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Concerns About Trade War May Continue to Hit Markets

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Concerns About Trade War May Continue to Hit Markets

By Investors Hub

The major U.S. index futures are pointing to a lower opening on Monday after turning higher over the course of the previous session.

Lingering concerns about a global trade war may weigh on the markets, as President Donald Trump plans to implement tariffs on steel and aluminum imports.

In a post on Twitter, Trump indicated that the tariffs on steel and aluminum would only be removed if the U.S. negotiates a ?new & fair? NAFTA agreement.

?We have large trade deficits with Mexico and Canada. NAFTA, which is under renegotiation right now, has been a bad deal for U.S.A. Massive relocation of companies & jobs. Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed,? Trump tweeted.

He added, ?Also, Canada must treat our farmers much better. Highly restrictive. Mexico must do much more on stopping drugs from pouring into the U.S. They have not done what needs to be done. Millions of people addicted and dying.?

Trading activity may be somewhat subdued, however, as traders look ahead to the Labor Department?s monthly employment report due to be released on Friday.

After coming under pressure early in the session, stocks showed a significant turnaround over the course of the trading day on Friday. The major averages bounced well off their lows of the session, with the Nasdaq and the S&P 500 climbing into positive territory.

The major averages ended the session mixed, as the Dow climbed well off its worst levels but was unable to turn positive. While the Dow fell 70.92 points or 0.3 percent to 24,538.06, the Nasdaq jumped 77.31 points or 1.1 percent to 7,257.87 and the S&P 500 climbed 13.58 points or 0.5 percent to 2,691.25.

Despite the recovery on the day, the major averages all moved lower for the week. The Dow plunged by 3 percent, the S&P 500 tumbled by 2 percent and the Nasdaq slumped by 1.1 percent.

Bargain hunting may have contributed to the rebound on Wall Street, as the early weakness came on the heels of the sharp pullback seen over the three previous sessions.

The initial drop came as traders expressed concerns about the impact President Donald Trump’s plans to impose new tariffs on steel and aluminum imports will have on global trade.

Trump indicated Thursday that he plans to impose a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports.

The tariffs are likely to benefit U.S. steel and aluminum producers, although some officials have warned of retaliation by the European Union and China.

Trump shrugged off the concerns in a post on Twitter early Friday morning, calling trade wars “good” and “easy to win”

“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” Trump said.

He added, “Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!”

Following Trump’s announcement, several industry groups warned that the tariffs would lead to increased costs and hamper their ability to create jobs.

A steep drop by shares of McDonald’s (MCD) weighed on the Dow, with the fast food giant slumping by 4.8 percent.

The drop by McDonald’s came after RBC Capital Markets cut its price target on the company’s stock to $170 from $190 after a slow start for the chain’s new value menu.

Biotechnology stocks showed a substantial move to the upside on the day, driving the NYSE Arca Biotechnology Index up by 3.2 percent. The index rebounded after closing lower for three straight sessions.

Biogen (BIIB) and AbbVie (ABBV) turned higher despite voluntarily withdrawing their relapsing multiple sclerosis drug Zinbryta from the global markets.

Significant strength also emerged among natural gas stocks, as reflected by the 2.3 percent gain posted by the NYSE Arca Natural Gas Index. The strength in the sector came despite a modest decrease by the price of natural gas stocks.

Tobacco, semiconductor, and healthcare stocks also moved notably higher, while steel stocks pulled back following the strength seen in the previous session.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via dipo.olowookere@businesspost.ng

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Economy

NGX All-Share Index Outperforms Inflation Over Three Years

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All-Share Index

The 3-year trailing performance of the All-Share Index (ASI) of the Nigerian Exchange (NGX) Limited surpasses the average inflation during the same period.

The annual inflation measured by the Consumer Price Index (CPI) released in September by the National Bureau of Statistics (NBS) was 20.52 per cent in August 2022.

Meanwhile, the NGX ASI, a market capitalisation weighted index of all companies listed on the NGX’s platform, had a year-to-date performance of 15.68 per cent during the same period. This could be misleading about the market performance until you view it through a longer-term lens.

British Economist, Benjamin Graham, made a quote popularly used by Warren Buffett, the Fund Manager of Berkshire Hathaway Inc and widely regarded as the best living investor: “Markets are a voting machine in the short term, and a weighing machine in the long run.” On a 3-year trailing basis, the NGX ASI has outperformed the CPI average in the same period, ensuring that investors with a longer-term hold on their investments remain in the positive region.

Analysis of data of closing prices gathered from the NGX’s website showed that the index has a 3-year moving average of 22.97 per cent, compared to an inflation average of 15.72 per cent.

The year 2022 has been a slow year for global stocks due to volatility resulting from the hiking of interest rates by central banks in the United States and Europe amidst inflationary pressures.

The NGX ASI’s 15.62% YTD return is a significant positive performance compared to the US S&P 500, which has plunged by 22.46% or the FTSE 100, which has declined by 7.68%, according to Google Finance. The local bourse has exhibited resilience and insulated investors from negative return on investment over three years.

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Economy

Laolu Martins Was Minority Shareholder of Bukka Hut—Management

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Bukka Hut Laolu Martins

By Modupe Gbadeyanka

The management of an online restaurant in Nigeria, Bukka Hut, has clarified that one of its late directors, Mr Laolu Martins, was a minority shareholder in the company.

On Wednesday, it was reported that the deceased breathed his last in Lagos. He was said to have co-founded the firm with Mr Rasheed Jaiyeola, who is the Chief Executive Officer.

The deceased was reportedly invited to join the firm by Mr Jaiyeola, who jointly owns majority shares of the company with his wife and sister.

Mr Jaiyeola and Mr Martins were co-owners of the Nigerian International Securities Limited (NISL) before the former resigned from his position as director to focus on Bukka Hut in 2016.

According to the statement from the organisation, Mr Jaiyeola established Bukka Hut but only invited the deceased and two others to invest in the eatery when it was established.

“To clarify, Rasheed Jaiyeola is the founder/CEO of Bukka Hut, a proudly Nigerian brand he built from inception in August 2011 from one outlet to 24 outlets comprising of restaurants, lounges and suya and grill spots, and a learning facility, BH Academy, as at today. He jointly owns the majority shares of the company with his wife and sister.

“Bukka Hut is not a one-man business as there are two other shareholders/directors, but they are not involved in the daily management of the business.

“Rasheed and the late Olaolu Martins were co-owners of Nigerian International Securities Lid (NISL), and naturally, Laolu was one of the three people he invited to invest in Bukka Hut when he founded it in 2011; Rasheed resigned from NISL as a director in 2016 to focus solely on building Bukka Hut while Olaolu remained the MD/CEO of NISL and its related businesses,” the statement explained.

Mr Martins was reported to have died from suicide, but fresh information revealed that he slumped at Lenox Mall after a cardiac arrest and was taken to a hospital in Lekki, where he passed on.

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Economy

Usman Laments Nigeria, Saudi Arabia Trade Volume of $5m

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trade volume of $5m

By Aduragbemi Omiyale

The president of the newly-establishment Nigeria-Saudi Arabia Chamber of Commerce, Industry, Mines and Agriculture, Mr Ibrahim Usman, has lamented the low trade volume between both countries despite their historical relationship.

Mr Usman expressed this frustration when he visited the Minister of Information and Culture, Mr Lai Mohammed, at his office in Abuja.

He said at the moment, the trade volume between Nigeria and Saudi Arabia is about $5 million, promising to deepen the relations between the two countries.

“And whereas many Saudi investors are looking out for profitable investment windows in friendly countries like Nigeria, our businesses have been unable to capitalise on such opportunities due to lack of an organised, reliable, safe and very secure private sector platform like a chamber of commerce,” he said.

Mr Usman said a 60-member inter-ministerial delegation from Saudi Arabia will be in Nigeria next week for the second session of the Nigeria-Saudi Arabia Joint Commission, which will further create opportunities for the chamber to set up trade missions.

On his part, Mr Mohammed praised his guest for his effort to establish the organisation after over 10 years of trial, saying he has proven himself as a man of vision and deep conviction.

“Clearly from your presentation, it’s clear that the major objective is to change the narrative and ensure that the relations between Saudi Arabia and Nigeria should not be seen just from the narrow prism of Hajj and Umrah pilgrimage, but from the prism of two very important nations of the world creating a bridge through better cooperation for the two countries and their citizens,” the Minister said.

Mr Mohammed described the chamber as a clearing house for proposals from business people from the two countries in order to open new vistas for trade opportunities.

He said the absence of such a chamber has led to the decline in the volume of trade and also bred trust deficit between business people from the two countries.

“The absence of this vehicle has led to loss of businesses between the two countries and it has also aggravated the trust deficit between them,” he said.

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