Global markets in negative sentiment over Brexit talks, FOMC

As the meeting of the Federal Open Market Committee (FOMC), the branch of the Federal Reserve board that determines the direction of monetary policy, in June draws closer, there have been increased speculations as regards the possibility of a rate hike or maintenance of status quo with investors on both sides of the divide.

Prior to the week, hopes of a rate hike in June seemed to have faded until the release of the minutes from the US Fed’s April meeting which provided a more positive outlook on the United States economy and suggested that if the incoming economic data signal an improvement in economic growth, then a rate hike will be appropriate at the next meeting.

Nevertheless, investors still await comments from Fed Chair Janet Yellen in the coming week.

The negative sentiments across global equities markets persisted this week as investors remained bearish on indices under our coverage.

In the developed markets, the UK FTSE rebounded from a previous negative close to advance 0.2 per cent week-on-week despite rising uncertainties surrounding the outcome of the BREXIT referendum to be held in June.

In the US markets, the S & P 500 and the NASDAQ slid 0.3 per cent and 0.1 per cent week-on-week amidst rising expectations of a rates hike in June. Performance in the European markets was however mixed as the France CAC rebounded from a negative close last week to advance 0.4 per cent week-on-week while the German DAX trended southwards week-on-week, losing 0.6 per cent after the gains recorded in the previous week which were driven by the release of the impressive GDP numbers for Q1:2016.

In the Asian markets however, the Japanese Nikkei remained upbeat, gaining 2.0 per cent week-on-week while the Hong Kong Hang Seng reversed the previous week’s performance, improving 0.7 per cent week-on-week as investors sought for bargain positions in the light of the technical indicators tilting towards the oversold region.

In the markets within the BRICS classification, the South African FTSE was the lone gainer, improving 2.3 per cent week-on-week after losses in the previous week.

The Brazil Ibovespa depreciated the most, losing 2.9 per cent week-on-week amidst persistent political risk concerns.

The Russian RTS followed, down 1.6 per cent W-o-W as there were rising fears as regards a possible renewal of the sanctions placed on Russia while the Indian BSE fell 0.7 per cent week-on-week.

The Chinese Shanghai composite slid 0.1 per cent week-on-week as concerns of the health of the economy, remain the order of the day even as the Index remains the worst performing for the year, down 20.2 per cent year-to-date.

In the African Markets, the Nigerian All Share Index advanced for the 5th consecutive week, up 2.6 per cent week-on-week and standing as the lone in the region.

The Kenya NSE chaired declining indices, down 1.2 per cent week-on-week followed by the Ghana GSE (-1.0 per cent week-on-week) and the Egypt EGX (-0.3 per cent week-on-week).