GCC markets impacted by rift
NBKC MONTHLY MARKET REPORT
KUWAIT: June was a month characterized by mixed performances. The MSCI All Country World Index ended the month up 0.28 percent while the MSCI Emerging Market Index also closed up 0.5 percent in June. In the US, equities reached new highs with the S&P 500 and Dow Jones each closing up 0.5 percent and 1.6 percent, respectively, for the month while the Nasdaq Composite Index was down 0.94 percent.
In Europe, French President Macron was able to secure his party a parliamentary majority while across the English Channel, UK’s May lost her party the majority it held in parliament. In terms of market performance, the German DAX and French CAC 40 indices were down 2.3 percent and 3.1 percent, respectively. In the GCC, markets were impacted by the rift among GCC countries, mainly the Qatar equity market. On the commodity front, Gold closed in the red in June 2.2 percent. Brent also closed down 4.8 percent in June and registered its lowest price year to date.
US Manufacturing and Services continue to shrink relative to the previous month and expectations, yet remain above the 50 marker. Preliminary numbers for June issued by Markit show manufacturing and services at 52.1 and 53.0, respectively. Initial Jobless Claims came in at 244,000 for June, slightly higher than May’s reading. Durable Goods Orders, in May, continued to fall recording a drop of 1.1 percent month on month. Housing Starts and Building Permits in May showed further signs of decline coming in at -5.5 percent and -4.9 percent, respectively versus April’s -2.8 percent and -2.5 percent. Further retracting in May compared to April is Retail Sales dropping 0.3 percent. Existing Home Sales in May increased to 5.62m from April’s 5.56m, an increase of 1.1 percent. New Home Sales also increased between April and May by 2.9 percent to 0.610m. GDP for Q1 on annualized basis increased, coming in at 1.4 percent compared to the previous reading of 1.2 percent.
The UK Manufacturing Purchasing Managers Index (PMI) for the month of June came in at 54.3 compared to the previous month’s reading of 56.3. The Consumer Price Index in May increased by 0.3 percent on a month on month basis and by 2.9 percent on a year on year basis. Retail Sales, on a year on year basis, increased by less than expectations or the previous month’s reading posting a slight gain of 0.9 percent whereas on a month on month basis the reading was -1.2 percent. Gross Domestic Product for Q1 2017 remained constant at 2 percent on a year on year basis. UK equities were down, closing the month with a loss of 2.8 percent, as measured by the FTSE 100.
On a preliminary basis for the month of June, the Eurozone Market Manufacturing PMI and Services PMI were both above the 50 marker. The preliminary Markit Services PMI was slightly down at 54.7 compared to May’s reading of 56.3 while the Markit Manufacturing PMI was slightly above at 57.3 versus 57.0. Consumer Confidence in June registered at -1.3 percent unchanged from the previous month. During the month of June, Q1 2017 Gross Domestic Product figure, on a year on year basis, was released exceeding expectations coming in at 1.9 percent compared to 1.7 percent. European equities declined in June by 2.7 percent, as measured by the Stoxx Europe 600.
Japan’s imports and exports for the month of May, on a year on year basis, were positive. Imports increased by 17.8 percent beating expectations of 14.8 percent whereas exports increase by 14.9 percent slightly below expectations of 16.1 percent. The Nikkei Manufacturing PMI for the month of June, on a preliminary basis, came in at 52.0 versus May’s reading of 53.1. Housing Starts in May on a year on year basis, registered a decline of 0.3 percent compared to April’s growth of 1.9 percent. Gross Domestic Product for Q1 2017 came in positive although far below expectations at 1.0 percent versus 2.4 percent. Japanese equities were up in June, as measured by the Nikkei 225, increasing 2.0 percent.
China’s Imports and Exports both increased year on year in May in dollar terms by 14.8 percent and 8.7 percent, respectively leading to a trading surplus of USD 40.81b. The Consumer Price Index was down 0.1 percent in May, yet on a year on year basis was up 1.5 percent. Retail Sales in May were flat. The Caixin Manufacturing PMI for the month of June was 50.4 compared to May’s 49.6 indicating the economy has begun entering expansionary mode. Chinese equities, as measured by the Shanghai Stock Exchange Composite Index, reported a gain of 2.4 percent in June.
The GCC equity markets closed out the month of June with mixed performance. The MSCI GCC Index was up 4.7 percent in June with a year to date gain of 2.1 percent. Dubai and Saudi Arabia’s equity markets closed up for the month 1.6 percent and 8.1 percent, respectively. The remaining GCC markets were negative for the month lead by Qatar down 8.8 percent, Muscat down 5.6 percent, Kuwait down 1.3 percent, Bahrain down 0.7 percent, and Abu Dhabi down 0.04 percent. Egypt reported a gain of 0.4 percent for the month of June.