Egypt’s Deadly Clashes, Downgrade Seen Hurting Sentiment Today

The deadly clashes that erupted in Egypt’s capital in continuing opposition to the Islamist government and worsening economic situation may weigh on Cairo’s bourse – Egyptian Exchange on Sunday, Reuters reported.

Several thousand opponents of Egypt’s Muslim Brotherhood clashed with supporters of the Islamist group, with at least 40 people were wounded, authorities said.

Cairo’s benchmark EGX30 fell to a three-month low last week as worries over the country’s political and economic outlook sparked a risk-off approach, with foreign investors exiting positions.

Moody’s cut Egypt’s credit rating on Thursday, citing unsettled political conditions and public finances, which it said raised the chance of a default within five years to nearly 40 percent.

The Egyptian economy has been in crisis since the overthrow of Hosni Mubarak in 2011, with Islamist President Mohamed Mursi’s cash-strapped government grappling with sliding currency reserves, dwindling tourism, a soaring budget deficit and a wave of often violent street protests.
Elsewhere, global equity markets and the euro advanced on Friday on hopes Cyprus will avert a financial collapse.