Is the stock rally being driven by FOMO? US equities’ record run could be driven by investors’ fear of missing out on gains in a market that keeps climbing higher, leading to an unprecedented surge in option trading that analysts are claiming is widely disproportionate to the actual amount of existing equities in the market, the Financial Times says. Stimulus measures by central banks to support the post-covid recovery has driven inflation higher and left yields in negative territory, and a boom in retail sales triggered by covid restrictions has “supercharged” the market upswing, analysts said. More bearish investors are feeling the burn of this environment, with hedge fund Russell Clarke shutting down completely after sustaining a string of losses amid the bullish market of the past months.

But some analysts are arguing that stocks are more resilient than ever. The S&P 500’s five-week advance suffered only a blip in the face of the biggest inflation surge in three decades, Bloomberg reports, leading analysts to believe that resilience will continue to be the headline story for equities in the coming months, especially considering the impressive earnings season US companies are enjoying so far. Despite supply chain concerns, analysts maintain that companies are prepared to course correct in the event that inflation rises and costs become too much for consumers to bear.

Also of note in the financial press:

• Dubai’s planned IPOs of 10 state-owned firms breathed new life into the emirate’s bourse, which saw its value rise to nearly AED 17 bn (USD 4.6 bn) and its shares rally 107% over the past two weeks, Bloomberg reports. The listings are part of DFM’s efforts to try to close the gap with neighboring UAE and Saudi markets, which have soared this year on the back of an IPO boom that has seen listings from Adnoc Drilling and Fertiglobe in Abu Dhabi to ACWA Power in Riyadh.
• India is rethinking its stance on digital currencies and is now planning “progressive” measures on crypto, after previously effectively banning them following a series of fraud incidents, Bloomberg reports, citing unidentified sources. The policy shift comes on the back of a record-breaking week for crypto, which raised its market value to more than USD 3 tn.

THE CLOSING BELL-

The EGX30 rose 0.8% yesterday on turnover of EGP 938 mn (36.7% below the 90-day average). Foreign investors were net sellers. The index is up 7.5% YTD.

In the green: Abou Kir Fertilizers (+5.8%), Speed Medical (+5.1%) and Oriental Weavers (+2.2%).

In the red: Ezz Steel (-6.5%), GB Auto (-2.8%) and AMOC (-2.8%).