SAT 26 MARCH, 2022-theGBJournal| In what can be regarded as a quiet trading week, the local bourse traded within tight bands before settling at 46,964.23 points (down 0.67% w/w). The negative performance was due to bouts of profit-taking activities in heavyweight stocks, namely NESTLE (-2.8%), UBA (-2.6%), GTCO (-1.4%), MTNN (-0.7%), and LAFARGE (-0.6%).
Based on the preceding, the MTD and YTD return settled at -0.9% and +9.9%, respectively. Activity levels were weaker than the prior week, as trading volumes and value declined by 52.0% w/w and 19.6% w/w, respectively.
Sectoral performance was broadly bearish as the Insurance (-1.4%) index led the laggards, followed by the Consumer Goods (-1.1%) and Banking (-0.7%) indices. The Industrial Goods and Oil and Gas indices closed flat.
In the week ahead, we expect the market to trade sideways as the activities of bargain hunters in dividend-paying stocks fizzle out due to the winding down of the 2021FY earnings season. In addition, risk-averse investors will likely sustain profit-taking activities in anticipation of an uptick in FI yields. Notwithstanding, we reiterate the need for positioning in only fundamentally sound stocks as the weak macro environment remains a significant headwind for corporate earnings.
Meanwhile, Global stocks posted mixed performances, albeit with a bullish bias, as investors weighed the impact of tightening of monetary policy by the US Federal Reserve against the effectiveness of Western sanctions on Russia to deescalate geopolitical risk.
Accordingly, US markets (DJIA: -0.1%; S&P 500: +1.3%) moved in different directions on the back of investors’ repricing Fed policy tightening expectations amidst a sustained rebound in tech stocks.
European markets (STOXX Europe: -0.3%; and FTSE 100: 0.8%) also moved in opposite directions as uncertainties surrounding the tensions between Russia and Ukraine undermined positive reaction to the moderation in crude oil prices.
Asian markets posted mixed performances, as the Japanese Nikkei 225: (+4.9%) posted robust gains following the announcement by Toyota Motor to buy back its shares, further supported by gains in Mining and Petroleum sectors.
Conversely, the SSE: (-1.2%) recorded losses as sentiments weakened after US revealed it was premature to expect a deal with China regarding the status of Chinese listed companies in US exchanges.
Emerging markets (MSCI EM: +1.2%) and Frontier (MSCI FM: +0.5%) market stocks were on course to end the week in the green consequent upon gains in Brazil (+3.3%) and Kuwait (+2.7%), respectively.
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