Economy
Lingering Trade Concerns May Weigh on Wall Street
By Investors Hub
The major U.S. index futures are pointing to a lower opening on Tuesday, with stocks likely to move back to the downside after ending the previous session mostly higher.
Lingering trade concerns may weigh on the markets even after President Donald Trump announced a new trade deal between the U.S., Mexico, and Canada to replace the North American Free Trade Agreement.
Trump praised the new United States-Mexico-Canada Agreement as an ?historic transaction? but also said it is ?too early to talk? with China about the escalating trade dispute between the two countries.
?Can’t talk now because they’re not ready,? Trump said of China. ?Because they have been ripping us for so many years, it doesn’t happen that quickly.?
He added, ?If politically, people force it too quickly, you’re not going to make the right deal for our workers and for our country.?
Reports of the last-minute cancellation of U.S. Defense Secretary Jim Mattis? trip to China have added to the concerns about rising tensions.
After an early move to the upside, stocks gave back some ground over the course of the trading session on Monday. The major averages pulled back off their highs of the session, with the tech-heavy Nasdaq sliding into negative territory.
The major averages eventually ended the day mixed. While the Nasdaq edged down 9.05 points or 0.1 percent to 8,037.30, the Dow climbed 192.90 points or 0.7 percent to 26,651.21 and the S&P 500 rose 10.61 points or 0.4 percent to 2,924.59.
The initial strength on Wall Street came amid easing trade concerns after U.S. and Canadian officials agreed on a trade deal to replace the North American Free Trade Agreement shortly before a midnight deadline.
The new trade deal, called the United States-Mexico-Canada Agreement, or USMCA, will reportedly provide more market access to U.S. dairy farmers and effectively cap Canadian automobile exports to the U.S.
A joint statement by U.S. Trade Representative Robert Lighthizer and Canadian Foreign Affairs Minister Chrystia Freeland said the agreement will “strengthen the middle class, and create good, well-paying jobs and new opportunities for the nearly half billion people who call North America home.”
President Donald Trump, a harsh critic of NAFTA, also praised the USMCA as a “historic transaction” in a post on Twitter on Monday.
“It is a great deal for all three countries, solves the many deficiencies and mistakes in NAFTA, greatly opens markets to our Farmers and Manufacturers, reduces Trade Barriers to the U.S. and will bring all three Great Nations together in competition with the rest of the world,” Trump tweeted.
The leaders of the U.S., Canada, and Mexico are expected to sign the new agreement before the end of November, although it will still need to be approved by Congress.
However, the optimism about trade may have been partly offset by Trump’s subsequent remarks calling it “too early to talk” with China about a new trade agreement.
Traders largely shrugged off a report from the Institute for Supply Management showing a modest slowdown in the pace of growth in the U.S. manufacturing sector.
The ISM said its purchasing managers index fell to 59.8 in September from 61.3 in August, although a reading above 50 still indicates growth in the manufacturing sector. Economists had expected the index to edge down to 60.3.
The slightly bigger than expected decrease by the index came after it reached its highest level in over fourteen years in the previous month.
Energy stocks saw significant strength on the day, benefiting from a sharp increase by the price of crude oil. Reflecting the strength in the energy sector, the NYSE Arca Oil Index jumped by 1.8 percent and the Philadelphia Oil Service Index climbed by 1.3 percent.
Considerable strength was also visible among chemical stocks, as reflected by the 1.3 percent gain posted by the S&P Chemical Sector Index.
Praxair (PX) led the chemical sector higher after Chinese regulators approved the company’s proposed merger with Linde AG.
On the other hand, networking stocks came under pressure on the day, dragging the NYSE Arca Networking Index down by 2.5 percent.
By Adedapo Adesanya
Nigerian energy giant, Oando Plc, says it is reporting rising revenues as global crude buyers increasingly turn away from the volatile Middle East in search of safer supply sources.
According to the chief executive of Oando, Mr Wale Tinubu, the crisis around the Strait of Hormuz has damaged the Gulf region’s long-standing reputation as the world’s safest and most reliable oil-producing hub, leading to demand elsewhere.
Speaking in a recent interview on the sidelines of the Africa CEO Forum in Kigali, Rwanda, Mr Tinubu disclosed that Oando is already benefiting financially from the geopolitical tensions.
“We are certainly getting a windfall increase in our revenues,” Mr Tinubu said.
According to him, mounting security concerns around the Strait of Hormuz have forced buyers to reconsider their dependence on Middle Eastern crude. The waterway accounts for around 20 per cent of global crude and liquified natural gas (LNG) flows, mostly to Asian markets.
“The Middle Eastern premium you got from being a stable environment to produce hydrocarbons has been shattered,” he added.
The conflict is rapidly reshaping global energy trade flows, with African producers, particularly Nigeria, emerging as alternative suppliers at a time of heightened uncertainty in the Gulf.
Indonesia recently took in some Nigeria crude to cushion against the impact that disruptions are having on fuel supplies.
Mr Tinubu said Oando is rolling out a seven-well drilling campaign aiming to add 10,000 barrels per day by the end of the year.
Oando is also looking to raise up to $750 million to execute a 100-well onshore drilling campaign, aiming to triple its oil and gas output from 32,000 barrels of oil equivalent per day to nearly 100,000 barrels of oil equivalent per day.
According to Mr Tinubu, global supply shocks have created highly favourable conditions for securing financing and expanding operations to meet supply gaps.
By Adedapo Adesanya
Nigerian billionaire investor, Mr Femi Otedola, has announced plans to invest $100 million in the Dangote Refinery, which plans to list later this year.
Mr Otedola disclosed this on Wednesday after leading a delegation of top executives from First HoldCo on a visit to the Dangote refinery.
“On a personal note, I’ve appealed to him (Aliko Dangote). I’ve been here with him 25 times, so my compensation is he’s going to allocate to me shares worth $100 million in the private placement,” the billionaire said.
Mr Otedola had previously denied that he had any stake or funded the construction of a 650,000 barrels per day facility.
The announcement marks his next big move after increasing his stake in First Holdco as well as buying a $10 million property in London.
Mr Dangote last year said the refinery could sell up to 10 per cent stake in the listing, which is valued at about $5 billion. It is aiming for a valuation of up to $50 billion for Dangote refinery.
The billionaire is planning to make the IPO a cross-border listing to enable the refinery to draw investments from domestic and international investors.
Mr Dangote, this week, said the IPO is designed to democratise wealth creation and give Africans direct access to participate in the continent’s industrial transformation.
On his part, Mr Dangote, president of the Dangote Group, says the company is targeting a private placement of about $2 billion for the refinery.
While the actual date for the IPO is yet to be announced, Mr Otedola’s early investment indicates value and could spur other high-net-worth individuals to show interest.
Mr Otedola, an ally of Mr Dangote, led top executives of First HoldCo on a tour of the refinery and the fertiliser plants in the Lekki free trade zone area.
The team also visited key project sites such as the jetty, a facility built by Dangote industries to receive large vessels.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange further chalked up 0.32 per cent on Wednesday, May 20, spurred by price appreciation in 11 Plc, and Central Securities and Clearing System (CSCS) Plc.
11 Plc, which used to be known as Mobil, added N22.11 to sell at N243.21 per unit compared with the previous day’s N221.10 per unit, and CSCS Plc gained N1.19 to trade at N71.81 per share versus Tuesday’s N70.62 per share.
The growth posted by the duo raised the market capitalisation by N8.04 billion to N2.495 trillion from N2.487 trillion, and lifted the NASD Unlisted Security Index (NSI) by 13.44 points to 4,171.19 points from 4,157.75 points.
Yesterday, there were two price losers, led by Nipco Plc, which shed N22.60 to close at N287.00 per unit compared with the preceding day’s N309.60 per unit, and FrieslandCampina Wamco, which lost 84 Kobo to sell for N150.95 per share, in contrast to the N151.79 per share it was traded a day earlier.
The volume of trades recorded at midweek dipped by 99.9 per cent to 2.3 million units from 1.9 billion units, the value of transactions fell by 93.7 per cent to N334.2 million from the preceding session’s N5.3 billion, and the number of deals went down by 43.3 per cent to 34 deals from 60 deals.
Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis, with 3.4 billion units worth N8.4 billion, trailed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion sold for N6.5 billion, and CSCS Plc with 60.9 million units exchanged for N4.1 billion.
GNI Plc also closed the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units valued at N6.5 billion, and Resourcery Plc with 1.1 billion units traded for N415.7 million.
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