Global equities shine in February

NBK Capital Global Markets Review

Global equities continue to perform well ending the month up 2.6 percent as measured by the MSCI All World Index. The rally was led by the US and emerging markets. President Trump continues to be a positive force on US equities, which closed up 3.7 percent for the month as measured by the S&P 500. Other major markets ended the month with gains, whereas the GCC region was down 0.8 percent, as measured by the MSCI GCC Countries. Commodities had mixed performance for the month with Gold closing up 3.1 percent and Brent Oil closing down 0.2 percent. As of the end of this month, oil producers remain compliant with the OPEC deal terms.

US manufacturing continues expanding with the ISM Manufacturing PMI for February coming in at 57.7, slightly higher than January’s number of 56. ISM NonManufacturing PMI was also higher in February, at 57.6 versus the 56.5 in January. The labor market continues to be strong with Initial Jobless Claims at 223,000 compared to the previous month’s claims of 242,000. Durable goods orders increased to 1.8 percent in January from -0.8 percent in December. Housing starts declined in January by 2.6 percent from the previous month although building permits increased from 1.228m in December to 1.285m in January. US retail sales for January was positive at 0.4 percent although lower than the prior month. Existing home sales was also up in January at 5.7m compared to the December’s reading of 5.5m. Consumer confidence was up 2.9 percent for the month of February, with a reading of 114.8 versus 111.6 in the prior month.

The UK Manufacturing Purchasing Managers Index (PMI) was 54.6 for the month of February, slightly lower than January. The Consumer Price Index for January, YoY, was 1.8 percent compared to 1.6 percent in December. Retail sales performed poorly in January dropping to 1.5 percent from a reading of 4.6 percent December. Consumer confidence also dropped for the month of February to -6 from -5 in January.

The eurozone Markit Manufacturing PMI for the month of February was 55.4 compared to the January figure of 55.2 indicating continued expansion. The Markit Services PMI preliminary reading increased to 55.6 in February from 53.7 in January further showing improvement in business activity. Consumer confidence was unchanged from the previous month at -6.2, while CPI for the Eurozone area, on a year on year basis for the month of January, was also unchanged at 1.8 percent. European equities rose in January by 2.8 percent, as measured by the Stoxx Europe 600.

Japan exports, on a year on year basis in January was positive at 1.3 percent, although it dropped from 5.4 percent in December. Imports for the same time-period were up 8.5 percent from the -2.6 percent in December. The Nikkei Manufacturing PMI for February was at 53.3, slightly below the prior month’s reading of 53.5, indicating Japanese manufacturing is continuing to expand. Housing starts were up year on year for the month of January at 12.6 percent compared to 3.9 percent for the month of December.

Japanese equities were slightly up in February, as measured by the Nikkei 225, increasing 0.4 percent.

China’s imports and exports both expanded year on year during the month of January at 7.9 percent and 16.7 percent. Overall, the country recorded a trade surplus for January of RMB 354.5b compared to RMB 335b in December. The Caxin Manufacturing PMI for the month of February was 51.7 compared to 51 in the previous month while the Nonmanufacturing PMI was slightly down at 54.2 from 54.6 in January.

The CPI reading year on year for January was reported at 2.5 percent coming in above expectations and the previous month’s reading of 2.1 percent.

Emerging market equities continued to perform well in February up 3.0 percent while Chinese equities, as measured by the Shanghai Stock Exchange Composite Index, also performed well posting gains of 2.6 per- cent. The GCC equity markets had mixed performances for the month of February. Saudi experienced the largest decline at -1.8 percent followed by Kuwait at -0.8 percent and Dubai at -0.3 percent. Bahrain’s equity market was the star performer gaining 3.5 percent followed by Qatar gaining 1.0 percent. Abu Dhabi and Oman were almost flat for the month posting a gain of 0.07 percent each. Egypt’s index did not continue its rally from the previous month, decreasing 5.8 percent in February.