Economy
Traders May Stick to Sidelines After Last Week’s Sell-Off
By Investors Hub
The major U.S. index futures are pointing to a roughly flat open on Monday following the sell-off seen on Wall Street last week.
Traders may look to pick up stocks at reduced levels, although concerns about the global economic outlook and skepticism about the potential for a long-term trade deal between the U.S. and China is likely to sap investors risk appetite.
Overall trading activity may be somewhat subdued, with a lack of major U.S. economic data likely to keep some traders on the sidelines.
The economic calendar remains relatively light throughout the week, although reports on producer and consumer price inflation, retail sales, and industrial production are likely to attract attention.
Traders may nonetheless remain reluctant to make significant moves ahead of the Federal Reserve?s monetary policy meeting next week.
With the Fed widely expected to raise interest rates by another quarter point, traders will closely scrutinize the accompanying statement for clues about future rate hikes.
Traders may look to pick up stocks at reduced levels on the heels of last week?s sell-off, which came amid skepticism about the potential for a long-term trade deal between the U.S. and China.
Overall trading activity may be somewhat subdued, however, with a lack of major U.S. economic data likely to keep some traders on the sidelines.
The economic calendar remains relatively light throughout the week, although reports on producer and consumer price inflation, retail sales, and industrial production are likely to attract attention.
Traders may nonetheless be reluctant to make significant moves ahead of the Federal Reserve?s monetary policy meeting next week.
With the Fed widely expected to raise interest rates by another quarter point, traders will closely scrutinize the accompanying statement for clues about future rate hikes.
After fluctuating early in the session, stocks moved sharply lower over the course of the trading day on Friday. The major averages showed a substantial move back to the downside following the rebound from early weakness seen on Thursday.
The major averages climbed off their worst levels going into the close but remained firmly negative. The Dow tumbled 558.72 points or 2.2 percent to 24,388.95, the Nasdaq plunged 219.01 points or 3.1 percent to 6,969.25 and the S&P 500 slumped 62.87 points or 2.3 percent to 2,633.08.
With the steep drop on the day, the major averages moved significantly lower for the week. The Nasdaq nosedived by 4.9 percent, while the Dow and the S&P 500 plummeted by 4.5 percent and 4.6 percent, respectively.
The sell-off on Wall Street came after the Labor Department’s closely watched monthly jobs report showed U.S. employment increased by much less than expected in the month of November.
The Labor Department said non-farm payroll employment rose by 155,000 jobs in November after surging up by a downwardly revised 237,000 jobs in October.
Economists had expected employment to climb by about 200,000 jobs compared to the jump of 250,000 jobs originally reported for the previous month.
Meanwhile, the report said the unemployment rate in November remained unchanged for the second straight month at 3.7 percent, holding at its lowest level since hitting 3.5 percent in December of 1969.
Average hourly employee earnings rose by $0.06 to $27.35 in November, reflecting a 3.1 percent increase compared to the same month a year ago. The annual rate of growth was unchanged from October.
“The slightly more modest 155,000 gain in payroll employment in November may not go down well in markets given the heightened nervousness in recent months,” said Paul Ashworth, Chief U.S. Economist at Capital Economics.
“But this is still a solid gain that suggests economic growth is gradually slowing back towards its potential pace,” he added. “There is nothing here to suggest the economy is suffering a more sudden downturn.”
Lingering skepticism about a U.S.-China trade agreement also weighed on the markets even though President Donald Trump tweeted, “China talks are going very well!”
Most of the major sectors showed notable moves to the downside over the course of the session, reflecting a broad based sell-off on Wall Street.
Computer hardware stocks showed a particularly steep drop on the day, dragging the NYSE Arca Computer Hardware Index down by 4.1 percent to a nearly two-year closing low.
Tech giant IBM Corp. (IBM) posted a significant loss after agreeing to sell some of its software products to India-based HCL Technologies for $1.8 billion.
Substantial weakness was also visible among transportation stocks, as reflected by the 3.9 percent nosedive by the Dow Jones Transpiration Average. The average tumbled to its lowest closing level in well over a month.
Semiconductor, software,
biotechnology, and retail stocks also saw considerable weakness, while
gold stocks were among the few groups to buck the downtrend amid an
increase by the price of the precious metal.
By Adedapo Adesanya
The Naira depreciated further against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, December 5, as FX demand pressure mounts.
The Nigerian currency lost N2.60 or 0.18 per cent against the greenback to close at N1,450.43/$1 compared with the previous day’s N1,447.83/$1.
Equally, the domestic currency declined against the Pound Sterling in the official forex market during the session by N4.48 to trade at N1,935.45/£1, in contrast to Thursday’s closing price of N1,930.97/£1 and shrank against the Euro by 43 Kobo to end at N1,689.17/€1 versus the preceding session’s rate of N1,688.74/€1.
Similarly, the local currency performed badly against the US Dollar at the GTBank FX counter by N2 to close at N1,455/$1 versus Thursday’s N1,453/$1 but traded flat at the parallel market at N14.65/$1.
As the country gets into the festive period, pressure mounted on the local currency reflecting higher foreign payments and lower FX inflows.
However, there are expectations that the Nigerian currency will be stable, supported by interventions by to the Central Bank of Nigeria (CBN) in the face of steady dollar Demand and inflows from Detty December festivities that will give the Naira a boost after it depreciated mildly last month.
Traders cited by Reuters expect that the Naira will trade within a band of N1,443-N1,450/$1 next week, buoyed by improved FX interventions by the apex bank.
As for the crypto market, it was down yesterday due to profit-taking associated with year-end trading. However, the December 1-Year Consumer Inflation Expectation by the University of Michigan fell to 4.1 per cent from 4.5 per cent previously and 4.5 per cent expected. The 5-Year Consumer Inflation Expectation fell to 3.2 per cent from 3.4 per cent previously and 3.4 per cent expected.
With the dearth of official economic data of late, these private surveys have taken on a new level of significance and the market banks of them to make decisions.
Cardano (ADA) depreciated by 5.7 per cent to $0.4142, Dogecoin (DOGE) slid by 5.1 per cent to $0.1394, Ethereum (ETH) dropped by 3.9 per cent to $3,039.75, Solana (SOL) declined by 3.8 per cent to $133.24, and Litecoin (LTC) fell by 3.7 per cent to $80.59.
Further, Bitcoin (BTC) went down by 2.6 per cent to sell at $89,683.72, Binance Coin (BNB) slumped by 2.2 per cent to $883.59, and Ripple (XRP) shrank by 2.1 per cent to $2.04, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Adedapo Adesanya
The oil market was up on Friday on increasing expectations the US Federal Reserve will cut interest rates next week, which could boost economic growth and energy demand.
Brent futures rose by 49 cents or 0.8 per cent to $63.75 per barrel and the US West Texas Intermediate (WTI) futures expanded by 41 cents or 0.7 per cent to $60.08 per barrel.
Investors digested a US inflation report and recalibrated expectations for the Federal Reserve to reduce rates at its December 9-10 meeting.
US consumer spending increased moderately in September after three straight months of solid gains, suggesting a loss of momentum in the economy at the end of the third quarter as a lackluster labor market and the rising cost of living curbed demand.
Traders have been pricing in an 87 per cent chance that the US central bank will lower borrowing costs by 25 basis points next week, according to CME Group’s FedWatch Tool.
Investors also focused on news from Russia and Venezuela to determine whether oil supplies from the two sanctioned members of the Organisation of the Petroleum Exporting Countries and allies (OPEC+) will increase or decrease in the future.
The failure of US talks in Moscow to achieve any significant breakthrough over the war in Ukraine has helped to boost oil prices so far this week.
A loss of Venezuelan oil production in case of a US military intervention will materially impact global benchmark prices as the market will have to replace Venezuela’s heavy crude.
Venezuela is estimated to pump about 1.1 million barrels per day of crude oil at present, so if the US-Venezuela tension escalation into an invasion in the South American country, this volume of crude would be at risk.
Reuters reported that the Group of Seven countries and the European Union are in talks to replace a price cap on Russian oil exports with a full maritime services ban in a bid to reduce the oil revenue that helps finance Russia’s war in Ukraine.
Any deal that could lift sanctions on Russia, the world’s second-biggest crude producer after the US, could increase the amount of oil available to global markets, weakening prices.
By Adedapo Adesanya
The United Kingdom via the British High Commission in Abuja has launched two flagship economic reform programmes – the Nigeria Economic Stability & Transformation (NEST) programme and the Nigeria Public Finance Facility (NPFF) -as part of efforts to support Nigeria’s economic reform and growth agenda.
Backed by a £12.4 million UK investment, NEST and NPFF sit at the centre of the UK-Nigeria mutual growth partnership and support Nigeria’s efforts to strengthen macroeconomic stability, improve fiscal resilience, and create a more competitive environment for investment and private-sector growth.
Speaking at the launch, Cynthia Rowe, Head of Development Cooperation at the British High Commission in Abuja, said, “These two programmes sit at the heart of our economic development cooperation with Nigeria. They reflect a shared commitment to strengthening the fundamentals that matter most for our stability, confidence, and long-term growth.”
The launch followed the inaugural meeting of the Joint UK-Nigeria Steering Committee, which endorsed the approach of both programmes and confirmed strong alignment between the UK and Nigeria on priority areas for delivery.
Representing the Government of Nigeria, Special Adviser to the President of Nigeria on Finance and the Economy, Mrs Sanyade Okoli, welcomed the collaboration, touting it as crucial to current, critical reforms.
“We welcome the United Kingdom’s support through these new programmes as a strong demonstration of our shared commitment to Nigeria’s economic stability and long-term prosperity. At a time when we are implementing critical reforms to strengthen fiscal resilience, improve macroeconomic stability, and unlock inclusive growth, this partnership will provide valuable technical support. Together, we are laying the foundation for a more resilient economy that delivers sustainable development and improved livelihoods for all Nigerians.”
On his part, Mr Jonny Baxter, British Deputy High Commissioner in Lagos, highlighted the significance of the programmes within the wider UK-Nigeria mutual growth partnership.
“NEST and NPFF are central to our shared approach to strengthening the foundations that underpin long-term economic prosperity. They sit firmly within the UK-Nigeria mutual growth partnership.”
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