According to a new report by the IMF, rising trade tensions could curtail
global economic growth. The IMF warned that increasing tensions
between the United States and China could cut global economic output
growth by 0.5 percentage points in 2020. IMF Managing Director,
Christine Lagarde expressed her concern that the effects of tariffs would
lead to a $455 billion loss in global GDP. The United States in early May
increased tariffs on $200 billion worth of Chinese goods, and prohibited
U.S. firms from carrying out business activities with Chinese telecoms
giant Huawei. In response to this, China retaliated with tariffs on $60
billion worth of U.S. goods, which came into effect at the start of June.
Shanghai is also said to be exploring the halting of rare-earth metals
exports to the U.S.; China accounts for 78% of rare-earth metal
productions, which are essential for the production of smartphones and
other tech products. The impact of the ongoing tensions has reverberated
across global equities and commodities; global equities lost about $3
trillion in value for the month of May, and Brent crude fell 19% in the
same period.
Equity: We foresee another negative session to kick off the new week;
however, we do not rule out the possibility of investors taking position on
beaten down stocks across the board as current levels present an
attractive entry point.
Stock Watch: CUTIX led the bid cart on Friday, rising 667bps to settle at
₦1.60 after hitting its year low in the previous session. The gain could be
a factor of bargain hunting on the deflated price of the stock. CUTIX traded
as high as ₦2.25 in March and has shed 29% since that peak. The
company has declined 2% YTD.
Fixed Income: With system liquidity at a decent level of ₦249 billion, we
expect slightly improved sentiment in the T-bills market at week open.
However, we expect mixed to negative trading for the remainder of the
week as market participants keep an eye on the PMA scheduled to hold
on Wednesday
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