The Trading Room: Weekly Market Review – Week 17, 2020
Most major stock markets around the world slipped lower this week after oil suffered its biggest-ever one-day price drop. Canada’s S&P/TSX Composite Index bucked the trend and managed a gain for the fifth straight week. The global shift to safety lifted the U.S. dollar, gold prices and government bonds, in turn pressuring government bond yields to move lower. Meanwhile, optimism about the potential re-opening of the economy continued to increase, as the European Union,China, the U.S and Canada announced additional economic stimulus packages.
The turmoil in energy futures seemed to weigh heavily on overall sentiment early in the week. On Monday, the May futures contract for West Texas Intermediate crude oil, due to expire Tuesday, closed at -$37.63 per barrel—meaning that buyers were getting paid to take and store each barrel. Traders noted that there were many rumored reasons for the move into negative territory, including technical trading issues, but the plunge in energy demand and what it implied for the global economy seemed to worry investors the most. Oil futures moved back into positive territory on Tuesday, but the major stock indices continued to decline as weakness spread to technology-related shares, with Wall Street analysts cutting estimates.
|Friday’s Close||Week’s Change||% Change YTD|
|NSE20 Share Index||1,967.84||-5.98||-25.86%|
|NSE All share Index||135.78||-0.15||-18.41%|
Most European and Asian markets were down as purchasing managers’ indices in Japan and Europe were weaker than expected. However, most other news related to their economies was more positive. The European Union approved the emergency package agreed to by the group’s finance ministers two weeks ago, the European Central Bank enhanced its easing measures, Germany’s ZEW Investors’ Expectations Index jumped sharply and Italy announced it would likely slowly restart its economy on May 4. Australian stocks were weakened after the country’s central bank said the nation’s economy would likely see its biggest contraction since the 1930s.
The Shanghai Composite and CSI 300 large-cap equity indices tracked each other closely in an uneventful week. Both indices closed higher on Monday before easing gently to finish down 1.1% week on week.Large-cap Japanese stocks retreated for the week. The Nikkei 225 Stock Average fell 635 points (-3.2%) and closed at 19,262.00, down 18.6% for the year-to-date period. The large-cap TOPIX Index declined significantly but less than the widely watched Nikkei average, while the small-cap stocks in the TOPIX Small Index were relatively unchanged for the week. The yen traded in a tight range and closed slightly below ¥108 per U.S. dollar.
The Nairobi Securities Exchange closed the week on a high note with 134 Million shares valued at Kes.4.3 Billion against the 79.8 Million shares valued at Kes.2.38 Billion transacted the previous week. The NSE 20 share index was down 5.98 points to close at 1967.84 basis points. The NSE All Share Index (NASI shed 0.15 points to settle at 135.78. The NSE 25 Share index was up 30.30 points to stand at 3175.45.
Noticeable trades were on the highly illiquid NewGold ETF which moved 53.5 Million units valued at Kes 45 million. The ETF jumped 9.91% to close the week at Kes.1,775.00, most likely an indication that investors on the exchange were looking out for more stable safe heaven securities that could withstand the long-term effect of the corona virus pandemic. Kenya Airways was the week’s worst performer, entering uncharted territory for the first time and closing at Kes 0.93 per shilling. KQ’s has slowly but steadily declined on the exchange over the past 15 years.
Safaricom Plc was the week’s biggest single mover with 53 million shares valued at Kes 1.5 Billion. The Banking Sector had shares worth Kes.2.38 Billion transacted which accounted for 55.35% of the week’s traded value. Noticeably was well was trades on Standard Chartered Bank Kenya which closed the week 3.62% higher to Kes.193.25 and moved 5.5 Million shares valued at Kes.793 Million.
The Derivative Market closed the week with a total of 6 contracts worth Kes.179,000. The Safaricom contract expiring in 17th September 2020 had 3 contracts valued at Kes.81,000 transacted. This was double the 3 contracts transacted the previous week.
The secondary bond market at the NSE was higher with bonds worth Kes 8.4 Billion transacted on the bond market this week, up from last week’s trade totals worth Kes 6.1 Billion. The FTSE NSE Kenya Govt. Bond Index closed the week lower at 96.62 basis points.