Emirates NBD Research
 

Find anything about our articles and more.
Enter a query in the search input above, and results will be displayed as you type.

Try typing "Dubai Economics", "Dubai GDP", "GCC Macro"

Emirates NBD
Search
Subscribe
   
  • Home
  • Economics

    Emirates NBD Research provides detailed coverage of 16 GCC and MENA economies, analysing them from a top down macro and strategic perspective as well as by a bottom up sector by sector approach.

    • SUBTOPICS
    • GCC Macro
    • MENA Macro
    • Global Macro
    • Sector Economics
    • Monthly Insights

     

    Latest Article Lebanon continues to face multiple challenges
    Latest Article UAE: A mixed bag of data in January
    Latest Article Moroccan growth will outperform MENA oil importer peers in 2021

     

  • Markets

    Emirates NBD Research publishes reports on global forex, rates and commodities, as well as regional fixed income and equity markets.

    • SUBTOPICS
    • Foreign Exchange
    • Fixed Income
    • Commodities
    • Equities
    • Monthly Insights

     

    Latest Article IEA lowers demand forecasts
    Latest Article Monthly Insights: January 2021
    Latest Article Gold prices stumble to start 2021

     

  • Daily
  • PMIs

    Emirates NBD sponsors Purchasing Managers’ Indices for the UAE, Saudi Arabia, Egypt and Dubai. The indices are compiled by IHS Markit, the leading global provider of financial market data.

    • SUBTOPICS
    • UAE PMI
    • Saudi Arabia PMI
    • Egypt PMI
    • Dubai PMI
    • Methodology

     

    Latest Article Dubai PMI moves back into expansion territory in December
    Latest Article Regional PMIs- Saudi PMI rises to year high in December
    Latest Article Regional PMI round-up: A mixed bag in November

     

  • About Us
  • EmiratesNBD.com
  • Subscribe
EQUITIES > MARKETS

Global equities closed higher last week

Published Date: 10 May 2020

Facebook
Linkedin
Twitter
Email
Print

 

Notwithstanding weak economic data and poor corporate earnings, global equities closed higher as investors started training their eyes beyond the immediate fallout from the coronavirus. The move also reaffirmed the deepening dependence of equity markets on central banks as they started pricing in the possibility of the Federal Reserve moving rates into negative territory.

Overall, the MSCI All Country World index +2.4% 5d on the back of strength in developed and frontier markets. The MSCI G7 index and the MSCI FM index added +3.2% 5d and +1.1% 5d respectively. Volatility too eased off across markets. The VIX index, the V2X index and the CBOE EM ETF Volatility index dropped -24.8% 5d, -12.6% 5d and -17.5% respectively.

The week ahead is relatively light on economic data. Hence the focus of investors will remain on corporate earnings and efforts of governments in easing lockdown measures. The progress on talks between the UK and the European Union will also be monitored in light of dire economic growth projections by the Bank of England.

Chart of the week

Much of the focus towards the latter half of the trading week remained on the lack of market reaction to what was the worst US jobs report on record. While a part of the reason could be the predictability of the data in light of warnings from the initial jobless claims, the main reason appears to be the fact that nearly 79% of those unemployed last month were furloughed. This is much higher than the numbers in the previous recessions and hence also raises the possibility that a large number of furloughed workers could be recalled as soon as the economy is running in the truest sense.

Furloughed workers made up for more than three-fourth of total unemployed people in the US

Source: Bloomberg

MENA Markets

Regional markets were unable to sustain the positive momentum from last week even as oil prices continued to rally. The S&P Pan Arab Composite index dropped -4.5% w-o-w. It is worth noting that much of the losses came in the early part of the week when global sentiment was weak too. 

UAE bourses closed lower with the DFM index and the ADX index losing -5.1% 5d and -4.0% 5d respectively. Losses were led by market heavyweights as investors locked in gains from the previous week. Abu Dhabi Commercial Bank dropped -9.0% 5d. The bank reported a Q1 2020 net profit of AED 207mn (-82% y/y). The decline was mainly on account of provisions of AED 1.88bn, of which AED 1.07bn was related to NMC Health, Finablr and other related companies.

The Tadawul dropped -6.8% 5d as the share price of petrochemical companies could not keep pace with the rise in oil prices. Saudi Aramco dropped -2.1% 5d while Sabic declined -5.5% 5d. Sabic reported a loss in Q1 2020 and suspended all discretionary capital expenditure leading to speculation of a possible cut in dividend payout.

Developed Markets

Developed market equities closed higher as investors retained their faith in the ‘central bank put’ and paid more attention to signs of more economies opening up. The positive noise around the implementation of the trade deal and a sustained rebound in oil prices also lent support to risk assets. Irrespective of market confidence, the Bank of England became the latest central bank to strike a somber tone about economic prospects. They expect the UK GDP to drop by as much as 14% in 2020 before rebounding by 15% in 2021. They also expect it to take a year before businesses return to normal.

Overall, the S&P 500 index, the Nikkei index and the Euro Stoxx 600 index added +3.5% 5d, +2.0% 5d and +1.1% 5d respectively. The Nasdaq index turned positive for the year with gains of +1.7% ytd.

The earnings season in the US remains rather dismal. With nearly 86% of companies in the S&P 500 index having reported earnings, 66% of companies are reporting profits and 58% of companies are reporting sales above estimates. According to FactSet, the blended earnings growth at the end of last week came in at -13.6%. If this rate of decline holds, then this will be the largest y/y decline in earnings since Q3 2009. The S&P 500 index is currently trading at 20.4x 12m forward earnings, higher than the 5y and 10y averages.

Emerging Markets

Emerging market equities underperformed the broader market. The MSCI EM index lost-0.6% 5d relative to a gain of +2.9% 5d in the MSCI World index. The weakness in the USD and strength in oil prices did help the broader emerging markets but could not overshadow deep declines in certain pockets.

Turkey’s Istanbul 100 index dropped -3.2% 5d as volatility in TRY weighed on broader investor sentiment. India’s Nifty index dropped -6.2% 5d as the composite PMI dropped to single digits following a nationwide lockdown for the full month of April.  The historical comparison with GDP data suggests that India’s economy contracted at an annual rate of 15% in April 2020.

Click here to see the full publication

Written By:
,

RELATED ARTICLES

Global equities moved higher
21.06.2020

GCC Equity Flow Monitor - May 2020
15.06.2020

Global equities suffered a reversal last week
14.06.2020

Last week global equities had one of their best weeks
07.06.2020

Notwithstanding heightened political tensions, global equities rallied last week
31.05.2020

See all

LATEST ARTICLES

Regional growth to be driven by improving global backdrop
13.01.2021

Lebanon continues to face multiple challenges
25.01.2021

UAE: A mixed bag of data in January
21.01.2021

See all
 

 Subscribe to our newsletter


Never miss out what is going on in UAE Economics

KEEP READING MORE

Regional growth to be driven by improving global backdrop

We expect GCC growth to average 2.3 percent in 2021 following an estimated 5 percent contraction in 2020.

ECONOMICS, GCC MACRO - 13.01.2021

Monthly Insights: January 2021

A round-up of our key research insights and forecasts this month.

ECONOMICS, MARKETS - 17.01.2021

Energy markets focus on US presidential election

Oil industry braces for a Biden administration.

MARKETS, COMMODITIES - 25.10.2020

 

Markets pricing in Democratic victory

Anticipation of a Democratic win in the US election is sending yields higher.

MARKETS, FX - 27.10.2020

MENA Quarterly Q4 2020

Our quarterly report on MENA economies

ECONOMICS, MENA MACRO - 13.10.2020

OPEC and allies reach agreement for 2021

The oil market should be able to absorb modest production increases

MARKETS, COMMODITIES - 06.12.2020

Green bond market has room to expand in MENA

Renewables projects across the region could attract new pool of investors.

MARKETS, FIXED INCOME - 21.10.2020

  • Economics
  • Markets
  • PMIs
  • About Us
  • Subscribe to our publications
  • Economics
  • GCC Macro
  • MENA Macro
  • Global Macro
  • Sector Economics
  • Markets
  • Foreign Exchange
  • Fixed Income
  • Commodities
  • Equities
  • PMIs
  • UAE PMI
  • Saudi Arabia PMI
  • Egypt PMI
  • Dubai Economy Tracker
  • Methodology
  • About Us
  • Subscribe to our publications

 


Terms and Conditions
Copyright © 2021 Emirates NBD Bank PJSC. All Rights Reserved