascom Development (+2.1%).

In the red: Sidi Kerir (-2.3%), Qalaa Holding (-1.5%) and SODIC (-1.5%).

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