The local bourse witnessed tepid trading activity in the week ended July 5, 2024, driven by weak volumes and values despite positive market internals.

The all-share index pared last week’s gains, nose-diving marginally by 0.04 percent week-on-week and settling at 100,022.03 points.

It remained above the T-line after breaking it to retrace upwards, thereby halting last week’s bullish transition.

Investors continued their portfolio realignment across major market sectors ahead of the new earnings season.

Consequently, the market capitalisation of listed equities exhibited a bearish movement, declining by 0.04 percent week-on-week to N56.58 trillion.

This was due to tepid investor sentiment and waning market activity levels. Equity investors incurred a total loss of N20.75 billion over three out of five trading sessions this week, bringing the year-to-date return of the index to 33.77 percent.

Trading activity was notably weak this week, as evidenced by the total volume and value of trades. The market breadth was also weak, with 37 weekly gainers compared to 45 weekly losers. As a result, the total traded volume dropped by 14.8 percent week-on-week to 2.26 billion units, while the total weekly traded value decreased by 37.6 percent week-on-week to N31.17 billion. Despite this, the total number of trades for the week improved marginally by 2.98 percent week-on-week to 42,851 deals.

Despite the tepid performance of the benchmark index, sectoral performance was largely positive in the review week, except for the NGX-Consumer Goods sector, which declined by 0.69 percent week-on-week due to negative price movements in MAYBAKER, DANGSUGAR, and INTBREW. Conversely, the NGX-Banking and NGX-Oil & Gas indices led the gainers’ chart, with increases of 3.87 percent and 3.01 percent respectively.

The NGX-Insurance and NGX Industrial indices also reported gains of 2.26 percent and 0.22 percent week-on-week. Stocks contributing to these gains included CONOIL, JAIZBANK, CORONATION, AIICO, OANDO, WAPCO, UBA, FBNH, and RTBRISCOE.

At the close of the week, notable performers such as VERITASKAP (+25%), CONOIL (+21%), JAIZBANK (+20%), CORONATION (+18%), and AIICO (+13%) emerged as the best-performing securities, driven by positive activities that propelled their price movements. Conversely, negative investor sentiment led to sell-offs in UPDCREIT (-17%), IKEJAHOTEL (-12%), LASACO (-10%), JULIUS BERGER (-10%), and MUTUAL BENEFIT (-9%), positioning these stocks as the top losers for the week.

Looking ahead to the coming week, stock market analysts expect that the bulls will lead the charge as the half-year earnings reporting season approaches. Position-taking and sector rotation is anticipated to persist ahead of the new earnings season, bringing changes in liquidity, momentum, volume, and reactions to both positive earnings and disappointing numbers, driving volatility that creates wealth for market players. As the changing market structure and fundamentals persist, investors are advised to position themselves in stocks with sound fundamentals.

Global stock markets were mostly higher this week driven by signs of slowing inflation, a cooling labor market, and dovish comments from the Federal Reserve that reinforced expectations of upcoming rate cuts. As of the time of writing, US equities (DJIA: +0.5%; S&P 500: +1.4%) were set to close higher as investors reacted favourably to dovish Fed comments on inflation and ISM Manufacturing PMI numbers which indicated softer price trends and weakening labour market.

Similarly, European equities (STOXX Europe: +1.5%; FTSE 100: +1.3%) were set for a weekly gain, boosted by optimism over potential US rate cuts and positive reactions to the UK Labour Party’s election victory.

In Asia, Japanese equities (Nikkei 225: +3.4%) surged as the yen’s weakness against the US dollar fueled strong buying interest in real estate and tech stocks, while Chinese equities (SSE: -0.6%) declined due to trade war fears following the European Union’s new tariffs on Chinese electric vehicles.

Elsewhere, gains in India (+1.0%) and Taiwan (+2.3%) lifted the Emerging Markets index (MSCI EM: +1.7%), while the Frontier Markets index (MSCI FM: +1.5%) was supported by positive sentiments in Vietnam (+2.8%).