Performance of the global equity market was largely bearish last week as 15 of the 16 indices under coverage closed the week in the red. The poor performance was largely due to speculations of a possible interest rate hike by the US Federal Reserves on the back of higher inflation levels as well as market correction following a largely bullish performance in January.
Oil prices, which trended lower during the week to settle at US$64.44/b after data released last Wednesday showed an increase in US fuel and crude production, also contributed to the bearish performance.
In the developed markets, all indices trended southwards. In the US, the S&P 500 and NASDAQ depreciated 6.6 percent and 6.4 percent week on week (W-o-W) respectively as a result of aggressive profit taking by investors as well as speculations of an interest rate hike by the US Fed.
Similarly, the UK FTSE 100 weakened 4.3 percent W-o-W as investors reduced exposure to equities on the back of expectation of a possible interest rate hike by the Bank of England.
Across markets in the BRICS classification, performance was also bearish as all indices declined W-o-W. China’s Shanghai Composite fell the most, down 9.6 percent W-o-W following sell offs in blue chip stocks ahead of the Chinese new year holiday next week.
The Russia RTS followed closely, dipping 6.6 percent W-o-W on the back of weaker oil prices during the weak as well as sell pressure from global markets. Similarly, South Africa’s FTSE/JSE ASI depreciated 4.9% as political tensions with regards to the resignation of President Zuma, mount. In the same vein, the Brazil IBOVESPA and India BSE Sens slid 3.4% and 3.0 percent W-o-W respectively.
The generally bearish sentiment filtered into markets in Europe and Asia with the, Hong Kong HANG SENG falling 9.6 percent against the backdrop of price declines in energy and financial services stocks while the Japan Nikkei 225 lost 8.1 percent W-o-W. Likewise, Germany’s DAX slid 5.3 percent W-o-W while France’s CAC 40 closed out the negative performance with a 5.2 percent W-o-W decline.
Sentiment in the African markets was also weak as all indices, save for Ghana’s GSE Composite, which gained 3.4% W-o-W on the back of positive expectations for domestic growth, closed in the red. The Nigerian ASI shed the most, down 3.4 percent W-o-W on the back of sustained profit taking during the week while Egypt’s EGX (-1.1% W-o-W) and Kenya’s NSE 20 (-0.3% W-o-W) also trended southwards.
Analysts expect the market to rebound in the coming week following positive expectations ahead of the earnings season in the UK and in the US, as well as investors buying the dip.
Frontpage December 4, 2017