The Trading Room: Weekly Market Review – Week 20, 2020
Globally equities retreated as investors reacted to bleak economic data and warnings of further weakness ahead. The declines were most pronounced among large-caps and slower-growing value stocks that had traded on higher prices in the previous week. Markets across the world had one of their worst sell-offs on Wednesday following a speech by U.S Federal Reserve Chair Jerome Powell, in which he said that the economy was “subject to significant downside risks” in the months ahead and warned of “lasting damage to the productive capacity of the economy.” Powell held out the possibility of further stimulus measures from the central bank, but he may have disappointed some by stating that the Fed was not considering cutting interest rates below 0%.
Equities in Europe fell on growing fears of a prolonged recession that could be made worse by a possible second wave of coronavirus infections. The pan-European STOXX Europe 600 Index ended the week 3.44% lower. Germany’s Xetra DAX Index slid 3.84%, France’s CAC 40 dropped 5.248%, and Italy’s FTSE MIB Index declined 2.84%. The UK’s FTSE 100 Index lost 1.97%.
The eurozone economy contracted by a record 3.8% in the first quarter compared with the final three months of 2019, according to a flash estimate from Eurostat. France’s economy shrank 5.8%, the worst result among the 19 participating countries, followed by Slovakia (5.4%) and Spain (5.2%). Italy’s gross domestic product (GDP) withered 4.7%. The largest economy, Germany, shrank 2.2%.
|Friday’s Close||Week’s Change||% Change YTD|
|NSE 20 Share Index||1,975.30||– 59.41||-25.58%|
|NSE All Share Index||135.33||– 5.54||-18.68%|
|NSE25 Share Index||3,179.99||-172.97||-22.45%|
In Asia, Japanese stocks posted mixed returns for the week. The Nikkei 225 Stock Average declined 142 points (0.7%) and closed at 20.037.47, down 15.3% for the year-to-date period. The large-cap TOPIX Index edged lower, while small-cap stocks in the TOPIX Small Index logged a modest gain. For the year to date, both broader Japanese market benchmarks have mid-teen percentage losses. The yen was modestly weaker for the week and closed near JPY 107 per U.S. dollar on Friday while in china the CSI 300 large-cap index closed the week 1.3% lower, while the Shanghai Composite lost 0.9%. Stocks were supported over the week by better-than-expected April economic and credit data and by promises of more fiscal stimulus from the Finance Minister Liu Kun.
Equity turnover at the Nairobi Securities Exchange closed the week with a relatively low growth in value in terms of shares exchanging hands and by turnover. Turnover for the week stood at Kes.4.9 Billion against Kes.4.85 Billion transacted the previous week achieved by the transaction of 145 million shares against a total of 118 million shares last week.
The benchmark NSE All Share Index (NASI) was down 5.54 points to close the week at 135.33, this represented a 1-week loss of 3.93%, a 4-week gain of 0.51%, but an overall year-to-date loss of 18.68%. The NSE 20 Share Index shed 59.41 basis points, closing 2.92% lower at 1,975.30 while the NSE 25 share Index lost 172.97 points (-5.16%) to close Friday at 3,179.99 points
The Banking Sector had shares worth Kes.1.9 Billion transacted representing 38.65% of the week’s traded value. Equity Group Holdings was the most active trading 31.6 Million shares valued at Kes.1.1 Billion. KCB Group Plc saw a decrease in value by 8.71% to Kes.35.65 with shares worth Kes.487 Million exchanging hands.
The Derivatives Market closed the week with a total of 33 contracts valued at Kes.1.1M. KCB contract expiring in 17th September 2020 had 22 contracts traded valued at Kes.827,000. This was an crease from the previous week’s traded value of Kes.345,000.
The Bond Market registered improved activity with bonds worth Kes.11.8Bn transacted compared to Kes.6.67Bn registered the previous session.