Economy

Disappointing Economic Data Weigh on US Stocks

Published

6 years ago

21/02/2019

By Investors Hub

The major U.S. index futures are currently pointing to a modestly lower opening on Thursday following the release of some disappointing U.S. economic data.

The pullback by the futures came after a report from the Philadelphia Federal Reserve unexpectedly showed a contraction in regional manufacturing activity in the month of February.

A separate report from the Commerce Department also showed a smaller than expected increase in durable goods orders in January.

Meanwhile, the Labor Department released a report showing first-time claims for unemployment benefits fell more than expected in the week ended February 16th.

Optimism about trade talks between the U.S. and China may also help to limit any early selling pressure, with a report from Reuters saying the two sides have started to outline commitments in principle on the stickiest issues in their trade dispute.

While the U.S. and China remain far apart on demand for structural changes to China’s economy, sources familiar with the negotiations told Reuters the broad outline of what could make up a deal is beginning to emerge from the talks.

A separate report from CNBC indicating Chinese authorities could be getting ready to implement more extensive stimulus measures in a bid to encourage economic growth may also help to limit any early downside by stocks.

Following the relatively lackluster performance on Tuesday, stocks continued to experience choppy trading on Wednesday. The major averages spent the day bouncing back and forth across the unchanged line.

Eventually, the major averages ended the day modestly higher. The Dow rose 63.12 points or 0.2 percent to 25,954.44, the Nasdaq inched up 2.30 points or less than a tenth of a percent to 7,489.07 and the S&P 500 edged up 4.94 points or 0.2 percent to 2,784.70.

The choppy trading came as traders digested the minutes of the latest Federal Reserve meeting, which provided further insight into the central bank’s decision to change the forward guidance language and indicate a patient approach to raising interest rates.

The minutes described the Fed’s discussions regarding changing the language in its statement from referencing “further gradual increases” in rates to a sentence indicating patience.

Meeting participants pointed to a variety of considerations that supported a patient approach to monetary policy as an appropriate step in managing various risks and uncertainties in the outlook.

The Fed said additional data would help policymakers gauge the trajectory of business and consumer sentiment, whether the recent softness in core and total inflation and inflation compensation would persist, and the effect of the tightening of financial conditions on aggregate demand.

Information arriving in coming months could also shed light on the economic impact of the prolonged government shutdown as well as the results of budget negotiations occurring in the wake of the shutdown, including the possible implications for the path of fiscal policy, the Fed said.

“A patient approach would have the added benefit of giving policymakers an opportunity to judge the response of economic activity and inflation to the recent steps taken to normalize the stance of monetary policy,” the minutes said.

The minutes said a patient posture would also allow time for a clearer picture of the international trade policy situation and the state of the global economy to emerge.

In light of a range of uncertainties associated with global economic and financial developments, the Fed also decided that it was not useful to express a judgment about the balance of risks.

However, many participants observed that if recent uncertainty eases, the Fed would need to reassess the characterization of monetary policy as “patient” and might then use different statement language.

The minutes of the January meeting also showed officials discussed a plan to end the reduction of bonds on the Fed’s balance sheet before the end of 2019

“Almost all participants thought that it would be desirable to announce before too long a plan to stop reducing the Federal Reserve’s asset holdings later this year,” the Fed said.

The central bank added, “Such an announcement would provide more certainty about the process for completing the normalization of the size of the Federal Reserve’s balance sheet.”

Traders also seemed reluctant to make significant moves as they wait for developments regarding the latest round of trade talks between the U.S. and China.

Officials from the U.S. and China are meeting in Washington this week as the world’s two largest economies attempt to reach a long-term trade deal.

Most of the major sectors ended the day showing only modest moves, although tobacco stocks showed a substantial move to the upside.

Reflecting the rally by tobacco stocks, the NYSE Arca Tobacco Index spiked by 3.3 percent to its best closing level in over three months.

Chemical and steel stocks also saw considerable strength on the day, with the S&P Chemical Sector Index and the NYSE Arca Steel Index both advancing by 1.7 percent.

While some strength was also visible among banking, natural gas, and gold stocks, software, retail and biotechnology stocks moved lower.

Economy

NASD OTC Securities Exchange Closes Flat

Published

3 hours ago

13/12/2024

Adedapo Adesanya

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange closed flat on Thursday, December 12 after it ended the trading session with no single price gainer or loser.

As a result, the market capitalisation remained unchanged at N1.055 trillion as the NASD Unlisted Security Index (NSI) followed the same route, remaining at 3,012.50 points like the previous trading session.

However, the activity chart witnessed changes as the volume of securities traded at the bourse went down by 92.5 per cent to 447,905 units from the 5.9 million units transacted a day earlier.

In the same vein, the value of securities bought and sold by investors declined by 86.6 per cent to N3.02 million from the N22.5 million recorded in the preceding trading day.

But the number of deals carried out during the session remained unchanged at 21 deals, according to data obtained by Business Post.

When trading activities ended for the day, Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units sold for N3.9 billion, Okitipupa Plc came next with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc was in third place with 297.5 million units worth N5.3 million.

Also, Aradel Holdings Plc remained the most active stock by value (year-to-date) with 108.7 million units worth N89.2 billion, followed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units sold for N5.3 billion.

Economy

Naira Firms to N1,534/$1 at NAFEM, Crashes to N1,680/$1 at Black Market

Published

3 hours ago

13/12/2024

Adedapo Adesanya

By Adedapo Adesanya

The Naira appreciated against the United States Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by N14.79 or 0.9 per cent to trade at N1,534.50/$1 compared with the preceding day’s N1,549.29/$1 on Thursday, December 12.

The strengthening of the domestic currency during the trading session was influenced by the introduction of the Electronic Foreign Exchange Matching System (EFEMS) by the Central Bank of Nigeria (CBN).

The implementation of the forex system comes with diverse implications for all segments of the financial markets that deal with FX, including the rebound in the value of the Naira across markets.

The system instantly reflects data on all FX transactions conducted in the interbank market and approved by the CBN; publication of real-time prices and buy-sell orders data from this system has lent support to the Naira at the official market.

Equally, the local currency improved its value against the British Pound Sterling by N3.91 to wrap the session at N1,954.77/£1 compared with the previous day’s N1,958.65/£1 and against the Euro, the Nigerian currency gained N2.25 to sell for N1,610.41/€1 versus N1,612.66/€1.

However, in the black market, the Naira crashed further against the US Dollar on Thursday by N10 to quote at N1,680/$1 compared with Wednesday’s closing rate of N1,670/$1.

Meanwhile, the cryptocurrency market majorly corrected after earlier gains as US President-elect Donald Trump reiterated his ambition to embrace crypto assets, but a bond market rout dragged risk assets lower.

Mr Trump said, “We’re going to do something great with crypto” while ringing the opening bell at the New York Stock Exchange, reiterating his ambition to embrace digital assets in the world’s largest economy and create a strategic bitcoin reserve.

Alongside, the European Central Bank trimmed its benchmark interest rates by 25 basis points and in its dovish policy statement hinted that more rate cuts were likely to happen.

The biggest loss was made by Cardano (ADA), which fell by 4.9 per cent to trade at $1.10, followed by Ripple (XRP), which slid by 4.1 per cent to $2.33 and Dogecoin (DOGE) recorded a value depreciation of 2.9 per cent to sell at $0.4064.

Further, Solana (SOL) slumped by 1.8 per cent to $225.89, Binance Coin (BNB) slipped by 1.3 per cent to $746.92, Bitcoin (BTC) declined by 0.6 per cent to $99,998.18, Ethereum (ETH) crumbled by 0.5 per cent to $3,909.43, and Litecoin (LTC) dipped by 0.3 per cent to $121.52, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.

Economy

Oil Market Falls on Expected Increase in Supply Surplus

Published

5 hours ago

13/12/2024

Adedapo Adesanya

By Adedapo Adesanya

The oil market slumped on Thursday, pressured by an expected increase in supply, supported by rising expectations of a Federal Reserve interest rate cut.

The International Energy Agency (EIA) made a slight upward revision to its demand outlook for next year but still expected the oil market to be comfortably supplied, with Brent crude futures losing 11 cents or 0.15 per cent to trade at $73.41 per barrel and the US West Texas Intermediate (WTI) crude futures declining by 27 cents or 0.38 per cent to finish at $70.02 per barrel.

The IEA in its monthly oil market report increased its 2025 global oil demand growth forecast to 1.1 million barrels per day from 990,000 barrels per day last month, largely in Asian countries due to the impact of China’s recent stimulus measures.

At the same time, the IEA expects nations not in the Organisation of the Petroleum Exporting Countries and Allies (OPEC+) group to boost supply by about 1.5 million barrels per day next year, driven by the US, Canada, Guyana, Brazil and Argentina – more than the rate of demand growth.

On Wednesday, OPEC cut its demand growth forecast for 2024 for the fifth straight month.

The IEA said that, even excluding the return to higher output quotas, its current outlook is to a 950,000 barrels per day supply overhang next year, which is almost 1 per cent of the world’s supply.

The Paris-based agency said this would rise to 1.4 million barrels per day if OPEC+ goes ahead with its plan to start unwinding cuts from the end of next March.

Next year’s surplus could make it harder for OPEC+ to bring back production. The hike was earlier due to start in October 2024, but OPEC+ has delayed it amid falling prices.

Meanwhile, inflation rose slightly in November increasing the possibility of a US Federal Reserve rates cut again as the data fed optimism about economic growth and energy demand.

Support also came as crude imports in China grew annually for the first time in seven months in November, up more than 14 per cent from a year earlier.