Weekly Market Commentary - February 12, 2016

This week was once again marked by volatility on global markets although stock rout eased amid oil advance. Federal Reserve Chair Janet Yellen acknowledged that financial conditions have become less supportive to growth which, when reading between the lines, indicated the US would not rush to raise interest rates again. Luckily, there was a small rebound on stocks on Friday as oil prices climbed by 12% following comments from the United Arab Emirates energy minister stating that OPEC were ready to cooperate on possible production cuts. Moreover, Venezuela suggested that both OPEC and non-OPEC producers should consider freezing output at the current level.
 
More specifically on African stock exchanges, volatility made no exception to the rule. EGX 30 fell by 6.26% or 388.5 points to close at 5,813.72 points, compared with 6,202.22 points a week earlier. This marked the worst performance of the week. TUNINDEX depreciated by 3.39% and the JSE ASI by 2.34%. Some negative comments by economists on the State of the Nation address on Thursday evening at the end of the week outweighed strong share price performances and the rand recovery at the end of the week. The rand benefitted from a continued weakness in the dollar, which lost ground again against the yen, one of the safe havens in the current uncertainty. All in all, the weaker dollar is good news for commodity shares and commodity prices, particularly gold, which traded at $1 241 for an ounce on Friday.
 
On the brighter side, NGSE ASI showed the strongest performance of the week increasing by 5.05% compared to last week. Despite the fact that the black-market rate fell to 314 against the dollar on Wednesday, the index was pulled by strong performance of key stocks.  Forte Oil Plc., Nigeria’s premier integrated energy solutions provider, reported strong 2015 full year results showing a profit Before Tax of N7.01bn representing a 30% increase over the previous year. As a side note, Forte Oil has set precedence by filing an approved result ahead of the regulatory deadline.
 
LuSE ASI barely reached the green zone by increasing merely by 0.07%. Zambia's central bank decided to keep its benchmark lending rate unchanged at 15.5 percent on Friday. Zambia is amongst the countries hard-hit by a severe drought that has affected southern Africa that has waned maize crops, raising fears that a sharp increase in the prices of the staple food would fuel inflation.