US inflation data, which increased at a rate of 0.1% on a monthly basis despite the decline in gasoline prices, led to significant declines in stock markets.
The Dow Jones index fell by 3.9%, equivalent to more than 1,200 points, at the closing of Tuesday’s session, in the biggest daily drop since June 2020, and the “Standard & Poor’s 500” index fell by 4.3%, after the August inflation report, which came above expectations and affected investors’ decisions and reinforced expectations of the continuation of the monetary tightening policy during the last quarter.
The US inflation increased in August to 8.3%, while it was expected to reach 8.1%.
Locally, the Egyptian Exchange (EGX) declined on Wednesday, affected by the downward wave that hit major global markets after the US inflation report, which negatively impacted the performance of global stock exchanges and led to increased possibilities of the US Federal Reserve continuing its monetary tightening policy.
Yasser Al-Masry, managing director of the Arab African Company for Securities, suggested that the main stock index will test the level of 11,000 points in the short term after the end of the current anticipation period related to the liberalization of the local currency exchange rate.
He added that it is currently best for investors to choose stocks with high cash dividends and low profitability multipliers, until the market trend becomes clear with a reduction in margin buying ratios.
The market capital of the shares of companies listed on EGX lost about EGP 11.7bn, to reach the level of EGP 701.6bn at the closing, after total transactions amounted to EGP 3.2bn, including EGP 1.6bn, the transactions of the major dealers’ bond markets and ownership transfer deals.
The benchmark index EGX30 ended the day’s trading with a decline of 1.96%, recording 10,193.79 points, and the EGX70 EWI declined by 1.34% to 2271.77 points.
The broader EGX 100 EWI also lost 1.52% of its value to end trading at 3239.37 points.
