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Thursday, 6 May 2021

What the markets are doing on 6 May 2021

That commodities supercycle could be putting a damper on the global energy transition: Rising demand for raw materials used in clean energy technologies, including lithium and cobalt, are pushing up commodity prices and threatening to stall the transition to green energy, the International Energy Agency’s Executive Director Fatih Birol tells the Financial Times. The soaring costs, which come as governments launch green stimulus packages and look to meet the goals of the Paris climate agreement, could ironically slow down the energy transition, Birol says. Investors need to begin developing new mines now to keep up with an anticipated jump in demand for these raw materials, particularly as a mining project takes some 16 years on average “to go from discovery to first production.”

And speaking of commodities and inflation: Consumer-facing firms are struggling to keep pace with the increasing consumer demand and limited stockpiles, with Nestlé and Colgate-Palmolive already flagging price hikes as manufacturers in Europe and the US grapple with soaring commodity prices, IHS Markit’s John Mothersole tells Bloomberg. The jump in commodity prices, coupled with tight inventories of materials and logistical bottlenecks, indicates an acceleration in inflation — however transient it may be. Some economists and central bankers assume the price gains will be transitory, as covid-19 concerns and unemployment will eventually curb inflation.

Saudi Arabia has cut oil prices for Asia as a covid-19 surge in India weighs on demand, reducing prices for the region between USD 0.10 and 0.30 / bbl, Bloomberg reports.

Inbound cross-border M&A in Europe worth more than USD 600 mn could soon be contingent on prior approval from the European Commission under a new proposal that seeks to clamp down on acquisitions of European companies by firms receiving subsidies from foreign governments, CNBC reports. Under the proposed rules, foreign companies looking to purchase European businesses would also be required to disclose the amount of funding they’ve received before moving forward with a transaction. The proposal comes after years of state-backed Chinese M&A activity in Europe — including the 2016 Tencent acquisition of Supercell — that has seen it snap up major tech companies in the trade bloc.

Up

EGX30

10,513

+0.5% (YTD: -3.1%)

None

USD (CBE)

Buy 15.62

Sell 15.72

None

USD at CIB

Buy 15.62

Sell 15.72

None

Interest rates CBE

8.25% deposit

9.25% lending

Down

Tadawul

10,252

-0.7% (YTD: +18.0%)

None

ADX

6,116

  • (YTD: +21.2%)

Up

DFM

2,650

+0.2% (YTD: +6.4%)

Up

S&P 500

4,168

+0.1% (YTD: +11.0%)

Up

FTSE 100

7,039

+1.7% (YTD: +9.0%)

Down

Brent crude

USD 68.91

-0.1%

Up

Natural gas (Nymex)

USD 2.95

+0.3%

Up

Gold

USD 1,786.20

+0.1%

Up

BTC

USD 56,894.34

+4.0%

The EGX30 rose 0.5% yesterday on turnover of EGP 896 mn (29.1% below the 90-day average). Foreign investors were net buyers. The index is down 3.1% YTD.

In the green: Pioneers (+3.3%), Orascom Development (+2.5%) and Oriental Weavers (+1.9%).

In the red: GB Auto (-2.4%), Credit Agricole (-1.6%) and Edita (-1.3%).

It’s largely clear skies for global markets this morning, with Asian indices uniformly in the green and futures suggesting shares in Europe, Wall Street and Bay Street are about to follow suit.

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