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Rising treasury yields hit tech stocks

U.S. government borrowing costs advanced for a sixth week, hurting tech stocks. This is because the investors are betting on rising interest rates, while three-year high oil prices ignited the energy sector. The encouragement for investors came from an easing in Sino-U.S. tensions and Chinese authorities’ decision to pump in more cash to offset the fallout from real estate firm Evergrande’s woes. The Germany’s election outcome ruled out a pure left-wing coalition government.

U.S. indices were mixed with the industrials-heavy Dow Jones index. Tim Ghriskey, chief investment strategist at Inverness Counsel in New York said that the technology stocks are higher valuation. This means that we are paying for the future growth. And the higher interest rates are a brake on it. Tech shares tend to underperform, while the yields were rising. The Dow Jones Industrial Average rose 71.37 points. The S&P 500 lost 12.37 points and the Nasdaq Composite dropped 77.73 points. Europe’s STOXX 600 index ended lower. Germany’s blue-chip DAX rose 0.3%.

The global inflation will prove longer-lasting than anticipated. This forces the central banks to act and benefiting so-called reflation investments. Fahad Kamal, CIO at Kleinwort Hambros in London said that they have a strong economic macro story that underpinned everything. Kamal noted that optimism was reflected in central banks. Oil futures have climbed around $9 a barrel over September. U.S. crude futures settled up 2% at $75.45 per barrel. Brent crude futures settled at $79.53 per barrel. Goldman Sachs forecast Brent to hit $90 per barrel by year-end. They stated that the current global oil supply-demand is larger than they expected. The portfolios are being repositioned by the investors. U.S. gold futures settled unchanged at $1,752.

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Finance

Euro zone ministers expect inflation to slow in 2022

The acceleration of euro zone inflation, driven energy prices, is mostly temporary. Then the price growth will slow down again. The euro zone finance ministers agreed that, that too the next year as forecasted by the European Central Bank and the European Commission.

Paschal Donohoe, chaired the talks of the ministers in Luxembourg. In a news conference he said that there was also agreement that the inflation spike was not an argument against the transition to renewable sources of energy. This is under the EU’s ambitious plan of reducing CO2 emissions to zero by the year 2050.

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Finance

Under new rules, borrowing for investment sensible

British finance minister Rishi Sunak said that the government borrowing to fund investment was a sensible thing. This is to allow under new fiscal rules that he is likely to announce, unlike borrowing for day-to-day spending. He said that borrowing for capital investment that is going to drive up their growth is probably a sensible thing for them. And that too particularly in an environment of slightly lower interest rate. Sunak stated this in an event on the sidelines of the annual conference of Britain’s ruling Conservative Party. This event was organized by the Taxpayers’ Alliance advocacy group. Sunak stated in that event, that borrowing for more day-to-day spending is probably less something that you would want to have as part of your framework.

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IMF board to interview Georgieva-sources

The International Monetary Fund’s executive board is going to interview Managing Director Kristalina Georgieva. This is regarding that; its reviews claims that she pressured World Bank staff to alter data to favor China in her previous role. Board members were initially expected to meet with Georgieva. But spent their time working on other regular business matters.

The board members spent hours for questioning lawyers from the WilmerHale firm. This is about their World Bank investigation report which alleged that Georgieva, as the bank‘s CEO applied undue pressure on staff, to alter data in the flagship “Doing Business” report to benefit China. Then, an IMF spokesperson said that the IMF board remains committed to a thorough, objective, and timely review of the matter. Georgieva has strongly denied the accusations.

The upcoming interviews could prove pivotal in either increasing support for Georgieva. This is with many IMF shareholders are keen to wrap up the board’s deliberations on the matter. The fund’s most influential member governments, including the top shareholder the United States, have withheld public judgment. The World Bank tasked WilmerHale with investigating the “Doing Business” data irregularities identified in 2020. The law firm’s report contends Georgieva. The former World Bank President Jim Yong Kim’s office pressured staff to manipulate data so that the China’s global ranking in the “Doing Business 2018” study of investment climates rose to 78th from 85th.

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