Economy
Renewed Trade Deal Uncertainty Weigh on Wall Street
By Investors Hub
The major U.S. index futures are pointing to a pointing to a lower opening on Thursday, with stocks likely to move back to the downside after ending the previous session moderately higher.
Renewed uncertainty about the potential for a long-term U.S.-China trade deal may contribute to initial weakness on Wall Street.
Optimism about phase one of a trade deal has contribute to recent strength on Wall Street, but a new report from Bloomberg said Chinese officials are casting doubts about reaching a comprehensive long-term trade agreement.
People familiar with the matter told Bloomberg that Chinese officials have warned in private conversations that they are unwilling to budge on the thorniest issues.
Early selling pressure may be somewhat subdued, however, with better than expected earnings news from tech giant Apple (AAPL) likely to help limit the downside.
With traders reacting positively to the Federal Reserve’s monetary policy decision, stocks moved moderately higher over the course of the trading session on Wednesday. With the upward move, the S&P 500 reached a new record closing high.
The major averages pulled back off their highs going into the close but remained in positive territory. The Dow climbed 115.27 points or 0.4 percent to 27,186.69, the Nasdaq rose 27.12 points or 0.3 percent to 8,303.98 and the S&P 500 ended the day up 9.88 points or 0.3 percent at 3,046.77.
Stocks showed a lack of direction for most of the day until the Fed announced its decision to lower interest rates for the third straight meeting.
The Fed announced its widely expected decision to lower the target range for the federal funds rate by 25 basis points to 1-1/2 to 1-3/4 percent.
The quarter point rate cut follows two matching moves at the Fed’s meetings in September and July, which marked the first rate cuts in over a decade.
Traders seemed unfazed by a change to the accompanying statement suggesting the central bank may put further monetary policy easing on hold.
The Fed’s accompanying statement removed a key line indicating the central bank would continue to “act as appropriate to sustain the expansion.”
The line was included in each of the Fed’s three previous statements and was seen as pointing toward a near-term rate cut.
The Fed said it would continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate.
“It’s a small change, but suggests less willingness to continue cutting rates in future,” FHN Financial Chief Economist Chris Low said about removing the line.
Low added, “In other words, while the FOMC was previously in the midst of a mid-cycle series of rate cuts and assessing whether to end it, the new language suggests they are ready to end it, but alert for evidence it should continue.”
The Fed is scheduled to hold its next monetary policy meeting on December 10-11, with CME Group’s FedWatch tool currently indicating a 79.1 percent chance the central bank will leave rates unchanged.
In his post-meeting press conference, Fed Chairman Jerome Powell said the current stance of monetary policy is “likely to remain appropriate” as long as “the outlook remains broadly in keeping with our expectations.”
Powell also told reporters the Fed would need to see a “really significant move up in inflation that’s persistent” before the central bank would consider raising interest rates.
With the focus on the Fed, traders largely shrugged off the release of some upbeat U.S. economic data, including the Commerce Department’s first reading on third quarter GDP.
The Commerce Department report showed U.S. economic growth slowed much less than expected in the third quarter.
The report said real gross domestic product increased by 1.9 percent in the third quarter after climbing by 2.0 percent in the second quarter. Economists had expected GDP growth to slow to 1.7 percent.
Payroll processor ADP released a separate report showing U.S. private sector employment increased by slightly more than anticipated in the month of October.
ADP said private sector employment climbed by 125,000 jobs in October compared to economist estimates for an increase of about 120,000 jobs.
However, the report also showed private sector job growth in September was downwardly revised to 93,000 from the previously reported addition of 135,000 jobs.
“Job growth has throttled way back over the past year,” said Mark Zandi, chief economist of Moody’s Analytics. “If hiring weakens any further, unemployment will begin to rise.”
Gold stocks showed a strong move to the upside over the course of the session, driving the NYSE Arca Gold Bugs Index up by 1.5 percent. The strength among gold stocks came amid an increase by the price of the precious metal.
Notable strength also emerged among software and pharmaceutical stocks, with the Dow Jones U.S. Software Index and the NYSE Arca Pharmaceutical Index both rising by 1.4 percent.
On the other hand, energy stocks moved sharply lower as the price of crude oil fell following the release of a report showing a much bigger than expected weekly jump in crude oil inventories.
Reflecting the weakness in the sector, the Philadelphia Oil Service Index plummeted by 4.4 percent, the NYSE Arca Natural Gas Index plunged by 3.7 percent and the NYSE Arca Oil Index tumbled by 2.2 percent.
Considerable weakness also remained visible among transportation stocks, as reflected by the 1.8 percent slump by the Dow Jones Transportation Average.
C.H. Robinson Worldwide (CHRW) led the sector lower after the trucking company reported third quarter results that missed analyst estimates.
By Dipo Olowookere
A 1.08 per cent growth was further printed by the Nigerian Exchange (NGX) Limited on Friday on improved appetite for Nigerian stocks.
Data showed that the insurance sector lost 0.61 per cent yesterday due to profit-taking as the energy space gave up 0.08 per cent, while the commodity counter closed flat.
However, the industrial goods landscape appreciated by 2.06 per cent, the banking index improved by 1.31 per cent, and the consumer goods sector expanded by 0.83 per cent.
At the close of business on Customs Street, the All-Share Index (ASI) increased by 1,563.92 points to 147,040.07 points from 145,476.15 points and the market capitalisation went up by N996 billion to N93.722 trillion from N92.726 trillion.
UAC Nigeria led the advancers’ log yesterday after it grew by 10.00 per cent to N96.80, Transcorp Hotels jumped by 9.71 per cent to N172.80, Royal Exchange appreciated by 8.89 per cent to N1.96, Ikeja Hotel soared by 8.74 per cent to N31.10, and Veritas Kapital leapt by 8.07 per cent to N1.74.
On the flip side, Union Dicon declined by 10.00 per cent to N6.30, ABC Transport slipped by 9.88 per cent to N3.10, AXA Mansard depreciated by 7.19 per cent to N12.90, FTN Cocoa lost 4.62 per cent to trade at N4.75, and Guinea Insurance dropped 3.36 per cent to finish at N1.15.
A total of 38 stocks ended on the gainers’ table and 17 stocks finished on the losers’ table, representing a positive market breadth index and strong investor sentiment.
Traders transacted 361.6 million equities for N14.8 billion in 21,051 deals yesterday versus the 1.9 billion equities worth N19.2 billion traded in 23,369 deals a day earlier, showing a decline in the trading volume, value, and number of deals by 80.97 per cent, 22.92 per cent, and 14.20 per cent, respectively.
The busiest stock for the session was Zenith Bank with 59.5 million units worth N3.6 billion, Access Holdings traded 46.1 million units valued at N973.0 million, Fidelity Bank exchanged 29.4 million units for N560.4 million, FCMB transacted 27.9 million units worth N293.9 million, and Tantalizers sold 13.0 million units valued at N29.8 million.
By Adedapo Adesanya
Energy stocks influenced the 4.76 per cent loss recorded by the NASD Over-the-Counter (OTC) Securities Exchange on Friday, December 5.
The culprits were the duo of 11 Plc and Nipco Plc,with the former shedding N32.17 to end at N291.83 per share compared with the previous day’s N324.00 per share, and the latter down by N21.00 to sell at N195.00 per unit versus the previous session’s N216.00 per unit.
Consequently, the NASD Unlisted Security Index (NSI) slumped by 170.16 points to 3,401.37 points from 3,571.53 points and the market capitalisation lost N101.81 billion to close at N2.035 billion from the N2.136 trillion quoted in the preceding session.
The OTC securities exchange suffered the decline yesterday despite the share prices of three companies closing green.
Central Securities Clearing System (CSCS) Plc was up by N1.80 to close at N39.80 per share compared with Thursday’s price of N38.00 per share, Air Liquide Plc appreciated by N1.09 to N11.99 per unit from N10.90 per unit, and FrieslandCampina Wamco Nigeria Plc grew by 78 Kobo to N56.57 per share from N55.79 per share.
During the session, the volume of transactions rose by 6,885.3 per cent to 18.2 million units from 4.3 million units, the value of transactions ballooned by 10,301.7 per cent to N389.7 million from N347.2 million, but the number of deals declined by 29.7 per cent to 26 deals from 37 deals.
Infrastructure Credit Guarantee Company (InfraCredit) Plc ended the day as the most traded stock by value on a year-to-date basis with 5.8 billion units worth N16.4 billion, followed by Okitipupa Plc with 170.4 million units valued at N8.0 billion, and Air Liquide Plc with 507.5 million units worth N4.2 billion.
InfraCredit Plc also finished the day as the most traded stock by volume on a year-to-date basis with 5.8 billion units transacted for N16.4 billion, followed by Industrial and General Insurance (IGI) Plc with 1.2 billion units sold for N420.2 million, and Impresit Bakolori Plc with 536.9 million units worth N524.9 million.
By Adedapo Adesanya
The Naira depreciated further against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, December 5, as FX demand pressure mounts.
The Nigerian currency lost N2.60 or 0.18 per cent against the greenback to close at N1,450.43/$1 compared with the previous day’s N1,447.83/$1.
Equally, the domestic currency declined against the Pound Sterling in the official forex market during the session by N4.48 to trade at N1,935.45/£1, in contrast to Thursday’s closing price of N1,930.97/£1 and shrank against the Euro by 43 Kobo to end at N1,689.17/€1 versus the preceding session’s rate of N1,688.74/€1.
Similarly, the local currency performed badly against the US Dollar at the GTBank FX counter by N2 to close at N1,455/$1 versus Thursday’s N1,453/$1 but traded flat at the parallel market at N14.65/$1.
As the country gets into the festive period, pressure mounted on the local currency reflecting higher foreign payments and lower FX inflows.
However, there are expectations that the Nigerian currency will be stable, supported by interventions by to the Central Bank of Nigeria (CBN) in the face of steady dollar Demand and inflows from Detty December festivities that will give the Naira a boost after it depreciated mildly last month.
Traders cited by Reuters expect that the Naira will trade within a band of N1,443-N1,450/$1 next week, buoyed by improved FX interventions by the apex bank.
As for the crypto market, it was down yesterday due to profit-taking associated with year-end trading. However, the December 1-Year Consumer Inflation Expectation by the University of Michigan fell to 4.1 per cent from 4.5 per cent previously and 4.5 per cent expected. The 5-Year Consumer Inflation Expectation fell to 3.2 per cent from 3.4 per cent previously and 3.4 per cent expected.
With the dearth of official economic data of late, these private surveys have taken on a new level of significance and the market banks of them to make decisions.
Cardano (ADA) depreciated by 5.7 per cent to $0.4142, Dogecoin (DOGE) slid by 5.1 per cent to $0.1394, Ethereum (ETH) dropped by 3.9 per cent to $3,039.75, Solana (SOL) declined by 3.8 per cent to $133.24, and Litecoin (LTC) fell by 3.7 per cent to $80.59.
Further, Bitcoin (BTC) went down by 2.6 per cent to sell at $89,683.72, Binance Coin (BNB) slumped by 2.2 per cent to $883.59, and Ripple (XRP) shrank by 2.1 per cent to $2.04, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
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