Economy
European Stock Markets Close in Negative Territory
By Investors Hub
With traders turning cautious on Monday after the strong gains recorded on the previous session, most of the markets across Europe are in negative territory despite having opened higher on positive cues from Asia.
The vice ministerial level trade talks between the U.S. and China commenced in Beijing today, but the buying momentum witnessed on Friday and in Asian markets earlier in the day is totally absent in European markets.
The lower U.S. stock futures, concerns about the likely impact of the government shutdown in the U.S. and Brexit uncertainty are weighing on the markets in addition to a report showing eurozone investor confidence tumbled to the lowest level in five years.
While the U.K.?s FTSE 100 Index has fallen by 0.5 percent, the German DAX Index and the French CAC 40 Index are down by 0.6 percent and 0.7 percent, respectively.
On the economic front, German manufacturing orders decreased for the first time in four months in November and the fall was worse than expected, preliminary data from Destatis showed.
Factory orders decreased a calendar and seasonally adjusted 1 percent from October, when they grew 0.2 percent. Economists had forecast a modest decline of 0.1 percent. The latest fall was the most severe since a 3.6 percent slump in June.
The data said demand from the euro area plunged 11.6 percent, while orders from other countries grew 2.3 percent.
A preliminary report from Destatis showed German retail sales grew at the fastest pace in seven months in November, exceeding economists’ expectations.
Retail sales rose a calendar and seasonally adjusted 1.4 percent from October, when they edged up 0.1 percent. Economists had expected a 0.4 percent increase. On a year-on-year basis, retail sales increased 1.1 percent in November.
Survey data from the behavioral research institute Sentix showed eurozone investor confidence deteriorated for a fifth straight month in January to its lowest level in four years, although the drop was less severe than expected.
The Sentix investor confidence index fell to -1.5 from -0.3, hitting the lowest level since December of 2014. Economists had forecast a score of -2 for January.
The current situation index dropped for a fifth month running to 18, which was lowest level since January of 2017. The expectations index fell for a third straight month -19.3, the lowest score since August of 2012.
“With these data, the eurozone is dangerously close to stagnation,” Sentix Managing Director Manfred Hubner said.
Meanwhile, eurozone retail sales grew for a second straight month in November and at a faster-than-expected pace, supported by lower oil prices and rising wages.
Retail sales rose a seasonally adjusted 0.6 percent from October, when sales increased at the same pace, figures from Eurostat showed. Economists had forecast 0.2 percent growth.
By Adedapo Adesanya
The last trading session of the week at the Nigerian Autonomous Foreign Exchange Market (NAFEX) ended on a negative note for the Naira on Friday, May 15, as it lost N15 Kobo or 0.1 per cent against the Dollar to trade at N1,371.04/$1 compared with the previous day’s N1,370.89/$1.
However, it further appreciated against the Pound Sterling in the same market segment yesterday by N20.77 to close at N1,830.61/£1 versus Thursday’s value of N1,851.38/£1, and gained N7.91 against the Euro to settle at N1,595.07/€1 versus N1,602.98/€1.
At the GTBank FX desk, the Naira lost N2 against the US Dollar during the session to sell at N1,383/$1 compared with the preceding session’s N1,381/$1, and at the black market, it remained unchanged at N1,385/$1.
The Naira is forecast to be broadly stable, supported by Dollar sales by the Central Bank of Nigeria (CBN) amid steady, higher oil receipts, with the market settling into a balance.
Policy direction is also expected to give the market some boost as the CBN said the new edition of the FX market guidelines will deepen liquidity, improve transparency and strengthen confidence in the country’s foreign exchange market.
According to the Governor of the CBN, Mr Yemi Cardoso, the update is due to changing global economic realities, domestic reforms and the need for a more coherent and forward-looking regulatory framework. According to him, the last edition of the FX manual was issued in 2018, making the latest review both timely and necessary.
Meanwhile, the cryptocurrency market plunged into the red zone as rising bond yields hit risk assets across markets, while traders are increasingly betting the Federal Reserve may need to raise rates again. Rising energy prices and resurging inflation could force central banks back into tightening mode.
Cardano (ADA) shrank by 4.4 per cent to $0.2557, Dogecoin (DOGE) slid by 3.7 per cent to $0.1104, Ripple (XRP) depreciated by 3.5 per cent to $1.41, Solana (SOL) crashed by 3.5 per cent to $87.81, and Binance Coin (BNB) slumped by 3.4 per cent to $659.64.
Further, Bitcoin (BTC) declined by 2.6 per cent to $78,547.49, Ethereum (ETH) lost 2.1 per cent to quote at $2,209.19, and TRON (TRX) tumbled by 0.7 per cent to $0.3509, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
By Adedapo Adesanya
Oil prices gained more than 3 per cent on Friday, after comments by US President Donald Trump and Iran’s foreign minister further dented hopes of a deal.
Brent crude settled at $109.26 a barrel after chalking up $3.54 or 3.35 per cent, and the US West Texas Intermediate (WTI) finished at $105.42 a barrel, up $4.25 or 4.2 per cent. Over the week, Brent has climbed 7.84 per cent and WTI 10.48 per cent on uncertainty over the shaky ceasefire in the Iran war.
President Trump said he was running out of patience with Iran and has agreed with Chinese President Xi Jinping that the Middle East nation cannot be allowed to have a nuclear weapon and must reopen the Strait of Hormuz, which is the waterway where about a fifth of the world’s oil and liquefied natural gas normally passes.
On his part, Iran’s Foreign Minister Abbas Araqchi said on Friday that it does not trust the US and is interested in negotiating only if the US is serious, adding that Iran is prepared to go back to fighting but also prepared for diplomatic solutions.
On the US-China front, while the Chinese President did not directly make a comment on Iran, a statement from the foreign ministry spoke out against the conflict.
Among the deals the market was looking for from the US-China summit, President Trump said China wants to buy oil from the US, also saying he could lift sanctions on Chinese companies that buy Iranian oil.
Iran’s Revolutionary Guards said 30 vessels had crossed the strait between Wednesday evening and Thursday, far from 140 a day that was typical before the war. Two of the 30 vessels that reportedly cleared the Strait of Hormuz earlier this week were tankers, one en route to Japan and the other headed to China.
A prolonged closure of the Strait of Hormuz points toward tighter physical markets, potential refined product shortages, and upward pressure on prices in the coming weeks and months.
Even though the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) announced production increases in recent weeks, traders saw little immediate benefit because many barrels still cannot move efficiently through the Gulf region.
By Adedapo Adesanya
Nigeria received its first credit rating upgrade since 2012 from S&P Global Ratings, driven by improved oil market conditions and the country’s growing ability to refine and export crude locally.
The credit ratings agency upgraded the country’s rating by one notch to B, five levels below investment grade, according to a statement on Friday.
It raised its long-term foreign and local currency sovereign credit ratings on Nigeria to ‘B’ from ‘B-‘ and affirmed its ‘B’ short-term ratings. It also raised its long- and short-term Nigeria national scale ratings on the sovereign to ‘ngA+/ngA-1’ from ‘ngBBB+/ngA-2’.
S&P also cited Nigeria’s decision to liberalise the exchange rate as crucial to the development, and changed the outlook to stable.
The decision also comes as the federal government ruled out the reintroduction of subsidies on refined petroleum products, in order to avoid a return to larger budgetary deficits and drains on foreign currency (FX) liquidity.
S&P projected the general government deficit will widen to over 4 per cent of GDP on average during 2026 and 2027, a year of a general election.
It added that the implementation of reforms to broaden the tax base from very narrow levels is underpinning a steady decline in Nigeria’s debt-to-revenue ratio to 338 per cent in 2026 versus 500 per cent in 2023.
The agency said it could raise ratings over the next two years if fiscal outcomes improve significantly, either due to fiscal consolidation or structurally higher revenue, resulting in lower debt service costs.
It, however, warned that it could also lower the ratings if the implementation of Nigeria’s reform programme, particularly the series of critical steps taken to liberalise the exchange rate in 2023, reverses.
On the oil production forecast, S&P expects 2026 production to average approximately 1.66 million barrels per day, including condensates.
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