Local bourse faces downbeat sentiment amid economic concern, skids 0.11% w/w

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The local stock market endured another challenging week, characterized by downbeat sentiment among investors who were reacting to the latest consumer price inflation report from the National Bureau of Statistics and speculations surrounding the Monetary Policy Committee meeting starting today.

The benchmark index experienced a slight decline, falling by 0.11 percent week-on-week to 98,125.73 points.

This downturn reflects ongoing portfolio rebalancing influenced by first-quarter earnings and the dividend payment season, set against a backdrop of evolving market dynamics and fundamentals.

Market capitalisation also dipped by 0.10 percent, decreasing to N55.51 trillion from N55.56 trillion in the previous week, resulting in a N54.11 billion loss for investors.

Despite this week’s losses, the year-to-date return for the benchmark index stands at 31.23 percent. However, given the inflation rate of 33.69 percent in April 2024, the real return remains negative.

Trading activity remained subdued, with a 15.8 percent decrease in the weekly traded volume, amounting to 1.65 billion units across 38,121 deals—a 24.5 percent drop from the prior week.

The traded value also fell by 15.8 percent to N42.7 billion. The market breadth was negative, with 51 stocks declining compared to 28 gainers. Across various sectors, most indices closed in negative territory.

The NGX-Industrial index managed a slight gain of 0.01 percent, driven by positive price movements in JULIUS BERGER, UPDC, and CUTIX respectively.

Conversely, the NGX-Banking index fell by 6.51 percent, influenced by declines in UBA and GTCO. The NGX-Oil & Gas index decreased by 6.49 percent, with SEPLAT leading the losses.

The NGX-Insurance index dropped by 3.98 percent, affected by NEM, while the NGX-Consumer Goods index was down by 1.29 percent, with PZ, PRESCO and DANGOTE SUGAR contributing to the decline.

Among the top performers of the week, International Energy Insurance led with a 12 percent increase, followed by MCNICHOLS and CUSTODIAN, both rising by 10 percent. AIRTELAFRI and TANTALIZER also performed well, each registering a 9 percent increase. On the other hand, the worst performers included PZ Cussons, which saw its share price fall by 22 percent, NEM Insurance and ETERNA, both dropping by 18 percent, UBA decreasing by 17 percent, and The Initiates Plc losing 15 percent.

Looking ahead, the market is expected to maintain a weak sentiment as investors continue to digest the latest economic data from the statistics bureau.

The anticipated outcome of the upcoming MPC meeting, likely to result in a modest 100 basis points rate hike, could further dampen market sentiment.

Despite the current market weakness and mixed sector performance, the oversold conditions and mixed technical indicators suggest potential buying opportunities for value investors aiming to capitalise on low prices and valuations.

Meanwhile, stock market analysts at Cowry Assets Management continue to advise investors to take positions in stocks with sound fundamentals.

Global equities

Sentiments in the global equities market were mixed in last week’s trading as investors’ sentiments wavered amidst ongoing adjustments of rate-cut expectations, spurred by a combination of inflation data and robust corporate earnings.

As of the time of writing, US equities (DJIA: +0.9%; S&P 500: +1.4%) posted gains supported by positive reactions to lower Treasury yields and softer-than-expected inflation and retail sales data. European equities (STOXX Europe: +0.3%; FTSE 100: -0.1%) performance was influenced by hotter-than-expected wage growth data, which dampened hopes of a June interest rate cut by the European Central Bank (ECB), despite positive reactions to stronger-than-expected Eurozone industrial production readings.

Asian markets posted mixed performances (Nikkei 225: +1.5%; SSE: 0.0%), with the Japanese market closing higher on expectations of a less hawkish stance from the Bank of Japan (BOJ) following weak Q1-24 GDP data. Meanwhile, the Chinese market closed flat due to lingering concerns about the strength of the economy.

The Emerging (MSCI EM: +2.5%) markets index remained positive, driven by gains in India (+1.7%) and Taiwan (+2.7%). Similarly, the Frontier (MSCI FM: +1.0%) markets index edged higher following positive sentiments in Vietnam (+2.2%).