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Careful now, big spenders: The US and China need to implement policies to address the imbalance between spending and revenues, which is adding to inflationary pressures and posing significant risks to the global economy, the IMF has warned in its latest Fiscal Monitor (pdf) out yesterday. Rampant spending from the world’s two largest economies could “have profound effects for the global economy and pose significant risks for baseline fiscal projections in other economies,” the Fund said.
How bad is it? The US will record a fiscal deficit of 7.1% in 2025, over three times the 2%average clocked in by other advanced economies, while China will record a deficit over twice the average of other EMs with 7.6%, the IMF said. The shortfall comes as both countries look set to face challenges ahead, with China dealing with weak domestic demand and a real estate crisis and the US entering a key year for fiscal policy in an election year that will see candidates pledging further tax cuts and increased state spending.
When the US spends, EMs pay: “Large and sudden increases” in US borrowing costs willlikely send global government bond yields soaring and exchange rates into murky waters in emerging markets and developing economies, the IMF said. “A 1 percentage point spike in US rates results in a 90 basis point rise in other advanced economies and an increase in EMs of 1 percentage point,” the salmon-coloured paper writes.
THE MARKETS THIS MORNING-
Asian markets are little changed in early trading this morning after Wall Street posted on Wednesday its first four-day string of losing days since the start of the year. The Kospi is the sole standout, up a bit more than 1.4% at dispatch time this morning. European and US equities futures were mostly unchanged overnight.
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ADX |
9,165 |
-0.3% (YTD: -4.3%) |
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DFM |
4,173 |
-0.3% (YTD: +2.8%) |
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Nasdaq Dubai UAE20 |
3,658 |
-0.3% (YTD: -4.8%) |
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USD : AED CBUAE |
Buy 3.67 |
Sell 3.67 |
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EIBOR |
4.9% o/n |
5.4% 1 yr |
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TASI |
12,466 |
-0.3% (YTD: +4.2%) |
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EGX30 |
29,668 |
+0.9% (YTD: +19.2%) |
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S&P 500 |
5,022 |
-0.6% (YTD: +5.3%) |
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FTSE 100 |
7,848 |
+0.4% (YTD: +1.5%) |
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Euro Stoxx 50 |
4,914 |
-0.1% (YTD: +8.7%) |
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Brent crude |
USD 87.29 |
-3.0% |
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Natural gas (Nymex) |
USD 1.72 |
+0.3% |
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Gold |
USD 2,380.80 |
-0.3% |
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BTC |
USD 61,260.80 |
-4.3% (YTD: +44.9%) |
THE CLOSING BELL-
The DFM fell 0.3% yesterday on turnover of AED 402.5 mn. The index is up 2.8% YTD.
In the green: Al Firdous Holdings (+6.1%), United Foods Company (+5.5%) and Dubai Financial Market (+2.9%).
In the red: Al Salam Sudan (-9.3%), Commercial Bank of Dubai (-2.8%) and Air Arabia (-2.2%).
Over on the ADX, the index also closed down 0.3% on turnover of AED 970.7 mn. Nasdaq Dubai fell 0.3% as well.
CORPORATE ACTIONS-
Abu Dhabi Aviation approved the disbursement of a AED 111.1 mn in dividends for 2023, according to an ADX disclosure (pdf).
National General Ins. Company approved a 35% dividend payout, comprising a 25% cash dividend and a 10% bonus share allocation, according to a DFM disclosure (pdf).
Pure Health tapped Q Market Maker as a liquidity provider for its shares, the company stated in an ADX disclosure (pdf).
