- trend to continue in current week
By Chioma Obinagwam
Three events shaped the performance of global markets in the previous week with the biggest mover being the informal “zero tariffs” trade agreement reached between President Trump of the United States (US) and President Juncker of the European Union (EU) on Wednesday, which led to rallies across the US and European markets.
In addition to this, the European Central Bank (ECB) on Thursday maintained status quo on key rates while restating its commitment to conclude its quantitative easing policy by the end of the year.
Moreover, in the global oil market, Brent Crude rallied to US$75.12 as at July 26, 2018, following threats of military action against Iran by President Trump which if initiated, would disrupt the Strait of Hormuz waterway through which crude oil of the Gulf area flows to other parts of the world.
Afrinvest (West Africa) Limited, a wealth advisory firm involved in investment banking, securities trading, asset management and investment research stated that these events impacted 17 out of 23 global markets positively, closing higher in the week under review.
“As a result, 17 of 23 markets under our coverage closed higher with the UK FTSE All Share and US S&P 500 climbing 0.2 per cent and 1.1 per cent respectively Week on Week (W-o-W), buoyed by positive expectations from the new trade agreement between the US and EU. The NASDAQ however, closed 0.3 per cent lower W-o-W as price declines in Facebook and Twitter which were stoked by earnings releases below expectation, offset earlier gains recorded from the EU deal,” Afrinvest disclosed in its weekly update.
“In the euroasia region, performance was largely bullish as Germany’s XETRA DAX rose 2.4 per cent W-o-W, buoyed by rally in some listed carmakers – expected to be main beneficiaries of the trade agreement. This positive sentiment also filtered into Hong Kong’s Hang Seng (+2.1 per cent), France’s CAC 40 (+2.1 per cent) and Japan’s Nikkei 225 (+0.1 per cent) which closed in the green W-o-W. Only Thailand’s SET index (-3.2 per cent) fell W-o-W following massive profit taking during the week,” it continued.
The report indicated that across the BRICS (Brazil, Russia, India, China and South African) markets, we saw increased bargain hunting as Russia’s RTS led gainers, up 3.1 per cent W-o-W while India’s BSE Sens followed, rising 2.3 per cent W-o-W on the back of better-than-expected quarterly earnings by index heavyweights.
Similarly, Brazil’s Ibovespa climbed 2.0 per cent W-o-W as the relative geopolitical calm in the country, kept investor sentiment upbeat while China’s Shanghai Composite also rose 1.6 per cent W-o-W following gains in Banks and Infrastructure stocks earlier in the week. Likewise, South Africa’s JSE rose 0.3 per cent W-o-W despite a report released in the week which showed inflation rate trended higher in June.
“We opine that the positive performance of the BRICS market could be linked to the three-day meeting between leaders of these nations held in South Africa during the week,” the report showed.
Also, in Africa, four of six markets under our coverage appreciated W-o-W with the largest gain recorded in Morocco’s MASI Index, up 2.7 per cent W-o-W, following upticks in Forestry & Paper and Oil & Gas stocks. Mauritius’ SEMDEX index followed (+0.9 per cent), buoyed by positive investor sentiment on general macroeconomic conditions while Kenya’s NSE 20 and Nigeria’s All Share Index bucked a negative trend to advance 0.2 per cent and 0.1 per cent W-o-W respectively on the back of bargain hunting activities.
On the flipside, Egypt’s EGX 30 shed 2.4 per cent W-o-W while Ghana’s GSE composite declined 0.4 per cent W-o-W.
In the Middle East, Lebanon and Saudi Arabia’s Beirut BLOM and Tadawul indices gained 1.0 per cent apiece W-o-W following a bullish trend in Oil price during the week.
On the other hand, UAE’s ADX General Index fell 1.5 per cent W-o-W despite a rally in Insurance and Finance stocks at close of the week while Qatar’s DSM 20 index fell 1.9 per cent W-o-W.
Analysts opine that the positive trend witnessed by most global markets in the previous week would filter into the current week as they absorb the gains from the trade concessions reached by the US and EU in addition to the anticipated hike in global oil prices if the US proceeds with its military action against Iran.