Economy
Global Economic Worries Weigh on Wall Street
By Investors Hub
The major U.S. index futures are currently pointing to a lower opening on Monday, with stocks likely to extend the downward move seen last Friday.
Renewed concerns about the global economic outlook may generate some selling pressure following the release of disappointing European economic data.
Survey data from IHS Markit showed the euro area private sector was close to stalling at the end of the third quarter. The flash composite output index unexpectedly fell to a 75-month low of 50.4 in September from 51.9 in August.
Germany’s private sector contracted the most since late 2012 as a downturn in manufacturing deepened and service sector growth lost momentum.
Waning optimism about a potential U.S.-China trade deal may also weigh on the markets after the Chinese cut short a visit to the U.S. last week and President Donald Trump indicated he is not in a hurry to reach an agreement.
Overall trading activity may be somewhat subdued, however, as a lack of major U.S. economic data may keep some traders on the sidelines.
Reports on consumer confidence, new home sales, durable goods orders and personal income and spending are likely to attract attention in the coming days.
After seeing modest strength throughout the morning, stocks once again came under pressure in afternoon trading on Friday. The major averages pulled back well off their best levels of the day and firmly into negative territory.
The major averages ended the day off their lows of the session but stuck in the red. The Dow fell 159.72 points or 0.6 percent to 26,935.07, the Nasdaq slid 65.20 points or 0.8 percent to 8,117.67 and the S&P 500 dropped 14.72 points or 0.5 percent to 2,992.07.
With the downturn on the day, the major averages also moved lower for the week, the Dow slumped by 1 percent, while the Nasdaq and the S&P 500 fell by 0.7 percent and 0.5 percent, respectively.
Stocks showed a notable move to the downside on news Chinese trade negotiators canceled a scheduled visit to U.S. farm states next week.
The Chinese delegation was in Washington this week for deputy-level trade talks and had been scheduled to visit American farms next week as a gesture of goodwill.
However, the Montana Farm Bureau revealed that the visit has been canceled, as the delegation is heading back to China sooner than expected.
The news offset some of the recent optimism about a potential end to the U.S.-China trade war, with the deputy-level talks expected to help pave the way for more productive high-level talks next month.
Comments from President Donald Trump indicating he is not interested in a “partial deal” with China also dashed hopes of a possible “interim deal.”
Trump also told reporters he doesn’t think he needs to reach a trade deal with China before the 2020 elections, claiming the U.S. is not being affected by the trade war.
Uncertainty about the outlook for interest also weighed on stocks, with Boston Federal Reserve President Eric Rosengren arguing that it is not necessary and potentially risky for the central bank to continue lowering rates.
Rosengren noted in a speech at the Stern School of Business at New York University that the U.S. economy has held up well in the face of trade-related impediments.
“Additional accommodation is not needed for an economy where labor markets are already tight – and risks further inflating the prices of riskier assets, and encouraging households and firms to take on what may be too much leverage,” Rosengren said.
Reflecting a divide at the Fed, Rosengren’s speech came the same day St. Louis Fed President James Bullard released a statement explaining his preference for cutting interest rates by 50 basis points at the Fed meeting earlier this week.
Bullard cited signs that U.S. economic growth is expected to slow in the near horizon as well as continued indications of low inflation.
Semiconductor stocks showed a significant move to the downside on the day, dragging the Philadelphia Semiconductor Index down by 1.8 percent.
Xilinx (XLNX) posted a steep loss after the chipmaker said its CFO Lorenzo Flores is stepping down from his position to pursue another executive opportunity.
Considerable weakness also emerged among computer hardware stocks, as reflected by the 1.4 percent drop by the NYSE Arca Computer Hardware Index.
Retail, tobacco, and oil service stocks also came under pressure over the course of the session, while gold and pharmaceutical stocks showed strong moves to the upside.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed flat on Wednesday, August 5, as the market witnessed weaker trading activity with only two deals executed.
In the midweek session, the volume of securities exchanged by investors dropped 99.9 per cent to 802 units from the 1.6 million units recorded on Tuesday. The value of securities further decreased by 99.6 per cent to N208,240 from the preceding session’s N47.6 million, and the number of deals significantly went down by 93.9 per cent to two deals from the 33 deals recorded a day earlier.
Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and Central Securities Clearing System (CSCS) Plc with 76.9 million units transacted for N5.5 billion.
GNI Plc was also the most active stock by volume on a year-to-date basis, with 3.4 billion units exchanged for N8.4 billion, followed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units valued at N415.7 million.
There were no price gainers or losers yesterday.
As a result, the market capitalisation stood unmoving at N2.739 trillion, while the NASD Security Index (NSI) remained unchanged at 4,563.96 points.
By Adedapo Adesanya
The Naira slid against the US Dollar by N2.28 or 0.17 per cent in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Wednesday, August 5, to N1,363.85/$1 from N1,362.55/$1.
The local currency also declined against the Pound Sterling in the official market during the session by N5.97 to close at N1,837.38/£1 compared with Tuesday’s closing rate of N1,831.41/£1, and against the Euro, it crashed by N6.54 to quote at N1,575.25/€1 versus the preceding session’s N1,568.71/€1.
But at the black market, the Nigerian Naira traded flat against the greenback yesterday at N1,400/$1, and also remained unchanged at the GTBank FX desk at N1,373/$1.
The Central Bank of Nigeria (CBN) says rates have narrowed to below two per cent, while the country’s external reserves have risen above $52.5 billion, reflecting the impact of its ongoing monetary and foreign exchange reforms.
CBN Governor Yemi Cardoso, represented by the Acting Director of Corporate Communications and Investor Relations, Mrs Hakama Sidi-Ali, disclosed this on Tuesday during the CBN Fair in Gombe. He noted that reforms introduced since 2023 had significantly reduced the disparity between the official FX market and the parallel market.
“The Naira continues to strengthen, with the spread between official and Bureau de Change rates now below two per cent,” he said, adding that reserves at $52.5 billion were supported by sustained inflows and renewed investor confidence in the economy.
Interbank FX transactions slid as weaker market activities dropped total Dollar volume exchanged to $75.35 million, a 51.8 per cent decline from $156.23 million in turnover quoted at the previous close.
The deals at the NFEM window also fell as data from the central bank put Wednesday’s quote at 82 from 139.
In the cryptocurrency market, major were down as global risk sentiment softened as a key world equity index slipped and chipmakers fell.
The MSCI All Country World Index snapped a five-day run to fall 0.2 per cent as chipmakers retreated on both sides of the Pacific. South Korea’s Kospi, a bellwether for the AI trade, dropped 4.4 per cent.
Ripple (XRP) depleted by 1.7 per cent to $1.05, Binance Coin (BNB) decreased by 1.0 per cent to $594.87, Cardano (ADA) depreciated by 0.9 per cent to $0.1884, TRON (TRX) shrank by 0.2 per cent to $0.3261, Solana (SOL) crumbled by 0.1 per cent to $74.00, and Dogecoin (DOGE) went down by 0.1 per cent to $0.0697.
On the flip side, Ethereum (ETH) gained 2.3 per cent to trade at $1,911.41, and Bitcoin (BTC) rose by 0.8 per cent to $64,759.28, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
By Dipo Olowookere
The domestic stock exchange rebounded by 0.05 per cent on Wednesday on the back of renewed bargain-hunting by investors, though the level of activity waned.
After bleeding for a few days, the Nigerian Exchange (NGX) Limited heaved a sigh of relief yesterday, as the All-Share Index (ASI) gained 109.41 points to close at 244,912.24 points compared with the previous day’s 244,802.83 points, and the market capitalisation garnered N71 billion to settle at N158.087 trillion versus Tuesday’s N158.016 trillion.
Business Post reports that despite the rebound recorded by Customs Street at midweek, the market breadth index remained negative, as there were 20 price advancers and 29 price decliners, implying bearish investor sentiment.
Linkage Assurance appreciated by 9.94 per cent to N1.77, AVA Capital rose by 9.55 per cent to N10.90, Fortis Global Insurance advanced by 7.69 per cent to N2.80, McNichols gained 7.34 per cent to finish at N5.85, and Coronation Insurance surged by 5.51 per cent to N2.49.
Conversely, Honeywell Flour depreciated by 9.94 per cent to N16.30, PZ Cussons gave up 9.94 per cent to trade at N74.75, Zichis crashed by 9.74 per cent to N20.76, Learn Africa slipped by 9.62 per cent to N9.40, and Neimeth tumbled by 8.33 per cent to N8.25.
The busiest equity was FCMB, with a turnover of 369.2 million units valued at N4.1 billion. Chams transacted 46.7 million units worth N201.8 million, First Holdco transacted 43.5 million units for N5.7 billion, Access Holdings sold 29.8 million units worth N778.0 million, and Linkage Assurance exchanged 19.6 million units valued at N33.5 million.
At the close of transactions, market participants bought and sold 824.1 million units worth N25.5 billion in 48,114 deals, in contrast to the 1.6 billion units sold for N28.7 billion in 54,160 deals a day earlier, showing a shortfall in the trading volume, value, and number of deals by 48.49 per cent, 11.15 per cent, and 11.16 per cent, respectively.
