Economy

Economic Uncertainty May Trigger Choppy Trading on Wall Street

Published

6 years ago

27/03/2019

By Investors Hub

The major U.S. index futures are pointing to a roughly flat opening on Wednesday, with stocks likely to show a lack of direction after ending the previous session mostly higher.

Traders may be reluctant to make significant moves amid uncertainty about the economic outlook amid recent signs of slowing growth.

The markets have seen considerable volatility since the Federal Reserve?s monetary policy announcement last Wednesday, when the Fed indicated it no longer plans to raise interest rates this year.

The dovish message from the Fed has been described by some analysts as an effort to support the stock markets, although the move has also raised concerns about the economy.

On the U.S. economic front, the Commerce Department recently released a report showing the U.S. trade deficit narrowed by much more than expected in January amid a steep drop in the value of imports.

After moving sharply higher early in the session, stocks gave back ground over the course of the trading day on Tuesday. The major averages pulled back well off their highs of the session but managed to hold on to gains.

Going into the close, the major averages moved to the upside once again to close firmly positive. The Dow rose 140.90 points or 0.6 percent to 25,657.73, the Nasdaq advanced 53.98 points or 0.7 percent to 7,691.52 and the S&P 500 climbed 20.10 points or 0.7 percent to 2,818.46.

The initial rally on Wall Street was partly attributed to a rebound by bond yields, with the yield on the benchmark ten-year note initially moving higher after falling sharply over the past few sessions.

A recent inversion of the yield curve, with the yield on the ten-year note falling below the yield on three-month bills, raised concerns about an impending recession.

The U.S. economy has held up relatively well amid a global economic slowdown, although the Federal Reserve’s recent indication that it no longer plans to raise interest rates this year has led to worries about the outlook going forward.

Buying interest waned over the course of the session, however, as bond yields pulled back off their best levels following the release of some disappointing U.S. economic data.

Before the start of trading, the Commerce Department released a report showing a sharp pullback in new residential construction in the month of February.

The report said housing starts plunged by 8.7 percent to an annual rate of 1.162 million in February after surging up by 11.7 percent to a revised rate of 1.273 million in January.

Economists had expected housing starts to dip to a rate of 1.213 million from the 1.230 million originally reported for the previous month.

The Commerce Department said building permits also fell by 1.6 percent to an annual rate of 1.296 million in February after dipping by 0.7 percent to a revised rate of 1.1317 million in January.

Building permits, an indicator of future housing demand, had been expected to drop to 1.300 million from the 1.345 million originally reported for the previous month.

A separate report from the Conference Board showed an unexpected decrease in consumer confidence in the month of March.

The Conference Board said its consumer confidence index dropped to 124.1 in March after jumping to 131.4 in February. Economists had expected the index to rise to 133.0.

“Confidence has been somewhat volatile over the past few months, as consumers have had to weather volatility in the financial markets, a partial government shutdown and a very weak February jobs report,” said Lynn Franco, Senior Director of Economic Indicators at the Conference Board.

“Despite these dynamics, consumers remain confident that the economy will continue expanding in the near term,” she added. “However, the overall trend in confidence has been softening since last summer, pointing to a moderation in economic growth.”

Biotechnology stocks showed a significant move to the upside on the day, resulting in a 2.2 percent spike by the NYSE Arca Biotechnology Index.

Considerable strength also remained visible among energy stocks, which moved higher along with the price of crude oil.

Reflecting the strength in the energy sector, the NYSE Arca Oil Index surged up by 1.7 percent, while the NYSE Arca Natural Gas Index and climbed by 1.5 percent and the Philadelphia Oil Service Index rose by 1.1 percent.

Financial, steel, and pharmaceutical stocks also ended the day notably higher, moving to the upside along with most of the other major sectors.

Economy

Wale Edun Rules Out IMF Loan for Nigeria

Published

1 hour ago

24/01/2025

Adedapo Adesanya

By Adedapo Adesanya

The Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, has said Nigeria may not run to the International Monetary Fund (IMF) for any loan.

He disclosed this in a chat with Arise Television on the sidelines of the ongoing World Economic Forum (WEF) in Davos, Switzerland.

The Minister affirmed that Nigeria has no reason to approach the global lender, adding that the nation is currently relying on relatively cheaper borrowing sources from the World Bank and the African Development Bank (AfDB).

He also argued that Nigeria does not have a balance of payments problem and therefore will not need the short-term financing intervention by the Bretton Wood institution.

“I can imagine the headlines if you saw a situation whereby you were saying Nigeria approaches the IMF for funding. But the reality is that, of course, as a developing country, requiring investment, funds for the government, and investment in key infrastructure to improve the enabling environment for business, we do need funds, and we have the need to borrow.

“We have relied on relatively cheap funding from the multilateral, from the World Bank, from AFDB, and the whole spectrum of funding has been used.”

He also said that the country will tap a range of instruments to help finance this year’s budget deficit and improve the economy.

“We have relied on Nigerian savings by convincing them of the macroeconomic plan of the president, and what it holds in terms of the prospects for growth of the economy and business, and improvement of the business environment.

“Of course, we have approached the Euro bond market, which is, of course, the commercial end of financing. So we’ve done that whole spectrum. When it comes to IMF financing, typically financing from the IMF is to help with short-term balance of payments issues and crises.

“In the case of Nigeria, we have a positive trade balance. We have a positive current account balance. Our reserves are growing. The Governor of the Central Bank recently announced that we had achieved upwards of $10 billion improvement and increase in the reserves.

“We need to use equity. We need to rely on crowding in the savings, particularly of the private sector in Nigeria and the private sector around the world in the form of foreign direct investment. We have to remember that at this time, we have had significant gains in terms of improving the economic environment,” Mr Edun stated.

Economy

NASD OTC Exchange Rises 0.33%

Published

9 hours ago

24/01/2025

Adedapo Adesanya

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange rose further by 0.33 per cent on Thursday, January 23, as appetite for unlisted stocks continued to grow.

During the trading session, the value of the bourse went up by N7.6 billion to N1.767 trillion from the N1.76 trillion it closed in the preceding session, as the NASD Unlisted Security Index (NSI) made an additional 10.33 points to wrap the trading day at 3,120.3 points compared with the 3,09.80 points recorded at the midweek session.

Business Post reports that the share price of Okitipupa Plc increased on Thursday by N4.35 to end the day at N47.90 per unit compared with the previous day’s N43.55 per unit, and Food Concepts Plc gained 14 Kobo to settle at N1.74 per share, in contrast to the preceding day’s N1.60 per share.

On the flip side, Impresit Bakolori Plc suffered a decline of 10 Kobo yesterday to trade at 95 Kobo per unit versus Wednesday’s closing price of N1.05 per unit.

When the exchange closed for the session, the volume of securities bought and sold by investors went up by 70,008 per cent to 407.4 million units from the 581,160 units transacted a day earlier.

Equally, the value of shares traded during the session jumped by 16,665.9 per cent to N391.2 million from the N2.3 million recorded at midweek, and the number of deals increased by 65 per cent to 30 deals from the 20 deals posted on Wednesday.

Impresit Bakolori Plc topped the activity chart as the most active stock by value (year-to-date) with 406.5 million units worth N386.1 million, followed by FrieslandCampina Wamco Nigeria Plc with 4.3 million units valued at N170.4 million, and Geo-Fluids Plc with 9.1 million units sold for N44.3 million.

However, Impresit Bakolori Plc snatched the top spot as most active stock by volume (year-to-date) with 406.5 million units worth N386.1 million, as Industrial and General Insurance (IGI) Plc dropped to second position for selling 26.3 million units sold for N6.3 million, and Geo-Fluids Plc occupied third with 9.2 million units valued at N44.3 million.

Economy

Naira Firms to N1,548/$1 at Official Market, Tumbles at Black Market

Published

10 hours ago

24/01/2025

Adedapo Adesanya

By Adedapo Adesanya

The Naira recovered about 0.26 per cent or N3.99 against the United States Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Thursday, January 23 after coming under pressure in recent times.

During the session, the exchange rate of the local currency to its American counterpart closed at N1,548.59/$1 in the official market compared with the previous day’s N1,552.58/$1.

Also, against the Pound Sterling, the domestic currency gained N3.32 yesterday to trade at N1,912.21/£1 compared with Wednesday’s value of N1,915.53/£1 and on the Euro, it improved by N3.82 to sell for N1,617.72/€1 versus N1,613.89/€1.

The forex market may be reacting positively to news that the Central Bank of Nigeria (CBN) would launch a FX Code, which will serve as a guideline to the banking industry to promote ethical conduct of Authorised Dealers in the Nigerian FX market, next week.

The code will further reduce speculative activities, eliminate market distortions, and give the CBN improved oversight capabilities to effectively regulate the market.

The bank noted that authorised dealers would subsequently conduct all FX transactions in the interbank FX market on the EFEMS approved by the apex bank where transactions will be reflected immediately.

However, in the black market segment, the Nigerian Naira lost N5 against the greenback during the session to quote at N1,665/$1, in contrast to midweek’s rate of N1,660/$1.

As for the cryptocurrency market, it was lively yesterday as attention is increasingly centered on potential policy developments under the government of President Donald Trump of the US.

On Thursday, President Trump signed an executive order to ban the digital dollar and promote crypto and AI innovation in the country.

Meanwhile, the US data released recently showed the “all tenant rent” index, which leads the shelter inflation in the Consumer Price Index (CPI), rose at a slower pace last quarter. That has raised hopes that the US Federal Reserve will walk back on its hawkish December rate forecasts.

These helped Ethereum (ETH) gain 5.4 per cent on Thursday to sell at $3,394.79, Solana (SOL) appreciated by 4.4 per cent to $260.86, Cardano (ADA) jumped by 2.9 per cent to $1.00, and Litecoin (LTC) expanded by 2.6 per cent to $116.78.

Further, Bitcoin (BTC) rose by 2.1 per cent to $1o4,978.31, Ripple (XRP) leapt by 0.7 per cent to $3.16, Dogecoin (DOGE) increased by 0.6 per cent to $0.3572, and Binance Coin (BNB) soared by 1.6 per cent to $710.31, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.