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The Trading Room: Weekly Market Review – Week 29, 2020

Markets globally began the week on a negative note, with worries about the resurgence of the coronavirus across major financial centres seemingly weighing down the economic sentiments that have shown the global economy has been slowly recovering from the effects of the corona virus pandemic.

United States

The major indexes in the united states ended the week mixed. The S&P 500 Index marked its third consecutive week of gains and reached intra-day levels not seen since the market sell-off began in late February; at its Wednesday peak, the index was also briefly in positive territory for the year. A shift out of higher-valuation growth shares into value stocks caused the technology-heavy Nasdaq Composite Index to pull back from its all-time highs, however. The market rotation was also evident in the out-performance of smaller-cap stocks, which have lagged considerably in recent months. Within the S&P 500, industrials shares outperformed by a wide margin, while technology stocks lost ground.

Europe

European shares rose over the week on reports of progress in the development of a coronavirus vaccine. The pan-European STOXX Europe 600 Index ended the week 1.6% higher. The major country indexes also climbed, with Germany’s Xetra DAX up 2.26%, France’s CAC 40 1.99% higher, and Italy’s FTSE MIB ahead by 3.24%. The UK’s FTSE 100 Index added 3%.

European Union (EU) leaders started a two-day summit Friday to discuss the proposed EUR 750 billion EU recovery fund, amid market hopes for a deal by the end of summer. The size of the fund, distribution criteria, and the proportion of grants to loans are the main areas of disagreement

The European Central Bank (ECB) left monetary policy unchanged as it entered what some have described as a “wait and see” period to assess the strength of the economic recovery before launching any new measures. ECB President Christine Lagarde said that there has been a “significant but uneven” recovery since the eurozone economy bottomed in April but “exceptionally elevated uncertainty” was still weighing on consumer spending and business investment.

 

Index

Friday’s Close Week’s Change % Change YTD
DJIA 26,671.95 596.65 -6.54%
S&P 500 3,224.73 39.69 -0.19%
NSE 20 Share Index 1,909.36 8.08 -28.07%
NSE All Share Index 132.25 -0.13 -20.53%
NSE 25 Share Index 3.107.31 15.30 -24.22%

Asia

Japanese stocks posted gains for the week. The Nikkei 225 Stock Average advanced 406 points (1.8%) and closed at 22,696.42. Japan’s widely watched benchmark has returned -4.1% for the year-to-date period. The large-cap TOPIX Index and the TOPIX Small Index, broader measures of Japanese stock market performance, also rallied for the week. The yen was little changed versus the U.S. dollar and traded near JPY 107 per U.S. dollar on Friday.

Chinese stocks slumped in a volatile trading week amid indications of economic weakness, renewed U.S. trade tensions, and profit taking following recent gains. The large-cap CSI 300 Index fell 4.4%, its biggest weekly decline since February, while the country’s benchmark Shanghai Composite Index lost 5.0%. China’s sovereign 10-year bond yield declined by nine basis points to 3.04% on the week through Friday.

Kenya

The turnover for the Nairobi Securities Exchange was slightly lower, closing the week at Kes 3.4 Billion achieved on trades of 138 million shares from the 170 million shares valued at Kes.4.2 billion transacted the previous week.

The benchmark NSE All Share Index shed 0.13 points during the week to close at 132.25, representing a 1-week loss of 0.10%, a 4-week loss of 8.53%, and an overall year-to-date loss of 20.53%. The NSE 20 share index added 8.08 points this week to close at 1,909.36, representing a one week gain of 0.42% and  a year to date decline of 28.07% while the NSE25 share index garnered 15.30 points from last week’s close, a week’s gain of 0.49% and a year to date loss of 24.22% to close the week at 3,107.31 points.

NSE 20 Share index one year chart performance

The Derivatives Market of the Nairobi Securities Exchange (NEXT) closed the week with a total of 19 contracts transacted valued at Kes 537,000, a decline in deals but a rise in value from the 20 contracts valued at Kes Kes.489,000 transacted the previous week.

Trading on the secondary Bond Market on the Nairobi Securities Exchange registered reduced activity with bonds worth Kes 11.5 billion transacted as compared to the Kes 14 billion registered the previous week.