Economy
Easing Trade Tensions May Lead to Strength on Wall Street
By Investors Hub
The major U.S. index futures are pointing to a higher opening on Monday, with stocks likely to add to the strong gains posted last week.
Early buying interest may be generated amid easing trade tensions ahead of a second round of trade talks between the U.S. and China this week.
Ahead of the meeting, President Donald Trump indicated in a post on Twitter that he is working with Chinese President Xi Jinping to get Chinese telecom equipment maker ZTE Corp. ?back into business, fast.?
ZTE has been crippled by a ban on U.S. supplies to its business, and sources briefed on the matter told Reuters that China has demanded the issue be resolved as a prerequisite for broader trade negotiations.
In a subsequent tweet, Trump expressed optimism about trade talks with China despite claiming past negotiations have been one-sided in favor of Beijing.
?China and the United States are working well together on trade, but past negotiations have been so one sided in favor of China, for so many years, that it is hard for them to make a deal that benefits both countries,? Trump tweeted. ?But be cool, it will all work out!?
Overall trading activity may be somewhat subdued, however, with a lack of major U.S. economic data likely to keep some traders on the sidelines.
After moving notably higher over the course of trading last Wednesday and Thursday, stocks turned in a lackluster performance during trading on Friday. The major averages spent the day bouncing back and forth across the unchanged line.
The Dow and the S&P 500 reached their best closing levels in nearly two months, but the Nasdaq closed marginally lower. While the Nasdaq edged down 2.09 points or less than a tenth of a percent to 7,402.88, the Dow climbed 91.64 points or 0.4 percent to 24,831.17 and the S&P 500 rose 4.65 points or 0.2 percent to 2,727.72.
Despite the mixed performance on the day, the major averages all moved sharply higher for the week. The Nasdaq surged up by 2.7 percent, and the Dow and the S&P 500 jumped by 2.3 percent and 2.4 percent, respectively.
The markets initially benefited from the upward momentum seen in the two previous sessions, but buying interest waned as traders seemed wary of continuing to pick up stocks.
Traders were also digesting President Donald Trump’s outline of his plan to reduce high drug prices, which he has previously described as a top priority for his administration.
In remarks from the White House rose garden, Trump suggested the government was partly to blame for high drug prices but also criticized drug lobbyists and so-called “middle men.”
Trump announced several steps his administration will take to reduce drug prices, including giving Medicare Part D plans better tools to negotiate discounts.
Reports earlier in the day indicated Trump’s reforms of Medicare would stop short of allowing the government to negotiate directly with drug makers.
The president also indicated he would seek to increase competition in drug markets, develop new incentives for drug makers to lower list prices and develop options to lower patients’ out-of-pocket spending.
On the U.S. economic front, the Labor Department released a report showing import prices increased by less than expected in the month of April.
The Labor Department said import prices rose by 0.3 percent in April after edging down by a revised 0.2 percent in March. Economists had expected import prices to climb by 0.5 percent.
Meanwhile, the report said export prices increased by 0.6 percent in April after rising by 0.3 percent in March. Export prices had been expected to rise by another 0.3 percent.
A separate report released by the University of Michigan showed consumer sentiment unexpectedly held steady in early May.
The report said the preliminary reading on the consumer sentiment index for May came in at 98.8, unchanged from the final April reading. Economists had expected the index to edge down to 98.5.
Many of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.
Biotechnology stocks showed a significant move to the upside, however, with the NYSE Arca Biotechnology Index jumping by 1.8 percent.
Healthcare and pharmaceutical stocks also saw considerable strength as traders reacted to Trump’s plan to reduce drug prices.
On the other hand, tobacco stocks moved notably lower on the day, dragging the NYSE Arca Tobacco Index down by 1 percent.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange extended its stay in the south for the fourth consecutive session after it shed 1.18 per cent on Friday, March 13.
The unlisted securities market recorded a loss despite closing without a price decliner, and ending with two price gainers led by Geo Fluids Plc, which gained 1o Kobo to sell at N3.10 per share compared with the previous day’s N3.00 per share. Industrial and General Insurance (IGI) Plc appreciated during the session by 2 Kobo to trade at 54 Kobo per unit versus Thursday’s closing price of 52 Kobo per unit.
When the market closed for the day, the market capitalisation lost N29.83 billion to close at N2.489 trillion compared with the N2.519 trillion it finished a day earlier, and the NASD Unlisted Security Index (NSI) crashed by 49.84 points to 4,160.46 points from 4,210.31 points.
Market activity improved yesterday, as the volume of transactions rose 179.5 per cent to 10.4 million units from 3.7 million units, but the value of trades declined by 68.4 per cent to N29.9 million from N95.0 million, while the number of deals weakened by 11.5 per cent to 46 deals from 52 deals.
Central Securities Clearing Systems (CSCS) Plc remained the most active stock by value on a year-to-date basis with 38.4 million units worth N2.4 billion, Okitipupa Plc followed with 6.4 million units traded at N1.1 billion, and FrieslandCampina Wamco Nigeria Plc transacted 6.3 million units for N584.3 million.
Resourcery Plc ended the trading session as the most traded stock by volume on a year-to-date basis with 1.1 billion units valued at N415.6 million, trailed by Geo-Fluids Plc with 130.8 million units valued at N504.5 million, and CSCS Plc with 38.4 million units worth N2.4 billion.
By Adedapo Adesanya
The Naira continued to claw back some gains against the Dollar in the different segments of the foreign exchange (FX) market, as its value was strengthened on Friday.
In the black market, it gained N10 against the United States Dollar yesterday to close at N1,400/$1 compared with the preceding day’s rate of N1,410/$1, and at the GTBank forex counter, it chalked up N6 to close at N1,385/$1, in contrast to the N1,391/$1 it was traded a day earlier.
Similarly, in the Nigerian Autonomous Foreign Exchange Market (NAFEX), it appreciated against the greenback during the session by N5.28 or 0.38 per cent to quote at N1,366.23/$1 versus Thursday’s closing price of N1,371.51/$1.
It also improved its value against the Pound Sterling in the official market on Friday by N21.81 to settle at N1,812.99/£1 compared with the previous day’s N1,834.80/£1, and gained N13.86 against the Euro to sell at N1,568.03/€1 versus N1,581.89/€1.
Pressure eased further on the FX market as the Central Bank of Nigeria (CBN) continued interventionist operations this week, selling Dollars to banks to boost liquidity after a $500 million boost last week.
This was complemented by inflows from foreign investors, exporters and non-bank corporates, among others, while Nigeria’s gross external reserves remained above $50 billion, the highest since 2009.
The Governor of the apex bank, Mr Yemi Cardoso, also eased fears of a Naira devaluation, saying the country’s financial system has been strengthened by reforms.
Regardless, external pressure looms as the US Dollar strengthened globally due to its war with Iran, now ongoing for three weeks.
Meanwhile, the cryptocurrency market was largely down as traders and investors continue to align with current realities.
The market is adapting to the conflict in real time. Early in the war, every headline produced an outsized reaction because nobody could price the tail risk. Now, traders have a framework where strikes happen, oil spikes and bitcoin dips only to recover again.
Cardano (ADA) depreciated by 3.8 per cent to $0.2623, Dogecoin (DOGE) lost 1.7 per cent to finish at $0.0948, Ripple (XRP) slumped 1.5 per cent to $1.39, Solana (SOL) dropped 1.4 per cent to sell for $87.33, Binance Coin (BNB) went down by 1.3 per cent to $653.58, Bitcoin (BTC) declined by 1.1 per cent to $70,670.63, and Ethereum (ETH) decreased by 0.9 per cent to $2,078.78.
However, TRON (TRX) appreciated by 1.7 per cent to $0.2941, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
By Adedapo Adesanya
The price of the major crude oil grade, Brent crude oil, closed above $100 on Friday for the second consecutive session, as the Iran war heads toward its third week, with oil tanker traffic through the Strait of Hormuz still effectively at a standstill.
It gained 2.67 per cent or $2.68 during the trading day to close at $103.14 per barrel, while the US West Texas Intermediate (WTI) crude oil grade appreciated by 3.11 per cent or $2.98 to settle at $98.71 per barrel.
Brent futures were up about 10 per cent for the week following the 27 per cent rise seen last week, which marked the biggest weekly gain in oil prices since the COVID-19 pandemic in 2020. WTI futures, which saw their best week since 1983 last week, ended the week more than 8 per cent higher.
US President Donald Trump said American forces launched a major bombing raid on Iran’s strategic Kharg Island, targeting military facilities on the key Persian Gulf outpost while warning Iran that its vital oil infrastructure could be destroyed if shipping in the Strait of Hormuz is disrupted.
The terminal accounts for roughly 90 per cent of Iranian crude shipments, loading millions of barrels per day onto tankers bound largely for Asian markets.
The US and Israel’s strikes in the conflict have largely targeted Iranian military and nuclear infrastructure. Oil facilities elsewhere in Iran have been hit, but Kharg’s massive storage tanks, jetties, and pipelines had remained untouched until the latest strike.
Iran’s new supreme leader, Mojtaba Khamenei, vowed to keep fighting in a message delivered via state television.
There have been a number of attacks on foreign ships in or near the Strait, feeding into concerns that a prolonged war could translate to a global economic shock.
Prices are rising despite the US and its allies rolling out some measures to keep a lid on energy costs.
The International Energy Agency (IEA) has agreed to release 400 million stockpiled barrels, the largest such action in history.
The US has issued a 30-day waiver for India to purchase sanctioned oil from Russia. President Donald Trump is considering loosening rules under the Jones Act that require American ships to transport goods between domestic ports, including oil and gas, in an effort to lower costs.
Traders are continuing to monitor developments in the Middle East.
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