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Thursday, 8 September 2022

Oil prices hit lowest levels since January + Markets increasingly expect another 75-bps Fed rate hike this month

Investors are increasingly pricing in another huge rate-hike in the US this month: The futures markets is currently giving a 75% probability to the Federal Reserve raising interest rates by 75 bps for the third consecutive meeting on the back of Chairman Jerome Powell’s hawkish speech last month, according to the Wall Street Journal’s Nick Timiraos. Federal Reserve officials haven’t tried to dial back expectations for a large increase, and have continued pushing the idea that the central bank will act to curb inflation no matter what. The latest to do that was Fed Vice-Chair Lael Brainard, who said yesterday that “we are in this for as long as it takes to get inflation down,” according to the Financial Times.

Oil prices plunged to their lowest level since January yesterday on fears of a global recession. Brent crude suffered its worst day since June, falling 5.4% to USD 87.82 a barrel. US crude, meanwhile, fell 5.6% to USD 82.

Recession fears outweigh supply concerns: Falling prices indicate that investors’ attention is trained on the possibility of recessions in major economies — caused by rising interest rates and an historic energy shock in Europe — rather than on the potential for supply to tighten in the coming months. Key OPEC producers have signaled in recent weeks that they could begin to cut supply in response to falling prices and made an albeit small step in that direction earlier this week. Russian President Vladimir Putin has also threatened to curb supply if G7 nations try to impose a cap on Russian crude.

ALSO WORTH NOTING-

  • Crypto winter continues: BTC briefly slipped to its lowest level since December 2020 yesterday, reaching an intraday low of USD 18,561 as global economic turmoil and a strengthening greenback takes its toll on crypto markets.
  • British peso hits 37-year low: The GBP hit its lowest level against the greenback since 1985 yesterday after falling 0.64% to USD 1.145. (BBC)
  • Good news / bad news for Musk: A judge has given Elon Musk the right to use recent claims made by a whistleblower in his legal showdown with Twitter — but denied his motion to delay the trial to November. (WSJ)
  • E-cigarette maker Juul will pay at least USD 438.5 mn in a settlement over claims it marketed its vaping products to teenagers. (WSJ)

Down

EGX30

10,232

-0.9% (YTD: -14.4%)

Up

USD (CBE)

Buy 19.21

Sell 19.32

Up

USD at CIB

Buy 19.24

Sell 19.30

None

Interest rates CBE

11.25% deposit

12.25% lending

Down

Tadawul

11,864

-1.1% (YTD: +5.2%)

Up

ADX

9,717

+0.6% (YTD: +14.5%)

Down

DFM

3,382

-0.4% (YTD: +5.8%)

Up

S&P 500

3,980

+1.8% (YTD: -16.5%)

Down

FTSE 100

7,238

-0.9% (YTD: -2.0%)

Up

Euro Stoxx 50

3,502

+0.1% (YTD: -18.5%)

Down

Brent crude

USD 87.82

-5.4%

Down

Natural gas (Nymex)

USD 7.84

-3.7%

Up

Gold

USD 1,727.80

+0.9%

Up

BTC

USD 19,372

+2.2% (YTD: -58.1%)

THE CLOSING BELL-

The EGX30 fell 0.9% at yesterday’s close on turnover of EGP 1.61 bn (44.4% above the 90-day average). Foreign investors were net sellers. The index is down 14.4% YTD.

In the green: CIRA (+2.4%), Orascom Construction (+2.3%) and Qalaa Holdings (+2.0%).

In the red: Telecom Egypt (-3.8%), Ezz Steel (-3.6%) and e-Finance (-3.4%).

Asian markets are slightly in the green this morning — though futures contracts point to a mixed open in Europe and the US later today.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

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