Economy
Upbeat Jobs Data May Generate Continued Buying Interest
By Investors Hub
Major US index futures are pointing to a higher opening on Monday, with stocks likely to add to the modest gains posted last Friday. The markets may continue to benefit from positive sentiment generated by the Labor Department’s upbeat monthly jobs report.
Overall trading activity may be somewhat subdued, however, with a lack of major US economic data keeping some traders on the sidelines.
Following the release of better than expected employment data, stocks saw modest strength during trading on Friday. While buying interest was somewhat subdued, the Dow still reached another new record closing high.
The major averages ended the day modestly higher. The Dow rose 66.71 points or 0.3 percent to 22,092.81, the Nasdaq edged up 11.22 points or 0.2 percent to 6,351.56 and the S&P 500 crept up 4.67 points or 0.2 percent to 2,476.83.
For the week, the major averages turned in a mixed performance. The Nasdaq fell by 0.4 percent, while the S&P 500 rose by 0.2 percent and the Dow jumped by 1.2 percent.
The modest strength on Wall Street came after a closely watched Labor Department report showed employment in the U.S. jumped by much more than anticipated in the month of July.
The Labor Department said non-farm payroll employment surged up by 209,000 jobs in July after spiking by an upwardly revised 231,000 jobs in June.
Economists had expected employment to climb by 183,000 jobs compared to the addition of 222,000 jobs originally reported for the previous month.
With the stronger than expected job growth, the unemployment rate edged down to 4.3 percent in July from 4.4 percent in June. The modest decrease matched economist estimates.
The report also said average hourly employee earnings were up by 2.5 percent year-over-year in July, unchanged from the previous month.
The data generated optimism about the economic outlook, although it also raised concerns about the possibility of future interest rate hikes.
“Following the disappointing ISM surveys for July, released earlier this week, this employment report provides reassurance that the real economy remained solid at the start of the third quarter,” said Michael Pearce, U.S. economist at Capital Economics.
He added, “If the labor market continues to tighten over the coming months, as the survey evidence suggests it will, the Fed will press ahead with rate hikes and balance sheet normalization later this year.”
A separate report from the Commerce Department showed the trade deficit narrowed more than expected in June amid rising exports and falling imports.
The report said the trade deficit narrowed to $43.6 billion in June from $46.4 billion in May. Economists had expected the deficit to narrow to $45.0 billion.
After falling sharply over the past few sessions, natural gas stocks showed a strong move back to the upside on the day. The NYSE Arca Natural Gas Index jumped by 1.8 percent after ending Thursday’s trading at its lowest closing level in over a month.
Considerable strength was also visible among trucking stocks, as reflected by the 1.9 percent gain posted by the Dow Jones Trucking Index. YRC Worldwide (YRCW) led the sector higher after reporting its second quarter results.
Steel, financial, and telecom stocks also saw some strength on the day, although buying interest was somewhat subdued.
On the other hand, gold stocks came under significant selling pressure on the day, dragging the NYSE Arca Gold Bugs Index down by 1.6 percent. The weakness among gold stocks came amid a notable decrease by the price of the precious metal.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange extended its stay in the south for the fourth consecutive session after it shed 1.18 per cent on Friday, March 13.
The unlisted securities market recorded a loss despite closing without a price decliner, and ending with two price gainers led by Geo Fluids Plc, which gained 1o Kobo to sell at N3.10 per share compared with the previous day’s N3.00 per share. Industrial and General Insurance (IGI) Plc appreciated during the session by 2 Kobo to trade at 54 Kobo per unit versus Thursday’s closing price of 52 Kobo per unit.
When the market closed for the day, the market capitalisation lost N29.83 billion to close at N2.489 trillion compared with the N2.519 trillion it finished a day earlier, and the NASD Unlisted Security Index (NSI) crashed by 49.84 points to 4,160.46 points from 4,210.31 points.
Market activity improved yesterday, as the volume of transactions rose 179.5 per cent to 10.4 million units from 3.7 million units, but the value of trades declined by 68.4 per cent to N29.9 million from N95.0 million, while the number of deals weakened by 11.5 per cent to 46 deals from 52 deals.
Central Securities Clearing Systems (CSCS) Plc remained the most active stock by value on a year-to-date basis with 38.4 million units worth N2.4 billion, Okitipupa Plc followed with 6.4 million units traded at N1.1 billion, and FrieslandCampina Wamco Nigeria Plc transacted 6.3 million units for N584.3 million.
Resourcery Plc ended the trading session as the most traded stock by volume on a year-to-date basis with 1.1 billion units valued at N415.6 million, trailed by Geo-Fluids Plc with 130.8 million units valued at N504.5 million, and CSCS Plc with 38.4 million units worth N2.4 billion.
By Adedapo Adesanya
The Naira continued to claw back some gains against the Dollar in the different segments of the foreign exchange (FX) market, as its value was strengthened on Friday.
In the black market, it gained N10 against the United States Dollar yesterday to close at N1,400/$1 compared with the preceding day’s rate of N1,410/$1, and at the GTBank forex counter, it chalked up N6 to close at N1,385/$1, in contrast to the N1,391/$1 it was traded a day earlier.
Similarly, in the Nigerian Autonomous Foreign Exchange Market (NAFEX), it appreciated against the greenback during the session by N5.28 or 0.38 per cent to quote at N1,366.23/$1 versus Thursday’s closing price of N1,371.51/$1.
It also improved its value against the Pound Sterling in the official market on Friday by N21.81 to settle at N1,812.99/£1 compared with the previous day’s N1,834.80/£1, and gained N13.86 against the Euro to sell at N1,568.03/€1 versus N1,581.89/€1.
Pressure eased further on the FX market as the Central Bank of Nigeria (CBN) continued interventionist operations this week, selling Dollars to banks to boost liquidity after a $500 million boost last week.
This was complemented by inflows from foreign investors, exporters and non-bank corporates, among others, while Nigeria’s gross external reserves remained above $50 billion, the highest since 2009.
The Governor of the apex bank, Mr Yemi Cardoso, also eased fears of a Naira devaluation, saying the country’s financial system has been strengthened by reforms.
Regardless, external pressure looms as the US Dollar strengthened globally due to its war with Iran, now ongoing for three weeks.
Meanwhile, the cryptocurrency market was largely down as traders and investors continue to align with current realities.
The market is adapting to the conflict in real time. Early in the war, every headline produced an outsized reaction because nobody could price the tail risk. Now, traders have a framework where strikes happen, oil spikes and bitcoin dips only to recover again.
Cardano (ADA) depreciated by 3.8 per cent to $0.2623, Dogecoin (DOGE) lost 1.7 per cent to finish at $0.0948, Ripple (XRP) slumped 1.5 per cent to $1.39, Solana (SOL) dropped 1.4 per cent to sell for $87.33, Binance Coin (BNB) went down by 1.3 per cent to $653.58, Bitcoin (BTC) declined by 1.1 per cent to $70,670.63, and Ethereum (ETH) decreased by 0.9 per cent to $2,078.78.
However, TRON (TRX) appreciated by 1.7 per cent to $0.2941, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
By Adedapo Adesanya
The price of the major crude oil grade, Brent crude oil, closed above $100 on Friday for the second consecutive session, as the Iran war heads toward its third week, with oil tanker traffic through the Strait of Hormuz still effectively at a standstill.
It gained 2.67 per cent or $2.68 during the trading day to close at $103.14 per barrel, while the US West Texas Intermediate (WTI) crude oil grade appreciated by 3.11 per cent or $2.98 to settle at $98.71 per barrel.
Brent futures were up about 10 per cent for the week following the 27 per cent rise seen last week, which marked the biggest weekly gain in oil prices since the COVID-19 pandemic in 2020. WTI futures, which saw their best week since 1983 last week, ended the week more than 8 per cent higher.
US President Donald Trump said American forces launched a major bombing raid on Iran’s strategic Kharg Island, targeting military facilities on the key Persian Gulf outpost while warning Iran that its vital oil infrastructure could be destroyed if shipping in the Strait of Hormuz is disrupted.
The terminal accounts for roughly 90 per cent of Iranian crude shipments, loading millions of barrels per day onto tankers bound largely for Asian markets.
The US and Israel’s strikes in the conflict have largely targeted Iranian military and nuclear infrastructure. Oil facilities elsewhere in Iran have been hit, but Kharg’s massive storage tanks, jetties, and pipelines had remained untouched until the latest strike.
Iran’s new supreme leader, Mojtaba Khamenei, vowed to keep fighting in a message delivered via state television.
There have been a number of attacks on foreign ships in or near the Strait, feeding into concerns that a prolonged war could translate to a global economic shock.
Prices are rising despite the US and its allies rolling out some measures to keep a lid on energy costs.
The International Energy Agency (IEA) has agreed to release 400 million stockpiled barrels, the largest such action in history.
The US has issued a 30-day waiver for India to purchase sanctioned oil from Russia. President Donald Trump is considering loosening rules under the Jones Act that require American ships to transport goods between domestic ports, including oil and gas, in an effort to lower costs.
Traders are continuing to monitor developments in the Middle East.
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