Economy
Bargain Hunting May Lead to Higher Open on Wall Street
The major U.S. index futures are pointing to a moderately higher opening on Thursday following the notable downward move seen over the two previous sessions.
The upward momentum on Wall Street comes as traders may look to go bargain hunting, picking up stocks at reduced levels following recent weakness.
A rebound by treasury yields may also generate some positive sentiment, with the yield on the benchmark ten-year note bouncing off its lowest levels since September of 2017.
The recent decline by treasury yields has led to concerns about the outlook for the economy and the possibility of a recession.
Buying interest may be somewhat subdued, however, as traders may be reluctant to get back into the markets amid lingering concerns about the U.S.-China trade dispute.
Amid a continued escalation of the rhetoric, Chinese Vice Foreign Minister Zhang Hanhui accused the U.S. of ?economic terrorism? by raising tariffs on Chinese goods.
?We oppose a trade war but are not afraid of a trade war,? Zhang said. ?This kind of deliberately provoking trade disputes is naked economic terrorism, economic homicide, economic bullying,?
After turning lower over the course of Tuesday?s session, stocks saw some further downside during trading on Wednesday. The Dow slid to its lowest closing level in well over three months, while the Nasdaq and the S&P 500 ended the day at more than two-month closing lows.
The major averages ended the session well off their worst levels but still firmly in negative territory. The Dow slumped 221.36 points or 0.9 percent to 25,126.41, the Nasdaq fell 60.04 points or 0.8 percent to 7,547.31 and the S&P 500 dropped 19.37 points or 0.7 percent to 2,783.02.
Worries about a further escalation of the U.S.-China trade dispute contributed to the weakness on Wall Street amid concerns China may seek to weaponize its dominance in rare earth minerals.
Reports suggest China is considering restricting the export of rare earth minerals, which are crucial for the U.S. technology industry.
The latest developments on the trade front have added fuel to investor fears that the dispute between the U.S. and China could escalate into a full-fledged trade war.
Trade war worries have increased the appeal of safe havens such as U.S. treasuries, resulting in a sharp decline in bond yields.
The slump in bond yields has in turn added to concerns that the U.S. could be headed for a recession or at least a notable slowdown in the pace of economic growth.
Treasuries saw further upside on the day, driving the yield on the benchmark ten-year note down to its lowest level since September of 2017.
Overall trading activity was somewhat subdued, however, as a lack of major U.S. economic data kept some traders on the sidelines.
Traders may have been looking ahead to the release of reports on first quarter GDP, pending home sales and personal income and spending in the coming days.
Pharmaceutical stocks turned in some of the market’s worst performances on the day, with the NYSE Arca Pharmaceutical Index falling by 1.5 percent.
Johnson & Johnson (JNJ) helped lead the sector lower after Oklahoma Attorney General Mike Hunter claimed the healthcare giant’s greed helped fuel the opioid crisis in opening remarks in a multi-billion-dollar lawsuit.
Significant weakness was also visible among biotechnology stocks, as reflected by the 1.5 percent drop by the NYSE Arca Biotechnology Index.
Utilities, commercial real estate and software stocks also moved notably lower, although most sectors ended the day well off their worst levels.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed flat on Wednesday, August 5, as the market witnessed weaker trading activity with only two deals executed.
In the midweek session, the volume of securities exchanged by investors dropped 99.9 per cent to 802 units from the 1.6 million units recorded on Tuesday. The value of securities further decreased by 99.6 per cent to N208,240 from the preceding session’s N47.6 million, and the number of deals significantly went down by 93.9 per cent to two deals from the 33 deals recorded a day earlier.
Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and Central Securities Clearing System (CSCS) Plc with 76.9 million units transacted for N5.5 billion.
GNI Plc was also the most active stock by volume on a year-to-date basis, with 3.4 billion units exchanged for N8.4 billion, followed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units valued at N415.7 million.
There were no price gainers or losers yesterday.
As a result, the market capitalisation stood unmoving at N2.739 trillion, while the NASD Security Index (NSI) remained unchanged at 4,563.96 points.
By Adedapo Adesanya
The Naira slid against the US Dollar by N2.28 or 0.17 per cent in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Wednesday, August 5, to N1,363.85/$1 from N1,362.55/$1.
The local currency also declined against the Pound Sterling in the official market during the session by N5.97 to close at N1,837.38/£1 compared with Tuesday’s closing rate of N1,831.41/£1, and against the Euro, it crashed by N6.54 to quote at N1,575.25/€1 versus the preceding session’s N1,568.71/€1.
But at the black market, the Nigerian Naira traded flat against the greenback yesterday at N1,400/$1, and also remained unchanged at the GTBank FX desk at N1,373/$1.
The Central Bank of Nigeria (CBN) says rates have narrowed to below two per cent, while the country’s external reserves have risen above $52.5 billion, reflecting the impact of its ongoing monetary and foreign exchange reforms.
CBN Governor Yemi Cardoso, represented by the Acting Director of Corporate Communications and Investor Relations, Mrs Hakama Sidi-Ali, disclosed this on Tuesday during the CBN Fair in Gombe. He noted that reforms introduced since 2023 had significantly reduced the disparity between the official FX market and the parallel market.
“The Naira continues to strengthen, with the spread between official and Bureau de Change rates now below two per cent,” he said, adding that reserves at $52.5 billion were supported by sustained inflows and renewed investor confidence in the economy.
Interbank FX transactions slid as weaker market activities dropped total Dollar volume exchanged to $75.35 million, a 51.8 per cent decline from $156.23 million in turnover quoted at the previous close.
The deals at the NFEM window also fell as data from the central bank put Wednesday’s quote at 82 from 139.
In the cryptocurrency market, major were down as global risk sentiment softened as a key world equity index slipped and chipmakers fell.
The MSCI All Country World Index snapped a five-day run to fall 0.2 per cent as chipmakers retreated on both sides of the Pacific. South Korea’s Kospi, a bellwether for the AI trade, dropped 4.4 per cent.
Ripple (XRP) depleted by 1.7 per cent to $1.05, Binance Coin (BNB) decreased by 1.0 per cent to $594.87, Cardano (ADA) depreciated by 0.9 per cent to $0.1884, TRON (TRX) shrank by 0.2 per cent to $0.3261, Solana (SOL) crumbled by 0.1 per cent to $74.00, and Dogecoin (DOGE) went down by 0.1 per cent to $0.0697.
On the flip side, Ethereum (ETH) gained 2.3 per cent to trade at $1,911.41, and Bitcoin (BTC) rose by 0.8 per cent to $64,759.28, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
By Dipo Olowookere
The domestic stock exchange rebounded by 0.05 per cent on Wednesday on the back of renewed bargain-hunting by investors, though the level of activity waned.
After bleeding for a few days, the Nigerian Exchange (NGX) Limited heaved a sigh of relief yesterday, as the All-Share Index (ASI) gained 109.41 points to close at 244,912.24 points compared with the previous day’s 244,802.83 points, and the market capitalisation garnered N71 billion to settle at N158.087 trillion versus Tuesday’s N158.016 trillion.
Business Post reports that despite the rebound recorded by Customs Street at midweek, the market breadth index remained negative, as there were 20 price advancers and 29 price decliners, implying bearish investor sentiment.
Linkage Assurance appreciated by 9.94 per cent to N1.77, AVA Capital rose by 9.55 per cent to N10.90, Fortis Global Insurance advanced by 7.69 per cent to N2.80, McNichols gained 7.34 per cent to finish at N5.85, and Coronation Insurance surged by 5.51 per cent to N2.49.
Conversely, Honeywell Flour depreciated by 9.94 per cent to N16.30, PZ Cussons gave up 9.94 per cent to trade at N74.75, Zichis crashed by 9.74 per cent to N20.76, Learn Africa slipped by 9.62 per cent to N9.40, and Neimeth tumbled by 8.33 per cent to N8.25.
The busiest equity was FCMB, with a turnover of 369.2 million units valued at N4.1 billion. Chams transacted 46.7 million units worth N201.8 million, First Holdco transacted 43.5 million units for N5.7 billion, Access Holdings sold 29.8 million units worth N778.0 million, and Linkage Assurance exchanged 19.6 million units valued at N33.5 million.
At the close of transactions, market participants bought and sold 824.1 million units worth N25.5 billion in 48,114 deals, in contrast to the 1.6 billion units sold for N28.7 billion in 54,160 deals a day earlier, showing a shortfall in the trading volume, value, and number of deals by 48.49 per cent, 11.15 per cent, and 11.16 per cent, respectively.
