Economy
Futures Pointing to Initial Strength on Wall Street
By Investors Hub
The major U.S. index futures are pointing to a higher opening on Thursday following the mixed performance seen in the previous session. The upward momentum on Wall Street comes as traders digest the latest batch of earnings news as well as several U.S. economic reports.
Traders are also likely to keep an eye on developments in Washington, as House Republicans prepare to vote on a revised bill to repeal and replace Obamacare.
Nonetheless, trading activity may be somewhat subdued ahead of the release of the closely watched monthly jobs report on Friday.
After spending much of the day in negative territory, the major averages ended Wednesday’s trading mixed following the Federal Reserve’s monetary policy announcement. While the Dow managed to creep into positive territory, the Nasdaq pulled back off yesterday’s record closing high.
The Dow inched up 8.01 points or less than a tenth of a percent to 20,957.90, while the Nasdaq fell 22.82 points or 0.4 percent to 6,072.55 and the S&P 500 edged down 3.04 points or 0.1 percent to 2,388.13.
The mixed close by the major averages came following the Federal Reserve’s widely expected decision to leave interest rates unchanged.
After a two-day meeting, the Fed said it decided to maintain the target range for the federal funds rate at $0.75 to 1 percent.
The accompanying statement said recent data indicates that the labor market has continued to strengthen even as growth in economic activity slowed.
The Fed said it views the slowing in economic growth during the first quarter as likely to be transitory and called the near-term risks to the economic outlook roughly balanced.
The central bank also reiterated that it expects economic conditions will evolve in a manner that will warrant gradual increases in interest rates.
Earlier in the day, some negative sentiment was generated in reaction to quarterly results from tech giant Apple (AAPL), which reported better than expected second quarter earnings but weaker than expected revenues and iPhone shipments.
Apple also announced a 10.5 percent increase to its quarterly dividend and a $35 billion addition to its stock buyback program.
On the economic front, payroll processor ADP released a report showing that private sector employment increased roughly in line with economist estimates in the month of April.
ADP said private sector employment climbed by 177,000 jobs in April after surging up by a revised 255,000 in March.
Economists had expected employment to increase by 175,000 jobs compared to the jump of 263,000 jobs originally reported for the previous month.
A separate report from the Institute for Supply Management showed that activity in the service sector grew at a faster than expected rate in the month of April.
The ISM said its non-manufacturing index rose to 57.5 in April from 55.2 in March, with a reading above 50 indicating growth in the service sector. Economists had expected the index to inch up to 55.8.
Steel stocks showed a substantial move to the downside on the day, dragging the NYSE Arca Steel Index down by 3.2 percent.
Allegheny Technologies (ATI), Ryerson (RYI), and Olympic Steel (ZEUS) turned in some of the steel sector’s worst performances.
Considerable weakness was also visible among telecom stocks, as reflected by the 3.1 percent slump by the NYSE Arca North American Telecom Index. The index tumbled to its lowest closing level in a month.
Frontier Communications (FTR) fell sharply after reporting a wider than expected first quarter loss and cutting its quarterly dividend.
Commercial real estate and chemical stocks also saw notable weakness on the day, while some strength emerged among banking stocks.
By Adedapo Adesanya
The Naira opened the new trading week on a negative note on Monday at the Nigerian Autonomous Foreign Exchange Market (NAFEX) and the black market.
At the parallel market, the Nigerian currency weakened against the US Dollar by N5 to sell for N1,380/$1 compared with the preceding session’s rate of N1,375/$1, and at the GTBank FX desk, it shed N1 to trade at N1,373/$1 versus N1,372/$1.
At the official market, it lost 63 Kobo or 0.05 per cent against the Dollar during the session to close at N1,362.84/$1, in contrast to last Friday’s value of N1,362.21/$1.
However, the Nigerian Naira gained N2.30 against the Pound Sterling at the spot market yesterday, quoting at N1,821.29/£1 compared with the previous rate of N1,823.59/£1, and improved against the Euro by 23 Kobo to settle at N1,574.35/€1 versus N1,574.58/€1.
Data from the Central Bank of Nigeria (CBN) showed that interbank forex turnover increased to $92.248 million across 90 deals, from $73.565 million last Friday.
On the policy front, participants believed that the application of the fourth edition of the Foreign Exchange Manual of the central bank, which introduces updated guidelines for foreign exchange transactions and tightening compliance requirements for authorised dealers and market participants, will enhance market flexibility and ease previous restrictions.
Meanwhile, the cryptocurrency market snapped from recent declines, jolted by Strategy’s purchase of 1,550 Bitcoin for approximately $101 million, increasing its total holdings to 845,256 BTC. The company raised $181 million through common stock sales, using the proceeds to fund the bitcoin purchase and increase its cash reserves to $1 billion, pushing the price of the coin higher by 3.2 per cent to $63,731.69.
Cardano (ADA) appreciated by 8.4 per cent to $0.1738, Ethereum (ETH) rose by 5.2 per cent to $1,711.54, Solana (SOL) expanded by 5.1 per cent to $67.82, and Ripple (XRP) improved by 4.9 per cent to $1.18.
Further, Dogecoin (DOGE) jumped by 4.3 per cent to $0.0873, Binance Coin (BNB) soared by 2.7 per cent to $609.50, and TRON (TRX) increased by 0.7 per cent to $0.3274, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $0.9997 and $0.9998, respectively.
By Aduragbemi Omiyale
The federal government has been advised to consider exploring other funding sources to finance its budget deficits.
Speaking with Punch recently, the chief executive of CSA Advisory, Mr Aliyu Ilias, said the current appetite for borrowing by the government cannot be sustained because it elevates debt-servicing costs.
The economist suggested the sale of some public assets and the involvement of the private sector in infrastructure financing for economic growth.
According to him, running to the debt markets to raise funds for the government is not the best route to take, as the reliance on borrowing always leads to higher debt-servicing obligations.
“The more you borrow, the more you are also incurring more debt services,” he said, tasking the government to also capitalise on increased oil revenues stemming from ongoing geopolitical tensions in the Middle East.
“The government can actually sell off some of their assets to raise more money. The government can also, if you look at the revenue we are getting from oil, it’s getting more, especially with this war. It’s another opportunity for us to actually not borrow again,” Mr Ilias submitted.
He also pointed to ongoing tax reforms as another avenue to improve government finances and narrow the fiscal gap.
“The government can also look at tax reform. The fact is that the government does not have money. The only chance for getting more money is to address the financial deficit,” he added.
By Adedapo Adesanya
Crude oil was up by $1 on Monday as Iran and Israel said they had halted attacks on each other following an appeal from US President Donald Trump.
Brent crude futures gained $1.16 or 1.3 per cent to trade at $94.25 a barrel, while the US West Texas Intermediate (WTI) crude futures were up 76 cents or 0.8 per cent to $91.30 per barrel.
Iran’s military said Monday it halted attacks on Israel after the two countries exchanged their most intense strikes in months, further straining an already shaky ceasefire as well as the US-Israeli relationship. Iran, however, said it would resume strikes if Israel continued to hit Hezbollah in Lebanon.
Israel also halted attacks on Iran, Israeli Prime Minister Benjamin Netanyahu said, stopping short of acknowledging a ceasefire that US President Donald Trump said the countries were aiming for.
President Trump said earlier that the US blockade, which was introduced in April, would remain in place “in full force” until a final peace agreement between the two warring nations is reached.
Prices gained more than 5 per cent earlier on Monday after renewed Israeli strikes on Iran and attacks on Lebanon had reduced hopes of an imminent end to the wider war.
Market analysts noted that because of the strikes, investors were concerned that flows through the Strait of Hormuz might remain restricted for longer. Roughly a fifth of the world’s daily supply of oil and liquefied natural gas passed through the waterway before US-Israeli airstrikes at the end of February unleashed the latest escalation of the Middle Eastern conflict.
Yemen’s Iran-aligned Houthis said on Monday they would ban ships linked to Israel from the Red Sea after Israel renewed its military attacks on Iran, adding to concerns about global shipping and energy flows.
In the face of the supply crisis, a sub-group under the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) on Sunday agreed on its fourth oil output target increase in four months. The seven members decided to increase targets by 188,000 barrels per day from July, the same as the June hike, which was adjusted down from monthly increases of 206,000 barrels per day in May and April to take into account the exit of the United Arab Emirates (UAE).
On paper, the sub-group has increased its output quotas from April to June by almost 600,000 barrels per day, but in reality, the group’s production has collapsed due to export cuts by Gulf members, averaging 33.19 million barrels per day in April compared with 42.77 million barrels per day in February.
Saudi Arabia has cut its official selling prices for crude oil to Asia in July for a second month.
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