Economy
US Shares Open Lower on Global Economic Concerns
By Investors Hub
The major U.S. index futures are pointing to a lower opening on Tuesday, with stocks likely to give back ground following the rally seen last week.
Concerns about the global economy are likely to weigh on the markets after the International Monetary Fund said the global expansion is weakening at a rate that is somewhat faster than expected.
The IMF lowered its forecasts for global economic growth to 3.5 percent in 2019 and 3.6 percent in 2020, 0.2 and 0.1 percentage points below last October?s projections.
An escalation of trade tensions and a worsening of financial conditions are key sources of risk to the outlook, the IMF said.
The IMF also expressed concerns about a bigger than expected slowdown in Chinese growth, the Brexit cliffhanger, and the ongoing U.S. government shutdown.
In remarks at the World Economic Forum in Davos, Switzerland, on Monday, IMF Managing Director Christine Lagarde noted risks to the global economy are increasingly intertwined.
?Think of how higher tariffs and rising uncertainty over future trade policy fed into lower asset prices and higher market volatility,? Lagarde said. ?This in turn contributed to tightening financial conditions, including for advanced economies, which is a major risk factor in a world of high debt burdens. ?
?Does that mean that a global recession is around the corner? The answer is ?no,?? she added. ?But the risk of a sharper decline in global growth has certainly increased.?
Extending the upward trend seen over the past several sessions, stocks moved sharply higher during the trading day on Friday. With the continued advance, the major averages reached their best closing levels in well over a month.
The major averages ended the day firmly in positive territory. The Dow soared 336.25 points or 1.4 percent to 24,706.35, the Nasdaq jumped 72.76 points or 1 percent to 7,157.23 and the S&P 500 surged up 34.75 points or 1.3 percent to 2,670.71.
Reflecting the four-day winning streak, the major averages moved substantially higher for the week. The Dow spiked by 3 percent, while the Nasdaq and the S&P 500 shot up by 2.7 percent and 2.9 percent, respectively.
The rally on Wall Street comes as traders continued to express optimism about trade talks between the U.S. and China.
Adding to the positive sentiment, a report from Bloomberg News said China has offered to go on a six-year buying spree to ramp up imports from the U.S.
An official familiar with the negotiations told Bloomberg that China would seek to reduce its trade surplus with the U.S. by increasing annual goods imports by a combined value of more than $1 trillion.
The Bloomberg report came on the heels of yesterday’s Wall Street Journal report indicating the U.S. is considering lifting tariffs on Chinese goods.
The Wall Street Journal report on Thursday said the U.S. is weighing easing tariffs in an effort to calm markets and give China an incentive to make deeper concessions.
People close to internal deliberations told the Journal that Treasury Secretary Steven Mnuchin proposed the idea of lifting some or all tariffs in a series of strategy meetings.
The people said the aim of easing the tariffs is to advance trade talks and win China’s support for longer-term reforms.
The positive news on trade overshadowed a report from the University of Michigan showing a substantial deterioration in U.S. consumer sentiment in the month of January.
The preliminary report said the consumer sentiment index plummeted to 90.7 in January from the final December reading of 98.3. Economists had expected the index to dip to 97.0.
With the much steeper than expected drop, the consumer sentiment index tumbled to its lowest level since hitting 87.2 in October of 2016.
“Consumer sentiment declined in early January to its lowest level since Trump was elected,” said Surveys of Consumers chief economist Richard Curtin. “The decline was primarily focused on prospects for the domestic economy, with the year-ahead outlook for the national economy judged the worst since mid 2014.”
He added, “The loss was due to a host of issues including the partial government shutdown, the impact of tariffs, instabilities in financial markets, the global slowdown, and the lack of clarity about monetary policies.”
Meanwhile, a separate report from the Federal Reserve showed industrial production increased by slightly more than expected in December, as jumps in manufacturing and mining output more than offset a sharp pullback in utilities output.
The Fed said industrial production rose by 0.3 percent in December after climbing by a downwardly revised 0.4 percent in November.
Economists had expected industrial production to edge up by 0.2 percent compared to the 0.6 percent advance originally reported for the previous month.
Oil service stocks moved sharply higher over the course of the trading session, driving the Philadelphia Oil Service Index up by 3.8 percent to its best intraday level in well over a month. The rally by oil service stocks came amid a significant increase by the price of crude oil.
Substantial strength was also visible among transportation stocks, as reflected by the 2.6 percent spike by the Dow Jones Transportation Average.
Trucking company J.B. Hunt Transport Services (JBHT) posted a standout gain after reporting better than expected fourth quarter results.
Computer hardware stocks also showed a significant move to the upside, resulting in a 2.6 percent jump by the NYSE Arca Computer Hardware Index.
Semiconductor, tobacco, banking, and networking stocks also moved notably higher, reflecting broad based buying interest.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed higher by 1.41 per cent on Friday, May 15, supported by four securities on the platform.
During the session, FrieslandCampina Wamco Plc added N14.24 to its share price to sell for N159.00 per unit, in contrast to the previous day’s N144.76 per unit.
Further, Central Securities and Clearing System (CSCS) Plc appreciated by N1.34 to N72.34 per share from N71.00 per share, Geo-Fluids Plc improved its price by 4 Kobo to N2.94 per unit from N2.90 per unit, and Industrial and General Insurance (IGI) Plc gained 1 Kobo to trade at 61 Kobo per share compared with Thursday’s closing price of 60 Kobo per share.
As a result, the NASD Unlisted Security Index (NSI) rose by 58.20 points to 4,188.41 points from 4,130.21 points, and the market capitalisation soared by N34.82 billion to N2.506 trillion from N2.471 trillion on Thursday.
During the session, the volume of trades went up by 180.8 per cent to 1.2 million units from 417,349 units, and the value of transactions increased by 29.8 per cent to N29.8 million from N23.2 million, while the number of deals fell by 22.6 per cent to 24 deals from 31 deals.
Great Nigeria Insurance (GNI) Plc ended the day as the most traded stock by value on a year-to-date basis with 3.4 billion units sold for N8.4 billion, followed by CSCS Plc with 60.8 million units exchanged for N4.1 billion, and Okitipupa Plc with 27.9 million units valued at N1.9 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 Resourcery Plc with 1.1 billion units transacted for N415.7 million, and Infrastructure Guarantee Credit Plc with 400 million units traded for N1.2 billion.
By Dipo Olowookere
The bears overpowered the Nigerian Exchange (NGX) Limited on Friday, sinking it further by 0.76 per cent when the closing gong was struck by 4 pm.
The nation’s flagship equity market was under selling pressure during the session, as investors booked profits after the shares witnessed price appreciation in the past trading sessions.
The energy sector was the most impacted, as it shed 4.43 per cent. The consumer goods index declined by 0.90 per cent, the banking counter decreased by 0.15 per cent, and the industrial goods sector lost 0.08 per cent, while the insurance counter gained 2.42 per cent, which was not enough to salvage the situation.
Consequently, the All-Share Index (ASI) contracted by 1,912.19 points to 250,330.92 points from 252,243.11 points, and the market capitalisation moderated by 1.225 trillion to N160.444 trillion from N161.669 trillion.
Zichis was the worst-performing stock for the session after it gave up 9.97 per cent to close at N29.43, FTN Cocoa slipped by 9.95 per cent to N8.96, The Initiates slumped by 9.90 per cent to N32.30, LivingTrust Mortgage Bank tumbled by 9.88 per cent to N3.83, and International Energy Insurance dropped 9.71 per cent to trade at N2.79.
The best-performing stock was ABC Transport, which grew by 10.00 per cent to N6.27. May and Baker also appreciated by 10.00 per cent to N47.30, SCOA Nigeria surged by 9.98 per cent to N33.05, Trans-Nationwide Express expanded by 9.97 per cent to N7.06, and DAAR Communications jumped 9.76 per cent to N2.25.
Yesterday, investors traded 1.1 billion shares worth N44.3 billion in 65,744 deals compared with the 1.0 billion shares valued at N41.6 billion transacted in 74,822 deals a day earlier. This indicated a dip in the number of deals by 12.13 per cent, and a rise in the trading volume and value by 10.00 per cent and 6.49 per cent, respectively.
Chams was the busiest equity for the day, with 328.5 million units sold for N1.1 billion. UBA traded 61.6 million units worth N2.7 billion, First Holdco transacted 58.7 million units valued at N4.2 billion, Secure Electronic Technology exchanged 51.9 million units worth N45.0 million, and Access Holdings traded 51.8 million units valued at N1.3 billion.
By Adedapo Adesanya
The last trading session of the week at the Nigerian Autonomous Foreign Exchange Market (NAFEX) ended on a negative note for the Naira on Friday, May 15, as it lost N15 Kobo or 0.1 per cent against the Dollar to trade at N1,371.04/$1 compared with the previous day’s N1,370.89/$1.
However, it further appreciated against the Pound Sterling in the same market segment yesterday by N20.77 to close at N1,830.61/£1 versus Thursday’s value of N1,851.38/£1, and gained N7.91 against the Euro to settle at N1,595.07/€1 versus N1,602.98/€1.
At the GTBank FX desk, the Naira lost N2 against the US Dollar during the session to sell at N1,383/$1 compared with the preceding session’s N1,381/$1, and at the black market, it remained unchanged at N1,385/$1.
The Naira is forecast to be broadly stable, supported by Dollar sales by the Central Bank of Nigeria (CBN) amid steady, higher oil receipts, with the market settling into a balance.
Policy direction is also expected to give the market some boost as the CBN said the new edition of the FX market guidelines will deepen liquidity, improve transparency and strengthen confidence in the country’s foreign exchange market.
According to the Governor of the CBN, Mr Yemi Cardoso, the update is due to changing global economic realities, domestic reforms and the need for a more coherent and forward-looking regulatory framework. According to him, the last edition of the FX manual was issued in 2018, making the latest review both timely and necessary.
Meanwhile, the cryptocurrency market plunged into the red zone as rising bond yields hit risk assets across markets, while traders are increasingly betting the Federal Reserve may need to raise rates again. Rising energy prices and resurging inflation could force central banks back into tightening mode.
Cardano (ADA) shrank by 4.4 per cent to $0.2557, Dogecoin (DOGE) slid by 3.7 per cent to $0.1104, Ripple (XRP) depreciated by 3.5 per cent to $1.41, Solana (SOL) crashed by 3.5 per cent to $87.81, and Binance Coin (BNB) slumped by 3.4 per cent to $659.64.
Further, Bitcoin (BTC) declined by 2.6 per cent to $78,547.49, Ethereum (ETH) lost 2.1 per cent to quote at $2,209.19, and TRON (TRX) tumbled by 0.7 per cent to $0.3509, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 each.
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