Global markets rebounded strongly this week, fuelled by rising expectations of a December U.S. rate cut. Major indices posted broad gains, with tech-heavy markets leading the charge. Bond yields softened globally as investor confidence improved, while Japan stood out with rising yields driven by fiscal concerns.
Locally, the Nairobi Securities Exchange cooled, with all major indices declining as investors locked in profits ahead of the holiday season. Turnover dipped, though foreign participation rose notably. E.A. Portland Cement dominated headlines after a major share acquisition deal drove a sharp rally. Banking stocks faced pressure following weaker earnings from Standard Chartered.
On the fixed-income side, T-bill demand remained strong, particularly on the 364-day paper, while secondary bond activity surged. Inflation eased to 4.5%, supported by lower maize flour prices, though weak short rains signal possible upward pressure in early 2026.
Executive Summary
Global Markets:
• Global equities recovered, posting a median gain of 3.2% as markets priced in an 80% probability of a U.S. Fed rate cut in December.
• U.S. indices rallied, with the Nasdaq up 4.9%.
• Bond yields mostly eased, except Japan, where yields rose amid debt-linked concerns.
Kenyan Equities:
• The NSE retreated across the board: NASI fell 3.6%, NSE-10 dropped 4.2%, and NSE-25 slipped 3.9%.
• Market turnover declined 17.2% to KES 3.17 billion.
• Foreign participation increased to 38.2%, though net flows remained negative.
• Top gainer: Uchumi (+45.9%).
• Biggest mover: E.A. Portland Cement (+19.8%) after a major share purchase deal signalling potential future control shifts.
• Banking sector lagged the most, weighed down by weak earnings and profit-taking.
Fixed Income:
• T-bills saw strong demand, with a 99.97% acceptance rate on the 91-day paper.
• Spot rates remained mostly stable with minor declines.
• Secondary bond turnover surged 76%, driven by IFB1/2022/019 activity.
• Eurobond yields trended lower on global rate-cut expectations.
Macroeconomic Update:
• Inflation eased slightly to 4.5%, driven by lower maize flour prices.
• Core inflation declined to 2.3%, reflecting subdued consumer demand.
• Weak short rains may push food prices higher in early 2026.
On the Radar:
• Markets await the U.S. Fed Chair’s speech and inflation data.
• Locally, investors are preparing for the upcoming SDB1/0211/030 and FXD1/2021/025 bond auctions.
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