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Morning Note: Bear Mulls Markets as Locals Run out of Amo.

Global markets were generally flat Thursday as investors continued to trade on news available across all markets, volatility spikes on most markets was moderate as investors cashed out on what has been the new norm, invest on Monday, exit by Thursday, Friday. Technically, traders are not leaving money on the market on grounds of two days of uncertainties.

Retail and small investors are becoming increasingly hard to convince on maintaining long term outlook with the uncertainty of the virus wave still in picture.

The U.S markets had a generally good day as the Dow Jones Industrial Average rose 33.33 points, or 0.14%, to 23,537.68, the S&P 500 gained 16.19 points, or 0.58%, to 2,799.55 and the Nasdaq Composite added 139.19 points, or 1.66%, to 8,532.36.

Data showed jobless claims fell slightly to 5.2 million last week from an upwardly revised 6.62 million the previous week. But the total figure for the past month still topped a stunning 20 million.

Early Friday, China released economic data which showed that the world’s second-biggest economy shrank by 6.8 per cent year on year in the first quarter, due to disruptions caused by coronavirus-induced lockdowns. That was worse than analysts’ median forecast of 6.5 per cent and marked the first decline in gross domestic product since 1976.

China’s CSI 300 index rose 1 per cent and Hong Kong’s Hang Seng up 2.6 per cent. Japan’s Topix index added 1.3 per cent, while Australia’s S&P/ASX 200 climbed 2.2 per cent.

The Nairobi Securities Exchange faced a slow day but with foreign outflows on the market as foreigners turned to hold a net selling position, majorly exiting Equity Bank & Safaricom. Foreigners taking a net selling position is worrying because often, they’re set to sell on the market which could bring prices even lower.

The local market seems to have run out of purchasing power, or are waiting for even lower prices as we presume, as they hold low counteractive measures against the foreign investors. Earlier in the month, locals had implemented a defensive approach on the market which prevented a further shock after markets declined, pushing the NSE20 to all time lows.

As markets open, the numbers of cases in Kenya of the corona virus continue to take a worrying trajectory with transmissions now emerging from the previous inbound to local communal transmissions. This could see the numbers surge exponentially, affecting the economy and finally holding to bay the Nairobi Securities Exchange.