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Economic Uncertainty May Trigger Choppy Trading on Wall Street

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Economic Uncertainty May Trigger Choppy Trading on Wall Street

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.

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

Unlisted Stocks Languish in Red Zone after 0.25% Fall Wednesday

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unlisted stocks

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange extended its stay in the bearish zone on Wednesday, December 8 as the trio of FrieslandCampina WAMCO Nigeria Plc, NASD Plc, and Central Securities Clearing Systems (CSCS) Plc compounded its woes by 0.25 per cent.

FrieslandCampina WAMCO Nigeria Plc depreciated by N1 or 0.9 per cent at the midweek session to settle at N110.80 per share in contrast to the preceding day’s value of N111.80 per share.

It was followed by NASD Plc, which closed at N27.00 per unit compared with the previous day’s N27.15 per unit, indicating a decline of 15 kobo or 0.6 per cent.

On its part, CSCS Plc declined yesterday by 9 kobo or 0.5 per cent to close the session at N16.91 per share in contrast to N17 per share of the previous session.

The losses posted by these unlisted stocks chopped off N1.49 billion from the market capitalisation of the bourse during the session to close the day at N602.96 billion versus N604.45 billion it ended on Tuesday.

In the same vein, the NASD Unlisted Security Index (NSI) closed lower by 1.8 points to wrap the session at 729.82 points compared with 731.62 points of the previous session.

At the market on Wednesday, there was an increase in the volume of securities traded by investors and this was by 168.9 per cent as 1.9 million units of stocks exchanged hands compared with the earlier day’s 694,849 units of securities.

In the same vein, the value of shares traded at the midweek amounted to N37.9 million, which by evaluation is 72.5 per cent higher than the N22.0 million posted on Tuesday.

All these transactions were executed in 14 deals, according to data from the exchange, 12.5 per cent lower than the 16 deals carried out at the preceding day.

Food Concepts Plc closed the day as the most active stock by volume (year-to-date) for selling 11.4 billion units for N14.4 billion, Lighthouse Financial Services Plc has traded 1.1 billion for N546.2 million, while Geo Fluids Plc has sold 1.0 billion units for N700.1 million.

Also, Food Concepts Plc finished the day as the most active stock by value (year-to-date) with a turnover of 11.4 billion units worth N14.4 billion, Nigerian Exchange (NGX) Group Plc, which is no longer on the platform maintained its second spot with 456.5 million units worth N9.2 billion, while the third spot was taken by VFD Group Plc with 10.4 million units valued at N3.5 billion.

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Economy

Naira Trades Flat at I&E as Bitcoin, Ethereum Fall at Crypto Market

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Ethereum

By Adedapo Adesanya

It was a stalemate between the Naira and the US Dollar at the Investors and Exporters (I&E) segment of the foreign exchange (forex) market on Wednesday, December 8.

This was because, at the specialised window where investors source FX for approved needs, the local currency closed against the greenback at N415.07/$1, the same value it was sold at the previous session.

This happened despite a 51.7 per cent or $76.98 million rise in the demand for forex at the market window, as data obtained by Business Post from FMDQ Securities Exchange showed that yesterday, the turnover rose to $225.99 million from the previous day’s turnover of $149.01 million.

Also, the Naira recorded the same outcome at the interbank window of the forex market as the exchange rate of the domestic currency compared with its American counterpart remained unchanged at N411.74/$1 at the close of transactions at the midweek session.

However, the Nigerian Naira appreciated against the British Pound Sterling during the session by N2.68 to settle at N543.04/£1 versus Tuesday’s closing rate of N545.72/£1 and against the Euro, the local currency performed badly as it lost 53 kobo to trade at N474.07/€1 compared with N463.54/€1 it closed a day earlier.

Meanwhile, the scales tilted to the bullish side on aggregate at the crypto market yesterday as six of the 10 cryptocurrencies tracked by this newspaper closed on the green side.

The highest gainer was Tron (TRX) as it appreciated by 9.1 per cent to sell for N52.50, just as Dash (DASH) rose by 6.6 per cent to sell at N85,000.00, with Ripple (XRP) appreciating by 5.9 per cent to N487.19.

In addition, Binance Coin (BNB) gained 5.3 per cent to trade at N249,686.22, Litecoin (LTC) rose by 1.5 per cent to sell at N96,110.37, while Cardano (ADA) pointed north by making a 0.9 per cent gain to quote at N815.96.

On the losers’ side, Ethereum (ETH) made a 3.4 per cent slump to trade at N2,300,500.02, Bitcoin (BTC) fell by 0.9 per cent to trade at N28,330,347.37, Dogecoin (DOGE) retreated by 0.6 per cent to sell at N103.74, while the US Dollar Tether (USDT) depreciated by 0.5 per cent to sell for N571.85.

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Economy

Crude Oil Prices Rise on Small US Inventory Draw

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crude oil prices

By Adedapo Adesanya

Crude oil prices continued to rise on Wednesday after the Energy Information Administration (EIA) reported an inventory draw of 0.2 million barrels for the week to December 3.

This came a day after the American Petroleum Institute surprised markets with an estimated crude oil inventory draw of over 3 million barrels that helped push prices higher.

In EIA estimates, last week’s draw was in comparison with a modest decline of 900,000 barrels for the first week of December and at 432.9 million barrels, US crude oil inventories remain below the five-year seasonal average.

Consequently, the price of the Brent crude appreciated yesterday by 1.02 per cent or 77 cents to settle at $76.59 per barrel, while the West Texas Intermediate (WTI) crude gained 1.17 per cent or 85 cents to sell for $73.26 per barrel.

Prices have been on the rise since the start of the week as the initial fear that the new Omicron variant could prompt new lockdowns began to subside amid reports of mild symptoms that don’t require hospitalization.

According to reports, early studies suggest two shots of the Pfizer-BioNTech shot may protect only partially against Omicron, but a third dose may improve that protection.

Market analysts also warned that some of the Omicron oil demand-related concerns might have been too pessimistic, and following some positive news related to the variant being released in recent days, oil prices recovered.

However, prices are still far below their October highs but have rebounded from below the $70 mark that they fell towards the end of November.

The outlook remains uncertain as researchers caution it is early days for Omicron and more data will become available as time passes.

Meanwhile, the market expects that supply will exceed demand by early 2022, due to rising US production and ongoing supply additions from the Middle East.

Also posing a bullish outlook was members of the Organisation of the Petroleum Exporting Countries (OPEC) raising oil prices for Asian and US buyers, and Iraq’s oil minister noted that would oil reach $75 a barrel.

On the geopolitical front, tensions between Western powers and Russia over Ukraine also remained high after American President Joe Biden warned Russian President Vladimir Putin that the West would impose strong economic and other measures on Russia if it invades Ukraine.

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