FRI 05 FEB, 2021-theGBJournal- Bearish sentiments dominated the local bourse this week, as concerns about the uptick in yields in the Fixed Income market made investors sell down their portfolio. Notably, the local bourse recorded losses in all of the trading sessions of the week.
Accordingly, the All-Share Index shed 1.7% w/w to close at 41,709.09 points. Consequently, the YTD return moderated to 3.6%. Activity levels were however strong, as trading volumes rose by 7.4% w/w while value traded rose by 6.4% w/w.
Notably, sell offs in WAPCO (-11.2%), ZENITH (-4.4%), NESTLE (-3.7%) and DANGCEM (-2.5%) drove the weekly loss. Sectoral performance was broadly negative as all sectors closed in the red. The Insurance (-6.0%) index led the losers chart followed by Consumer Goods (-3.2%), Banking (-2.3%), Industrial Goods (-2.1%) and Oil and Gas (-0.2%) indices.
With the moderation in the prices of bellwether stocks this week, we expect savvy investors to take advantage of this and make re-entry ahead of their FY 2020 earnings announcement. However, we note that the recent hike in OMO rates by the CBN will continue to stoke uncertainties on the direction of yields, keeping risk-averse investors on the side-lines.
Thus, we expect a zig-zag market performance in the week ahead. Notwithstanding, we advise investors to take positions in only fundamentally justified stocks as the unimpressive macro story remains a significant headwind for corporate earnings.
Meanwhile, Global stocks mounted a massive rebound from last week’s rout as investors’ sentiment were lifted by progress in vaccine distribution and the decision of U.S Democrats to commence the process of approving President Biden’s USD1.9 trillion coronavirus relief bill.
Consequently, US (DJIA: +3.6%; S&P: +4.2%) stocks posted robust gains buoyed by expectations of fiscal stimulus and better-than-expected data on the job market. In Europe, the STOXX Europe (+3.5%) and FTSE 100 (+1.5%) were on track for weekly gains, as improved vaccine rollouts lifted optimism about a stronger economic recovery.
In Asia, the Nikkei 225: (+4.0%) and SSE: (+0.4%) were on course for weekly gains, as sentiments were bolstered by the rally on Wall Street amidst rosy earnings announcements by Japanese companies.
Emerging markets (MSCI EM: +4.4%) stocks were supported by gains in India (+9.7%) and Brazil (+3.6%) while Frontier (MSCI FM: +1.0%) market stocks were on track for their fifth consecutive weekly gains, buoyed by gains in Kenya (+1.8%).-With Cordros Research