Economy
Futures Pointing To Initial Weakness On Wall Street
Major U.S. index futures are pointing to a lower opening on Thursday following the mixed performance seen in the previous session.
The downward momentum on Wall Street comes as traders continue to digest the Federal Reserve’s decision to raise interest rates by a quarter point on Wednesday.
Stocks showed a lack of direction throughout much of the trading session on Wednesday before ending the session mixed. The narrow Dow climbed to a new record closing high.
The Dow rose 46.09 points or 0.2 percent to 21,374.56, while the Nasdaq fell 25.48 points or 0.4 percent to 6,194.89 and the S&P 500 edged down 2.43 points or 0.1 percent to 2,437.92.
The mixed closed on Wall Street came after the Federal Reserve raised its benchmark interest rate for the third time in three months despite signs the U.S. economy has cooled off in 2017.
The Federal Open Market Committee voted to raise fed funds to between 1% and 1.25% and will start “gradual” shrinking of its $4.5 trillion balance sheet “this year.”
The Fed, tasked with promoting full employment and healthy inflation, was forced to deal with an unusual dilemma — the unemployment rate has dropped to its lowest in 16 years, but inflation has weakened below the Fed’s 2 percent target rate.
Their so-called ‘dot plot’ shows one more rate hike in 2017 and three more in 2018, but the Fed’s accompanying statement offered little indication they plan to raise interest rates again this summer.
Policy makers say they are “monitoring developments closely,” meaning they are likely wait for confirmation that recent economic weakness is “transitory.”
“Information received since the Federal Open Market Committee met in May indicates that the labor market has continued to strengthen and that economic activity has been rising moderately so far this year,” the Fed said.
However, in a nod to May’s lackluster jobs report, the statement noted “Job gains have moderated but have been solid, on average, since the beginning of the year.” Also, U.S. retail sales in May were the weakest in 16 months, data showed this morning.
Meanwhile, the rate of inflation over the past 12 months has slowed to 1.9% in May from 2.7% just in February.
In her accompanying press conference, Fed Chair Janet Yellen offered some explanation for the tame inflation, noting declines in a few areas, such as cell phone service and prescription drugs.
Yellen said the Fed still expects inflation to reach the 2% target next year, and the economy is expected to grow at the same pace of around 2% for the next three years.
As such, the Fed expects to begin implementing a balance sheet normalization program this year, provided that the economy evolves broadly as anticipated.
On the U.S. economic front, the Commerce Department released a report this morning showing an unexpected drop in retail sales in the month of May.
The Commerce Department said retail sales fell by 0.3 percent in May after climbing by an upwardly revised 0.4 percent in April.
The drop in sales surprised economists, who had expected sales to inch up by 0.1 percent compared to the 0.3 percent increase originally reported for the previous month.
Excluding auto sales, retail sales still fell by 0.3 percent in May following the 0.4 percent growth seen in April. Ex-auto sales were expected to rise by 0.2 percent.
A separate report from the Labor Department showed a modest decrease in consumer prices in May amid a steep drop in energy prices.
The report said the consumer price index edged down by 0.1 percent in May after rising by 0.2 percent in April. Economists had expected prices to come in unchanged.
Energy stocks moved sharply lower amid a drop by the price of crude oil, while strength was visible among tobacco and biotechnology stocks.
By Dipo Olowookere
On the Nigerian Exchange (NGX) Limited last week, investors transacted 3.648 billion shares worth N220.568 billion in 251,861 deals compared with the 3.821 billion shares valued at N154.393 billion traded in 258,567 deals a week earlier.
Analysis showed that financial stocks led the activity chart with 2.899 billion units sold for N147.360 billion in 106,603 deals, accounting for 79.48 per cent and 66.81 per cent of the total trading volume and value, respectively.
Services equities recorded a turnover of 164.914 million units valued at N3.615 billion in 16,375 deals, and the consumer goods shares exchanged 157.451 million units worth N7.777 billion in 27,950 deals.
First Holdco, Zenith Bank, and Fidelity Bank were the busiest stocks for the five-day trading week, trading 1.745 billion units valued at N121.828 billion in 31,053 deals, contributing 47.85 per cent and 55.23 per cent to the total trading volume and value, respectively.
Business Post reports that 60 equities appreciated during the week versus 22 equities in the previous week, 28 shares depreciated versus 57 shares of the preceding week, and 58 stocks closed flat versus 67 stocks of the previous week.
International Breweries gained 40.00 per cent to trade at N13.30, RT Briscoe expanded by 32.02 per cent to N13.40, Livestock Feeds improved by 28.47 per cent to N9.25, First Holdco chalked up 25.82 per cent to close at N69.20, and Abbey Bank rose by 23.65 per cent to N9.15.
On the flip side, McNichols lost 28.57 per cent to finish at N5.00, Thomas Wyatt gave up 11.64 per cent to quote at N2.43, Geregu Power declined by 10.00 per cent to N825.70, CAP shed 9.99 per cent to settle at N157.60, and Guinness Nigeria also slipped by 9.99 per cent to N329.00.
Customs Street was under buying pressure last week, making the All-Share Index (ASI) and the market capitalisation close higher by 6.35 per cent to 243,798.76 points and N156.445 trillion, respectively.
In the same vein, all other indices finished higher apart from the growth and sovereign bond indices, which depreciated by 7.43 per cent and 0.02 per cent, respectively.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange rose by 2.30 per cent, spurring the NASD Security Index (NSI) to close higher by 96.61 points to 4,296.34 points from 4,199.73 points, and raising the market capitalisation by N57.99 billion to N2.578 trillion from N2.521 trillion.
The market was up yesterday despite a lower activity level, as the volume of securities traded slumped by 94.7 per cent to 1.3 million units from the previous 23.9 million units. The value of securities slipped by 57.2 per cent to N29.2 million from the preceding session’s N68.2 million, while the number of deals executed by market participants increased by 6.7 per cent to 32 deals from the 30 deals carried out on Thursday.
At the close of transactions, Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with a turnover of 3.4 billion units worth N8.4 billion, trailed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units valued at N6.5 billion in trades, and Central Securities Clearing System (CSCS) Plc with 70.8 million units traded for N4.9 billion.
GNI Plc was also the most traded stock by volume on a year-to-date basis, with 3.4 billion units sold for N8.4 billion, followed by Infracredit Plc with 2.3 billion units exchanged for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
During the trading day, there were three price gainers and two price losers, led by Afriland Properties Plc, which shed N1.48 to sell at N15.17 per share compared with the previous session’s N16.65 per share, and Food Concepts Plc, which slid by 7 Kobo to close at N2.69 per unit versus N2.76 per unit.
Conversely, FrieslandCampina Wamco Nigeria Plc improved its value by N9.50 to trade at N150.00 per share compared with Thursday’s closing price of N140.50 per share, CSCS Plc went up by N7.95 to N89.65 per unit from N81.70 per unit, and 11 Plc soared by N6.94 to N206.95 per share from N200.01 per share.
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited lost its footing by 0.07 per cent on Friday as a result of renewed profit-taking by investors.
The fall happened after Thomas Wyatt and Guinness Nigeria led other price losers group comprising 27 stocks at the market yesterday due to selling pressure.
Thomas Wyatt Nigeria shed 10.00 per cent to quote at N2.70, Guinness Nigeria drowned by 9.99 per cent to close at N329.00, Ikeja Hotel slipped by 9.96 per cent to N42.50, Zichis shed 9.94 per cent to trade at N26.37, and McNichols depreciated by 9.91 per cent to N5.00.
On the flip side, International Breweries gained 9.92 per cent to finish at N13.30, NEM Insurance appreciated by 9.61 per cent to N27.95, Jaiz Bank grew by 6.36 per cent to N9.20, UPDC expanded by 6.33 per cent to N4.20, and Livestock Feeds increased by 6.32 per cent to N9.25.
Business Post reports that investor sentiment remained bullish despite the loss recorded during the session, as there were 27 price decliners and 30 price advancers, representing a positive market breadth index.
Yesterday, market participants transacted 441.3 million equities for N19.4 billion in 44,938 deals compared with the 1.7 billion equities worth N112.0 billion traded in 44,780 deals a day earlier. This showed that the trading volume contracted by 74.04 per cent, the trading value declined by 82.68 per cent, and an uptick in the number of deals by 0.35 per cent.
Access Holdings led the activity chart on Friday after selling 40.2 million shares valued at N1.0 billion, Sterling Holdco traded 30.3 million stocks worth N228.8 million, Fidelity Bank sold 26.3 million equities for N505.6 million, Zenith Bank transacted 22.3 million shares valued at N2.5 billion, and First Holdco exchanged 19.0 million stocks worth N1.3 billion.
During the last trading session of the week, the consumer goods sector rose by 0.49 per cent, the insurance counter increased by 0.06 per cent, and the industrial goods index closed flat, while the banking and energy indices lost 0.78 per cent and 0.52 per cent, respectively.
As a result, the All-Share Index (ASI) shrank by 159.97 points to 243,798.76 points from 243,958.73 points, and the market capitalisation moderated by N103 billion to N156.445 trillion from N156.548 trillion.
