MENA MARKETS REVIEW: APRIL 2018
Kuwait: May 09, 2018
HIGHLIGHTS
The Qatar Exchange Index was the best performing GCC index in April, up 6.3%, recovering from last month’s loss. The index was boosted by the changes in the level of foreign ownership, up to 49%, for several key listed companies in addition to strong bank earnings
- US equities break their losing streak despite volatility and geopolitical concerns
- Emerging Markets continue to underperform on the back of heightened volatility arising from potential trade wars
- Brent Oil, unlike equities, has benefitted from the latest geopolitical tensions, closing up 7.0%
- GCC equities continue to generate positive returns, supported by higher oil prices
- Saudi Arabia and Qatar both tapped international debt capital markets with issuances of $11 billion and $12 billion
GLOBAL GROWTH OUTLOOK POSITIVE DESPITE SIGNS OF SLOWDOWN IN US AND EUROPE
The global economy remains in decent shape, but recent data suggests that growth in both the US and Europe is starting to soften from earlier highs. An easing in US-China trade tensions helped major equity markets stabilize and recover in April after sharp falls in February and March, though the stances of both sides appear to have hardened since. Recent turmoil in Argentina has raised concerns about vulnerabilities in emerging markets amid tighter monetary policy and a strong US dollar, though many seem better placed to weather shocks than in previous decades.
GLOBAL EQUITIES
Global equities broke their two-month losing streak in April with the MSCI All Country World Index climbing up 0.8%. US equities followed suit, yet posted lower returns with the S&P 500 and Dow Jones Index each closing up 0.3%. In the US, market volatility was a major concern with a potential trade war with China brewing and an air strike on Syria. Further adding suspense to market participants was the upcoming earning season, which for the most part exceeded expectations. During the month, the US 10 year treasury broke through the 3% yield for the first time in almost 4 years alleviating some concerns surrounding a flattening of the yield curve which would have indicated a weaker economic position. The Federal Reserve has recently confirmed that it is on track for two additional hikes during 2018.
In Europe, the Stoxx Europe 600 posted a gain of 3.9%, making April the best month of 2018 so far. Unlike the US, European equities performed well during the month. Within continental Europe, three of the largest markets closed in the green. The French CAC 40 Index closed up 6.8% followed by the German DAX 30 Index up 4.3% and Spain’s IBEX 35 Index up 4.0%. During the month, European leaders made it clear that they were willing to hit back if the US placed tariffs on Euro countries. Towards the end of the month, the US did announce an extension of tariff exemptions for the Euro countries avoiding any form of a cross Atlantic trade war.
Read the rest of the report here.
