SAT, 30 APRIL, 2022-theGBJournal | Impressive corporate earnings by bellwether stocks supported market performance this week, as investors increased their bets on blue-chip companies in anticipation of continued expansion in profits.
Notably, investors’ buying interest in NB (+18.6%), SEPLAT (+16.5%), WAPCO (+16.1%), GUINNESS (+13.1%), and UNILEVER (+11.5%) supported market performance, pushing the NGX All-Share Index and Market Capitalization higher by 2.43% to close the week at 49,638.94 and N26.761 trillion respectively. The MTD and YTD return increased to +5.7% and +16.2%, respectively also.
Similarly, activity levels were stronger than the prior week, as trading volumes and value increased by 62.8% w/w and 32.4% w/w, respectively. Across our sectoral coverage, the Oil and Gas (+10.2%), Consumer Goods (+6.3%), Insurance (+3.4%) and Industrial Goods (+0.5%) indices closed in the green, while the Banking (-1.5%) index was the sole loser.
In the week ahead, we expect investors to continue to rotate their portfolios towards cyclical stocks that delivered decent earnings this week. Thus, we see scope for the bulls to maintain dominance, albeit the magnitude of the gains will be substantially lower, as profit takers are likely to cash out on the gains across bellwether stocks.
Notwithstanding, we reiterate the need for positioning in only fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings.
Mixed sentiments trailed global equities for the second consecutive week as investors digested a batch of corporate earnings, prospect of EU oil embargo on Russia and weaker-than-expected GDP data from US and the Euro Area.
Accordingly, US (DJIA; +0.3% and S&P 500; 0.4%) stocks managed to eke out weekly gains as the disappointing GDP print for the first quarter undermined appetite for risk assets amidst weak earnings outlook on tech giants (notably Apple and Amazon).
European markets (STOXX Europe: -0.5% and FTSE 100: +0.3%) moved in opposite directions as investors weighed the subdued Q1 GDP for the bloc and the possibility that Europe will place an embargo on Russia’s oil against decent earnings releases.
On the other hand, Asian markets posted negative performances as the SSE (-1.3%) and Nikkei 225 (-0.9%) recorded losses as investors fretted about signs of economic slowdown in China induced by the nation’s stringent Covid policy and the downbeat mood on Wall Street. Likewise, the Emerging (MSCI EM: -2.0%) and Frontier (MSCI FM: -1.8%) markets declined following the selloffs in China (-1.3%) and Kenya (-3.0%), respectively.
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