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Thursday, 11 November 2021

US inflation hits 30-year high; stocks aren’t happy

Inflation worries hit stocks: US stocks experienced their biggest single-drop in a month and treasury yields rose the most since February yesterday after fresh data (pdf) showed inflation reaching a 30-year high in October. The S&P 500 fell 0.8% during trading and the Nasdaq slipped 1.4% after figures released by the Bureau of Labor Statistics showed that US consumer prices accelerated to 6.2% last month — the highest annual rate since 1990.

This is going to put more pressure on the Fed, which said earlier this month that it will begin tapering its USD 120 bn per-month asset purchase programme this month but indicted that interest rates would remain on the floor for the foreseeable future.“Now that it’s breached that 6% level, I think the Fed are going to be getting a little bit hot under the collar,” one analyst told Bloomberg. “There is no way, I think, they can ignore 6.2% on that CPI reading. It’s going to be prompting a more hawkish feel.”

The US isn’t the only one dealing with surging inflation: Factory input costs in China rose at their fastest pace in 26 years in October, the Financial Times reports, as the energy crisis turbocharged industrial input prices. The country saw factory gate prices rise 13.5% y-o-y last month, exceeding analysts’ expectations and replacing September’s 10.7% reading as the highest since 1995. The rise comes on the back of a global commodities crunch that has triggered particularly severe energy and raw materials shortages in China, where this latest reading will add to fears of a growing stagflation crisis — a double-punch of high inflation coupled with slowing growth.

The sell-off in New York is bleeding over into Asia this morning, where most indices are in the red, though China and Japan were bucking the trend in the minutes before dispatch. It’s a mixed picture in the futures market: the dip buyers look to be coming out in force in the US, where stock futures are all in the green, though the open in European markets is less certain.

Down

EGX30

11,481

-0.9% (YTD: +5.9%)

None

USD (CBE)

Buy 15.66

Sell 15.76

None

USD at CIB

Buy 15.66

Sell 15.76

None

Interest rates CBE

8.25% deposit

9.25% lending

Up

Tadawul

11,857

+0.9% (YTD: +36.5%)

Up

ADX

8,230

+0.4% (YTD: +63.1%)

Down

DFM

3,107

-0.4% (YTD: +24.7%)

Down

S&P 500

4,647

-0.8% (YTD: +23.7%)

Up

FTSE 100

7,340

+0.9% (YTD: +13.6%)

Down

Brent crude

USD 82.56

-2.6%

Down

Natural gas (Nymex)

USD 4.88

-2.0%

Up

Gold

USD 1,848

+1.0%

Down

BTC

USD 64,646

-4.0% (as of midnight)

THE CLOSING BELL-

The EGX30 fell 0.9% yesterday on turnover of EGP 821.2 mn (45% below the 90-day average). Regional investors were net buyers. The index is up 5.9% YTD.

In the green: Medinet Nasr Housing (+3.1%), Mopco (+2.2%) and Abou Kir Fertilizers (+0.8%).

In the red: Gadwa for Industrial Development (-5.1%), Aspire Capital (-3.9%) and AMOC (-3.3%).

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