KEY THEMES
Global equities rebounded notably during Thursday and Friday, as sentiment for risk assets improved, despite Russia pounding Kyiv with missiles. U.S. equities bounced back strongly, with the Dow registering its biggest daily percentage gain since November 2020. Investors were buying the dip as thy shrugged off the possibility of a full-blown military conflict between Russia and NATO, with U.S. President, Joe Biden, announcing a second round of heftier sanctions against Russia. Furthermore, Investors also were assessing news that Russian President, Vladimir Putin told his Chinese counterpart Xi Jinping that his country is willing to sit for talks with Ukraine, according to Chinese foreign ministry. Meanwhile, oil prices went in profit taking mode, retreating below the USD100/bbl mark, with Brent oil prices below USD95/bbl. The strong run by global commodities during last week was partially stopped by improving sentiment for risk assets, yet prices remain elevated from an ytd perspective.
Here at home, both indices slipped badly, with both the EGX 30 and the EGX70 EWI lower 3.6% and 9% respectively. The impact of the current Russian invasion over Ukraine will expose Egypt to the overly high wheat prices, alongside with other commodities, placing pressures on the countries state budget. Furthermore, a significantly weaker Russian rouble could spur imports volumes from Russia to the country, let alone slowing down Egypt’s tourism recovery. While the market is set to rebound today, following the recovery in global equity markets, it’s useful to memorize that volatility is still the name of the game. That said, from a tactical standpoint,
Commodity-linked stocks with local feedstock should be in favor if the situation persists as we mentioned in our Trading Playbook last Thursday.