Economy

Optimism About More Dovish Fed May Generate Buying Interest

Published

6 years ago

19/12/2018

By Investors Hub

The major U.S. index futures are pointing to a higher opening on Wednesday, with stocks likely to add to the gains posted in yesterday?s volatile session.

Traders may once again look to pick up stocks at reduced levels after the markets were unable to sustain the initial upward move in the previous session.

The major averages managed to end Tuesday?s trading in positive territory, although many sectors extended recent sell-offs.

The markets may also benefit from optimism the Federal Reserve will strike a more dovish tone in its announcement of its latest monetary policy decision this afternoon.

The Fed is widely expected to raise interest rates by a quarter point, but traders will closely scrutinize the central bank?s accompanying statement and forecasts for clues about future rate hikes.

Ahead of the announcement, President Donald Trump has been urging the Fed to refrain from its gradual pace of raising rates.

?Don?t let the market become any more illiquid than it already is,? Trump told the Fed in a post on Twitter on Tuesday. ?Stop with the 50 B’s. Feel the market, don’t just go by meaningless numbers. Good luck!?

While the Fed will not want to be seen as bowing to political pressure, the central bank may still signal a slower pace of rate hikes due to recent disappointing economic data, low inflation, and concerns about the ongoing trade dispute between the U.S. and China.

After failing to sustain an early move to the upside, stocks continued to experience substantial volatility over the course of the trading day on Tuesday. The major averages fluctuated wildly as the day progressed before closing in positive territory.

The S&P 500 hit its lowest intraday level in over a year but ended the up just 0.22 points or less than a tenth of a percent at 2,546.16. The Dow rose 82.66 points or 0.4 percent to 23,675.64 and the Nasdaq climbed 30.18 points or 0.5 percent to 6,783.91.

The initial strength on Wall Street was partly due to bargain hunting, with traders picking up stocks at reduced levels on the heels of the sharp drop seen over the two previous sessions.

The pullback seen Monday afternoon pulled the Dow down to its lowest closing level in over eight months, while the Nasdaq and the S&P 500 dropped to their lowest closing levels in over a year.

The subsequent volatility came as traders remained on edge ahead of the Federal Reserve’s monetary policy announcement.

On the U.S. economic front, the Commerce Department released a report showing a substantial increase in U.S. housing starts in November, as a spike in multi-family starts more than offset a continued drop in single-family starts.

The Commerce Department said housing starts jumped by 3.2 percent to an annual rate of 1.256 million in November from the revised October estimate of 1.217 million.

Economists had expected housing starts to edge down to a rate of 1.225 million from the 1.228 million originally reported for the previous month.

The report also said building permits surged up by 5.0 percent to an annual rate of 1.328 million in November from the revised October rate of 1.265 million.

Building permits, an indicator of future housing demand, had been expected to dip to a rate of 1.259 million from the 1.263 million originally reported for October.

Gold stocks showed a substantial move to the upside over the course of the session, driving the NYSE Arca Gold Bugs Index up by 2.3 percent. With the jump, the index reached a four-month closing high.

The rally by gold stocks came amid a modest increase by the price of the precious metal, with gold for February delivery rising $1.80 to $1,253.60 an ounce.

Housing stocks also saw considerable strength on the heels of the housing starts data, moving notably higher along with computer hardware and semiconductor stocks.

On the other hand, energy stocks moved sharply lower amid a steep drop by the price of crude oil. Crude for January delivery plunged $3.64 to a fifteen-month closing low of $46.24 a barrel amid concerns about oversupply.

Oil service stocks turned in some of the energy sector’s worst performances, dragging the Philadelphia Oil Service Index down by 2.7 percent to its lowest closing level in fifteen years.

Tobacco stocks also extended a recent sell-off, while considerable weakness also emerged among biotechnology and banking stocks.

Economy

Aradel Holdings Acquires Equity Stake in Chappal Energies

Published

3 hours ago

11/12/2024

Aduragbemi Omiyale

By Aduragbemi Omiyale

A minority equity stake in Chappal Energies Mauritius Limited has been acquired by a Nigerian energy firm, Aradel Holdings Plc.

This deal came a few days after Chappal Energies purchased a 53.85 per cent equity stake in Equinor Nigeria Energy Company Limited (ENEC).

Chappal Energies went into the deal with Equinor to take part in the oil and gas lease OML 128, including the unitised 20.21 per cent stake in the Agbami oil field, operated by Chevron.

Since production started in 2008, the Agbami field has produced more than one billion barrels of oil, creating value for Nigerian society and various stakeholders.

As part of the deal, Chappal will assume the operatorship of OML 129, which includes several significant prospects and undeveloped discoveries (Nnwa, Bilah and Sehki).

The Nnwa discovery is part of the giant Nnwa-Doro field, a major gas resource with significant potential to deliver value for Nigeria.

In a separate transaction, on July 17, 2024, Chappal and Total Energies sealed an SPA for the acquisition by Chappal of 10 per cent of the SPDC JV.

The relevant parties to this transaction are working towards closing out this transaction and Ministerial Approval and NNPC consent to accede to the Joint Operating Agreement have been obtained.

“This acquisition is in line with diversifying our asset base, deepening our gas competencies and gaining access to offshore basins using low-risk approaches.

“We recognise the strategic role of gas in Nigeria’s energy future and are happy to expand our equity holding in this critical resource.

“We are committed to the cause of developing the significant value inherent in the assets, which will be extremely beneficial to the country.

“Aradel hopes to bring its proven execution competencies to bear in supporting Chappal’s development of these opportunities,” the chief executive of Aradel Holdings, Mr Adegbite Falade, stated.

Economy

Afriland Properties Lifts NASD OTC Securities Exchange by 0.04%

Published

7 hours ago

11/12/2024

Adedapo Adesanya

By Adedapo Adesanya

Afriland Properties Plc helped the NASD Over-the-Counter (OTC) Securities Exchange record a 0.04 per cent gain on Tuesday, December 10 as the share price of the property investment rose by 34 Kobo to N16.94 per unit from the preceding day’s N16.60 per unit.

As a result of this, the market capitalisation of the bourse went up by N380 million to remain relatively unchanged at N1.056 trillion like the previous trading day.

But the NASD Unlisted Security Index (NSI) closed higher at 3,014.36 points after it recorded an addition of 1.09 points to Monday’s closing value of 3,013.27 points.

The NASD OTC securities exchange recorded a price loser and it was Geo-Fluids Plc, which went down by 2 Kobo to close at N3.93 per share, in contrast to the preceding day’s N3.95 per share.

During the trading session, the volume of securities bought and sold by investors increased by 95.8 per cent to 2.4 million units from the 1.2 million securities traded in the preceding session.

However, the value of shares traded yesterday slumped by 3.7 per cent to N4.9 million from the N5.07 million recorded a day earlier, as the number of deals surged by 27.3 per cent to 14 deals from 11 deals.

Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units sold for N3.9 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units worth N5.3 million.

Also, Aradel Holdings Plc remained the most active stock by value (year-to-date) with 108.7 million units worth N89.2 billion, followed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units sold for N5.3 billion.

Economy

Naira Trades N1,542/$1 as FX Speculators Dump Dollars in Panic

Published

7 hours ago

11/12/2024

Adedapo Adesanya

By Adedapo Adesanya

The Naira continued to appreciate on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM), gaining 0.7 per cent or N10.23 on Tuesday, December 10 to trade at N1,542.27/$1 compared with the preceding day’s N1,552.50/$1.

The Central Bank of Nigeria (CBN)-backed Electronic Foreign Exchange Matching System (EFEMS) platform introduced to tackle speculation and improve transparency in Nigeria’s FX market has been attributed as the source of the Naira’s appreciation.

Speculators holding foreign currencies, particularly the US Dollar, have seen the value of their money drastically drop due to the appreciation of the local currency. This is forcing them to dump greenback into the system and take the domestic currency alternative- a move that has seen available FX increase.

Equally, the domestic currency improved its value against the Pound Sterling in the official market during the trading day by N6.81 to sell for N1,955.12/£1 compared with Monday’s closing price of N1,961.93/£1 and against the Euro, it gained N10.84 to close at N1,613.00/€1, in contrast to the previous day’s rate of N1,623.84/€1.

Data from the FMDQ Securities Exchange showed that the value of forex transactions significantly increased yesterday by $228.85 million or 257.2 per cent to $401.17 million from the preceding session’s $112.32 million.

However, in the parallel market, the Nigerian currency weakened against the US Dollar on Tuesday by N5 to settle at N1,625/$1 compared with the previous day’s value of N1,620/$1.

In the cryptocurrency market, Dogecoin (DOGE) lost 4.8 per cent to sell at $0.39116, Litecoin (LTC) depreciated by 3.3 per cent to trade at $110.25, Binance Coin (BNB) went south by 2.3 per cent to $681.44, Ethereum (ETH) dropped 1.6 per cent to finish at $3,671.08, and Cardano (ADA) slid by 0.5 per cent to $0.8837

Conversely, Ripple (XRP) jumped by 5.4 per cent to $2.23 amid a continued shift for the coin with its parent company seeing the benefits of a crypto-friendly regulatory environment for US-based companies.

XRP is closely related to Ripple Labs, a high-profile payments company targeted by the SEC in 2020 on allegations of selling the token as a security to U.S. investors. Ripple fully cleared a long-drawn court case in 2024.

Further, Solana (SOL) expanded by 0.8 per cent to $219.75, Bitcoin (BTC) grew by 0.4 per cent to $97,446.95, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.