Economy
Futures Climb Well Off Lows After Consumer Price Data
By Investors Hub
The major U.S. index futures have climbed well off their worst levels of the morning and are currently pointing to a roughly flat opening on Thursday.
The futures were pointing to a sharply lower open earlier in the day but rebounded as treasury yields tumbled following the release of the Labor Department?s report on consumer prices in the month of September.
The Labor Department report showed consumer prices inched up by less than expected in September, while the annual rate of consumer price growth slowed to 2.3 percent in September from 2.7 percent in August.
Treasury yields have moved notably lower following the release of the data, with the yield on the benchmark ten-year note sliding by 5.6 basis points to 3.169 percent.
The pullback by treasury yields may offset some of the recent concerns about the outlook for interest rates that contributed to the sell-off on Wednesday.
Stocks saw substantial weakness during trading on Wednesday following the mixed performances seen in the two previous sessions. The tech-heavy Nasdaq showed a particularly steep drop, falling to its lowest closing level in over three months.
The major averages saw further downside going into the close, ending the day just off their lows of the session. The Dow plunged 831.83 points or 3.2 percent to 25,598.74, the Nasdaq plummeted 315.97 points or 4.1 percent to 7,422.05 and the S&P 500 tumbled 94.66 points or 3.3 percent to 2,785.68.
Technology stocks helped to lead the way lower on Wall Street, with Netflix (NFLX), Amazon (AMZN), Apple (AAPL) and Facebook (FB) all posting significant losses on the day.
The sell-off came amid lingering concerns about the outlook for interest rates following a recent increase in treasury yields.
Treasury yields moved higher on the day following the release of a Labor Department report showing a rebound in producer prices in the month of September.
The Labor Department said its producer price index for final demand increased by 0.2 percent in September after edging down by 0.1 percent in August. Economists had expected prices to rise by 0.2 percent.
Excluding decreases in prices for food and energy, core producer prices still rose by 0.2 percent in September after slipping by 0.1 percent in August. The uptick in core prices also matched economist estimates.
The report also said the annual rate of producer price growth slowed to 2.6 percent in September from 2.8 percent in August, although the annual rate of core producer price growth accelerated to 2.5 percent from 2.3 percent.
In comments to reporters on Tuesday, President Donald Trump said he does not like the pace at which the Federal Reserve is raising interest rates.
“I like to see low interest rates,” Trump told reporters as he prepared to depart for a campaign rally in Iowa. “The Fed is doing what they think is necessary, but I don’t like what they’re doing.”
“I will say this: We’re normalizing money, and that’s good,” he added. “But I think we don’t have to go as fast.”
The comments from Trump come after the Fed raised interest rates by a quarter point to 2 to 2.25 percent last month, marking the third rate hike this year.
The Fed’s projections for future rates also pointed to one more increase in rates this year and three rate hikes next year.
Arguing that inflation has been held in check, Trump said he does not want to see Fed policy lead to a slowdown in recent economic growth.
CME Group’s FedWatch tool currently indicates an 81.4 percent chance the Fed will raise rates by another quarter point to 2.25 to 2.5 percent at its December meeting.
Energy stocks moved sharply lower over the course of the session, with a steep drop by the price of crude oil weighing on the sector.
Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plummeted by 5.6 percent, while the NYSE Arca Oil Index and the NYSE Arca Natural Gas Index both slumped by 3.8 percent.
Substantial weakness was also visible among semiconductor stocks, as reflected by the 4.5 percent plunge by the Philadelphia Semiconductor Index. The index fell to its lowest closing level in over five months.
Transportation stocks also saw significant weakness, dragging the Dow Jones Transportation Average down by 4.1 percent to a nearly three-month closing low.
Networking, retail, computer hardware, and biotechnology stocks also moved notably lower, reflecting broad based weakness on Wall Street.
Meanwhile, gold stocks were among the few groups to buck the downtrend amid an increase by the price of the precious metal.
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.
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.
By Adedapo Adesanya
The global crude oil market waned on Thursday after the US President, Mr Donald Trump, urged the Organisation of the Petroleum Exporting Countries (OPEC) to bring down the cost of the commodity during his address at the World Economic Forum (WEF).
Brent crude futures lost 71 cents or 0.9 per cent after the speech to close at $78.29 a barrel and the US West Texas Intermediate crude (WTI) crude futures contracted by 82 cents or 1.09 per cent to $74.62 per barrel.
At WEF in Davos, Switzerland, President Trump announced he would ask Saudi Arabia and OPEC to bring down the cost of oil.
Since he took office, the uncertainty over how Mr Trump’s proposed tariffs and energy policies would affect global economic growth and energy demand have weighed on prices.
He threatened to add new tariffs to his sanctions threat against Russia if the country does not make a deal to end its war with Ukraine.
He also vowed to hit the European Union with tariffs and impose 25 per cent tariffs against Canada and Mexico.
On China, Mr Trump said his administration was discussing a 10 per cent punitive duty because fentanyl is being sent from there to the US.
On Monday, he declared a national energy emergency intended to provide him with the authority to reduce environmental restrictions on energy infrastructure and projects; and ease permitting for new transmission and pipeline infrastructure.
Market analysts say there will be more potential for a downward choppy movement in the oil market in the near term due to the Trump administration’s lack of clarity on trade tariffs policy and the impending higher oil supplies from the US.
Meanwhile, the US Energy Information Administration (EIA) reported an inventory dip of 1 million barrels for the week to January 17. In fuels, the EIA estimated mixed changes.
The change in crude inventories compared with a draw of 2 million barrels for the previous week, which also saw another round of sizable builds in fuels.
This contradicts forecasts by the American Petroleum Institute (API) which showed that on the US oil inventory front, crude stocks rose by 958,000 barrels in the week ending January 17 and added that gasoline (petrol) inventories rose by 3.23 million barrels and distillate stocks climbed by 1.88 million barrels, they said.
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