The global stock market crash which is threatening global markets is fast spreading as the bug has cut up with the Nigerian Stock Exchange, starting the week on a bearish note with the All Share Index (ASI) down by 17bps
Specifically,losses in MTNN (-6.0%), TRANSCORP (-1.8%), and STERLING (-3.0%) pushed the NGX-ASI down by 17bps to 97,582.41 points.
Consequently, the Year-to-date (YTD) return fell to 30.5% (previously 30.7%).
Market capitalisation lost 0.2% to print at ₦55.4tn, even with activity level improving as volume and value traded increased by53.6% and 57.4% respectively to 324.0m units and ₦6.2bn.
According to a report by Afrinvest Securities, the sector performance within their purview was mixed as three indices gained, while the other three lost.
The Consumer Goods and Banking indices gained 0.9% and 0.2% respectively due to buying interest in DANGSUGAR (+10.0%), INTBREW (+10.0%), UBA (+1.3%), and FBNH (+0.5%).Trailing, price appreciation in WAPCO (+0.5%) and CUTIX (+3.6%) pulled the Industrial Goodsindex up by 3bps.
However, the AFR-ICT (-1.9%) recorded the largest decline due to selloffs in MTNN (-6.0%) and OMATEK (-8.2%).
Similarly, the Insurance and Oil & Gas indices lost 3bps and 1bp respectively, stemming from price decline in VERITASK (-6.3%), MANSARD (-1.5%), and JAPAULGOLD (-0.6%).
The analysts say of the outlook, that the investor sentiment, as measured by market breadth, remained unchanged at 0.36x as 37 stocks advanced, 12 declined, while 70 closed flat.
In fact, since Friday, August 2, there has been a global stock market sell-off which led to a crash in the European and Asian markets based on trading data from Monday morning.
Trading data from Asian markets show Japanese stocks crashed, with the Nikkei 225 Index down by 12.40%, hitting its lowest point in 2024.
The Hang Seng Index was down by 1.60%, with the Shanghai Stock Exchange Composite Index falling by 1.54% to hit its lowest since February 2024.
According to reports, Monday, August 5, has seen Japanese stock markets record their worst trading day since the “Black Monday” of 1987. Some of the heavyweight stocks in the markets have recorded huge losses. Mitsubishi crashed by over 14%, Mitsui and Co. crashed by about 20%, and Sumitomo crashed by about 18%.
The Asian market selloffs were extended to European markets, with the CAC 40 (Euronext Paris), down by 2.26% on market opening, with the FTSE 100 also down by 2.08% upon market opening.
Big tech stocks have been the major casualty in this global sell-off, with pre-market data showing Microsoft down by 4.53%, Meta down by 4.92%, and Tesla down by 5.44%. Nvidia has also fallen by 20% from its all-time high price.
Indeed, the sell-off was triggered when the US Labor Department released job data figures for July showing a rise in unemployment to 4.3%, the worst since September 2021.
It is noted that the rise in unemployment was triggered by the US Federal Reserve’s decision to keep the benchmark rates, despite progressive declines in US inflation data.
With rate hikes from 2022 into 2023, benchmark rates in the US have reportedly strained economic activities, thus leading to a constraint in the ability of employers to hire more labour.
A rise in unemployment as well as unemployment benefits in the US is a sign of declining economic activities, thus the July unemployment data led to panic about a recession.
The US Federal Reserve is set to meet again in September, with analysts projecting a rate cut for the first time in two years. However, there are fears that a rate cut in September would further feed into the sentiment that the US economy is on the edge of a recession.