Fed Reserve comments dominated movements in stock this week creating nervousness and thus high volatility on the broader market. These moves followed the release of minutes from the Fed’s latest meeting, which emphasised the Fed’s intent to raise interest rates soon, provided the U.S. economy continues to strengthen. However, a handful of mixed data on Thursday did not offer investors more clarity about the health of the economy.
NGSE ASI increased by 2.60%. Nigeria witnessed the bombing of a gas pipeline owned by the Nigerian subsidiary of Italy's Eni in the latest attack on the country's oil facilities. Earlier, a new militant group called the Niger Delta Avengers (NDA) carried out several attacks on key pipelines and facilities operated by oil majors Shell and Chevron. Officials stated that Nigeria's output had slumped to 1.4 million barrels per day from 2.2 million due to the turmoil. Nigerian economy is suffering one of its worse crisis due to sharp fall in oil prices. The central bank's monetary policy committee will meet in the beginning of next week. Speculation that the naira may soon be devalued has grown since the vice president stated last week that currency policies needed to change to encourage investment. In other news, Nigeria has suspended talks with MTN about a record $3.9bn fine on the wireless company while the country’s House of Representatives completes an investigation into the size of the penalty and how it was delivered. The company’s stock has plunged by almost a third since the penalty was made public.
JSE ASI was up 2.01%. The Sunday Times reported on May 15, that South-African minister of finance was at risk of being charged with espionage, and fired, once the police unit completed the investigation of the so-called Sars rogue unit. The speculation drove the rand to a two-month low on Monday. The impact of Gordhan “arrest” would be bad for the market. By the end of the week, the rand had strengthened, ignoring renewed dollar strength as technical factors and a recovery in risk appetite globally helped the unit recapture recent losses, while stocks were boosted by demand for commodities. By Friday, the JSE ASI had strongly recovered from Thursday’s sell-off on news that most policymakers in the US Federal Reserve were in favour of an interest rate hike. The South African Reserve Bank's decision to leave interest rates unchanged for now probably also supported the local market. On a negative note however, global luxury goods company Richemont released a trading update on Friday forecasting a difficult first-half after sales plunged 18% in April indicating that the local market still faces strong challenges.
EGX30 closed in red this week, down 0.28%, after suffering from the disappearance of EgyptAir’s Paris-Cairo flight MS804 in the Mediterranean Sea. On last Thursday, the EGX30 declined 1.8% session-over-session to 7,499.49 points from 7,637.04 points.
