The US Federal Reserve’s disclosure of its intention to begin reversing its easy money policies later this year, has confused capital market dealers around the world, as the toll of COVID-19 on major economies and job creation is still serious.
Although the policy-setting Federal Open Market Committee still held interest rates at near-zero in its updated statement, the recent remarks could mean that next November may witness an increase in interest rates in America.
In Egypt, the interest rates on overnight deposit and lending were 8.25% and 9.25%, respectively, while the rate of the main operation, the discount, and credit was 8.75% for each, after fixing the basic rates for the seventh time in a row last Thursday.
This followed the August urban inflation increase, the highest in nine months, to 5.7%, compared to 5.4% in July, driven by the increase in food, fuel, and transportation costs.
Stock exchange traders expected that the anticipation of new stimuli would affect the performance of the benchmark index and lead it to continue its sideways performance, with an attempt to accommodate the declines of the leading shares last week, to continue between 10,900 and 11,100 points levels in the short term.
Last week, EGX30 decreased by 3.2%, closing at 10,642 points, while EGX70 EWI fell by 3.6%, settling at 2,763 points.
Sameh Gharib, Head of Senior Clients Department at Arabeya Online, said, EGX30 capped was able to compensate for part of its losses at the end of trading, ending the last week’s transactions at 13,017 points, down by 3.58%, and last week’s transactions were negative. After the index breached the lower limit of the occasional move between the resistance level of 13,717 points and the support level of 13,200 points, the outlook for the index changed to negative in the short term. The support level reached 12,700 points, which pushed the index for a corrective movement upwards, in which it finds the resistance level at 13,200 points, then 13,400 points, and the indicator is moving in a bearish direction in the short term and sideways in the medium term.
Gharib explained that the outlook for EGX70 EWI also turned negative after it breached the lower limit of the occasional move between the resistance level of 3,038 points and the support level of 2,764 points, to reach 2,559 points. This was able to stop the decline and push it to a corrective movement upwards in which it found the nearest resistance level at 2,800 points, then 2,875 points. The index is moving in a downtrend in the short term.
EGX30 capped decreased by 3.6%, stable at the level of 13,017 points, and EGX100 EWI fell by 3.7%, stable at the level of 3,722 points.
Haitham Abdel Samie, Head of Technical Analysis at Ostoul, said that the corrective rise attempts in the SME index had stopped at the level of 2,765 points, and that the above stability would bring it back to target the levels of 2,850 points, then 2,960 points.
The market recorded a total trading value of EGP 19.7bn last week, circulating 2.02 billion shares through 241,000 transactions.
Foreign transactions turned into a net purchase of EGP 2.3m, with an acquisition rate of 5.7% of buying and selling shares. Arabs were more inclined toward buying with net transactions of EGP 146.4m, and an acquisition rate of 5.6%, excluding deals.
Shares accounted for 33.4% of the Egyptian Exchange’s trading during the past week, while the value of bonds trading accounted for 66.6% of transactions.