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Economy

Oil Tumbles as US Hikes Interest Rate

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crude oil market

By Adedapo Adesanya

Oil depreciated on Wednesday after the United States Federal Reserve delivered another hefty rate hike to quell inflation, but indications show this may also reduce economic activity.

Brent futures fell 54 cents or 0.6 per cent to $90.08 a barrel, while the US West Texas Intermediate (WTI) crude fell 71 cents or 0.9 per cent to $83.23 per barrel.

The US Fed raised its target interest rate by three-quarters of a percentage point to a range of 3.00-3.25 per cent and signalled more big increases ahead, causing crude oil to tumble.

In its quest to bring down inflation running near its highest levels since the early 1980s, the US central bank took its federal funds rate up to the range, which is the highest it has been since early 2008, following the third consecutive 0.75 percentage point move.

The increases started in March and from the point of near-zero mark the most aggressive US Fed tightening since it started using the overnight fund rate as its principal policy tool in 1990. The only comparison was in 1994 when the Fed hiked a total of 2.25 percentage points; it would begin cutting rates by July of the following year.

Along with the massive rate increases, Fed officials signalled to continue to hike until the funds level hits a “terminal rate,” or end point of 4.6 per cent in 2023. That implies a quarter-point rate hike next year but no decreases.

This was worsened as the US Energy Information Administration (EIA) reported a crude oil inventory build of 1.1 million barrels for the week to September 16.

For the previous week, the EIA had estimated an inventory build of a considerable 8.8 million barrels. A day before this week’s EIA report, the American Petroleum Institute (API) estimated a crude oil stock build of just over 1 million barrels, with builds estimated in fuels.

The EIA reported a build of 1.6 million barrels for gasoline (petrol) inventories, estimating production at some 9.5 million barrels per day last week. This is compared with an inventory draw of 1.8 million barrels for the previous week and a production rate of 9.5 million barrels per day.

The market will also be looking at the new turn in the Russian aggression in Ukraine as President Vladimir Putin reportedly rallied 300,000 reservists to fight in Ukraine and backed a plan to annex parts of the country, hinting he was prepared to use nuclear weapons.

US President Joe Biden has accused Russia of making “reckless” and “irresponsible” threats to use nuclear weapons.

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

Economy

Again, FrieslandCampina Pulls Down OTC Bourse by 0.23%

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OTC stock exchange

By Adedapo Adesanya

FrieslandCampina Wamco Nigeria Plc, for the second consecutive session, dragged the NASD Over-the-Counter (OTC) Securities Exchange down by 0.23 per cent on Wednesday, October 5.

This happened as the milk-producing company recorded a N1.15 loss to close the midweek session at N73.85 per unit compared with the previous day’s rate of N75.00 per unit.

Consequently, the market capitalisation of the OTC bourse went down by N2.25 billion to wrap the day at N960.50 billion, in contrast to Tuesday’s N962.75 billion.

Equally, the NASD unlisted securities index (NSI) recorded a drop of 1.71 points to wrap the session at 729.63 points compared with the preceding day’s 731.34 points.

The number of shares transacted during the session went up by 40.5 per cent to 41,217 units from the 29,331 units transacted on Tuesday, while the value of the shares depreciated by 4.1 per cent to N2.1 million from N2.2 million, with the number of deals carried out by investors rising by 225 per cent to 13 deals from the four deals executed in the previous session.

AG Mortgage Bank Plc ended the trading session as the most traded stock by volume on a year-to-date basis with a turnover of 2.3 billion units valued at N1.2 billion, CSCS Plc stood in second place with 687.7 million units worth N14.3 billion, and Mixta Real Estate Plc was in third place with 178.1 million units valued at N313.4 million.

Also, the most traded stock by value on a year-to-date basis was still CSCS Plc with the sale of 687.7 million units for N14.3 billion, VFD Group Plc was in second place with 27.7 million units worth N7.4 billion, and FrieslandCampina WAMCO Nigeria Plc was in third place with 14.4 million units valued at N1.7 billion

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Economy

Equity Market Falls 0.09% as Investors Lose N25bn

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equity market size

By Dipo Olowookere

Trading activities remained in the bearish region on Wednesday on the floor of the Nigerian Exchange (NGX) Limited despite the upbeat about the listing of Geregu Power Plc on the exchange.

The local equity market depreciated by 0.09 per cent yesterday as a result of the persistent profit-taking triggered by inflationary pressures as investors leave the market for other assets that can give them returns closer to the 20.52 per cent inflation rate.

When the market closed for the session, the All-Share Index (ASI) decreased by 43.04 points to 48,836.70 points from 48,879.74 points as the market capitalisation dwindled by N25 billion to N26.354 trillion from N26.379 trillion.

The industrial goods space remained flat for another trading day, while the insurance counter closed higher by 0.21 per cent, with the banking, energy and consumer goods sector depreciating by 0.98 per cent, 0.27 per cent and 0.18 per cent, respectively.

Cadbury Nigeria recorded the highest fall as its value went down by 9.93 per cent to N12.25, Northern Nigerian Flour Mill declined by 9.33 per cent to N6.80, PZ Cussons fell by 9.19 per cent to N8.40, Cornerstone Insurance retreated by 8.93 per cent to 51 Kobo, and Unity Bank lost 6.82 per cent to trade at 41 Kobo.

The highest price gainer for the midweek session was the new boy, Geregu Power, as its share value rose by 10.00 per cent to N110.00. Multiverse gained 9.88 per cent to sell for N4.45, Red Star Express appreciated by 9.43 per cent to N2.32, Sovereign Trust Insurance chalked up 8.00 per cent to quote at 27 Kobo, and Japaul garnered 7.69 per cent to settle at 28 Kobo.

The most active stock for the day was Chams, which sold 25.5 million units worth N7.4 million and was trailed by GTCO, which sold 19.5 million units valued at N341.0 million. Sterling Bank transacted 9.9 million shares for N15.2 million, Geregu Power traded 8.5 million equities worth N935.0 million, and Transcorp exchanged 7.2 million stocks for N7.5 million.

At the close of business, the market recorded the sale of 135.5 million stocks worth N2.2 billion in 4,041 deals compared with the 173.5 million stocks worth N2.4 billion traded in 4,926 deals on Tuesday, representing a decline in the trading volume, value and number of deals by 21.87 per cent, 7.12 per cent and 17.97 per cent, respectively.

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Economy

Naira Appreciates to N733/$1 at Black Market, Weakens to N437.50/$1 at I&E

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Bitcoin Naira

By Adedapo Adesanya

The exchange rate of the Naira to the American Dollar at the black market closed at N733/$1 at the black market, data obtained by Business Post from foreign exchange (forex) traders on the streets showed.

On the previous day, the Naira was exchanged with the United States currency at N740/$1, indicating that the local currency appreciated within 24 hours against its American counterpart by N7.

Also, in the Peer-to-Peer (P2P) segment of the FX market, the Naira appreciated against the US Dollar yesterday by N2 to close at N747/$1 in contrast to the previous day’s value of N749/$1.

However, in the Investors and Exporters (I&E) window of the market, the Nigerian currency depreciated against the greenback in the midweek session by 47 Kobo or 0.06 per cent to settle at N437.50/$1 compared with Tuesday’s value of N437.03/$1 as forex traders executed transactions valued at $70.42 million during the session.

In the same vein, the domestic currency suffered losses against the Pound Sterling and the Euro in the interbank segment of the market on Wednesday.

On the Pound Sterling, the indigenous currency lost N21.64 to trade at N491.52/£1 versus the previous day’s N469.88/£1 and against the Euro, it lost N9.16 to close at N429.91/€1 compared with Tuesday’s rate of N420.75/€1, according to data from the Central Bank of Nigeria (CBN).

Meanwhile, in the digital currency market, bullishness continued in Bitcoin (BTC) as the coin added 1.3 per cent toits value to trade at $20,386.63, with Ripple (XRP) recording a 5.4 per cent gain to sell at $0.5016.

Ethereum (ETH) appreciated by 1.8 per cent to sell at $1,376.18, Dogecoin (DOGE) gained 1.5 per cent to trade $0.0659, Solana (SOL) recorded a 1.1 per cent rise to sell at $34.41, Cardano (ADA) recorded a 0.7 per cent climb to quote at $0.4354, as Binance Coin (BNB) also recorded a 0.7 per cent appreciation to trade at $296.48.

However, Binance USD (BUSD) recorded a 0.05 per cent depreciation to settle at $0.9999, Litecoin (LTC) declined by 0.02 per cent to $54.80, while the US Dollar Tether (USDT) closed flat at $1.00.

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