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
Seplat Energy Plc will revive hundreds of Nigerian oil wells laying fallow after completing the acquisition of Mobil Producing Nigeria Unlimited (MPNU) from ExxonMobil.
The company said it aims to lift oil output to about 200,000 barrels a day, a move that will help boost Nigeria’s oil production levels, as it aims to reach 2 million barrels per day next year.
The transaction, according to Seplat, “is transformative for Seplat Energy, more than doubling production and positioning the company to drive growth and profitability, whilst contributing significantly to Nigeria’s future prosperity.”
The completion of the Seplat-ExxonMobil deal has created Nigeria’s leading independent energy company, with the enlarged company having equity in 11 blocks (onshore and shallow water Nigeria); 48 producing oil and gas fields; 5 gas processing facilities; and 3 export terminals.
Recall that the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in October approved the deal as part of a series of approvals, while it blocked Shell’s asset sale of up to $2.4 billion to the Renaissance consortium.
The acquisition of the entire issued share capital of MPNU adds the following assets to the Seplat Group: 40 per cent operated interest in OML 67, 68, 70 and 104; 40 per cent operated interest in the Qua Iboe export terminal and the Yoho FSO; 51 per cent operated interest in the Bonny River Terminal (‘BRT’) NGL recovery plant; 9.6 per cent participating interest in the Aneman-Kpono field; and approximately 1,000 staff and 500 contractors will transition to the Seplat Group.
MPNU adds substantial reserves and production to Seplat Energy; 409 million barrels of oil equivalent (MMboe) 2P reserves and 670 MMboe 2P + 2C reserves and resources as at 30 June 2024 and 6M 2024 average daily production of 71.4 kboepd (thousand barrels of oil equivalent).
Business Post reports that Seplat will be part of the payment this year, and will defer some to next year,
Speaking on the transaction, the Chairman of Seplat Energy, Mr Udoma Udo Udoma commended President Bola Tinubu for supporting this transaction and appreciated the support and diligence of the various ministries and regulators for all the work to reach a successful conclusion.
“We are delighted to welcome the MPNU employees to Seplat Energy. We are excited to begin our journey in a new region of the country, and we look forward to replicating the positive impacts we have achieved within our communities in our current areas of operations.
“Seplat’s mission is to deliver value to all our stakeholders, and we treasure the good relationships we have developed with the government, regulators, communities and our staff.”
On his part, the chief executive of Seplat Energy, Mr Roger Brown, described the acquisition as a major milestone, adding, “I extend my thanks to the entire Seplat team for their hard work and perseverance to complete this transaction.
“MPNU’s employees and contractors have a strong reputation for safety and operational excellence, and I welcome them to the Seplat Energy Group.
“We have acquired a company with one of the best portfolios of assets and related infrastructure in a world-class basin, providing enormous potential for the Seplat Group. Our commitment is to invest to increase oil and gas production while reducing costs and emissions, maximising value for all our stakeholders.
“MPNU is a perfect fit with our strategy to build a sustainable business that can deliver affordable, accessible and reliable energy for Nigeria alongside attractive returns to our shareholders”.
By Adedapo Adesanya
The National Pension Commission (PenCom) is projected to close the year with over N22 trillion in pension assets impacted by challenges like inflation and monetary policies.
This is according to PenCom Director-General, Mrs Omolola Oloworaran, at a press conference in Abuja on Thursday.
She said as of October 2024, the Contributory Pension Scheme (CPS) had 10.53 million registered contributors and pension fund assets worth N21.92 trillion.
Speaking at the conference-themed Tech-driven Transformation Shaping the Pension Landscape, which showcased PenCom’s strategic commitment to innovation, she said that the numbers reflected the agency’s unwavering commitment to fund safety, prudent management, and sustainable growth.
She explained that the pension environment was impacted by the wider economic challenges facing the country, noting that the sector battled multi-year high inflation, Naira devaluation, and the lingering effects of unorthodox monetary policies by the Central Bank of Nigeria (CBN).
Business Post reports that the apex bank hiked interest rates by 875 basis points this year alone to tackle persistent inflation which peaked at 33.8 per cent as of October.
She said that these challenges eroded the real value of pension funds and impacted contributors’ purchasing power.
“To address these issues, the commission has initiated a comprehensive review of its investment regulations.
“It is focusing on diversifying pension fund investments into inflation-protected instruments, alternative assets, and foreign currency-denominated investments.
“The goal is to safeguard contributor savings and ensure resilience against future economic volatility,” she said.
She restated the commission’s commitment to expanding pension coverage, particularly through the advanced micro-pension plan designed to encourage participation from the informal sector using technology.
“This initiative will make it easier for everyday Nigerians to save for retirement, aligning with our vision of inclusive growth and financial stability for all.
“The backlog in retirement benefits for retirees of the Federal Government’s Ministries, Departments, and Agencies (MDAs) will soon be settled.
“The federal government recently disbursed N44 billion under the 2024 budget to settle approved pension rights.
“We are collaborating with the Federal Government to institutionalise a sustainable solution to ensure retirees receive their benefits promptly, eliminating delays,” Mrs Oloworaran said.
She said that PenCom’s technology-driven transformation aimed to make the CPS more accessible, reliable, and sustainable.
“From data management to seamless contributions and regulatory supervision, we are paving the way for a future where the pension industry serves all Nigerians effectively,” she said,
Mrs Oloworaran also said that the e-application portal for pension clearance certificates has replaced the manual processes and enhanced the ease of doing business in the sector.
“Since its deployment, 38,528 pension clearance certificates have been issued. This initiative ensures compliance and secures the future of Nigerians working in organisations that interact with the government,” she said.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed flat on Thursday, December 12 after it ended the trading session with no single price gainer or loser.
As a result, the market capitalisation remained unchanged at N1.055 trillion as the NASD Unlisted Security Index (NSI) followed the same route, remaining at 3,012.50 points like the previous trading session.
However, the activity chart witnessed changes as the volume of securities traded at the bourse went down by 92.5 per cent to 447,905 units from the 5.9 million units transacted a day earlier.
In the same vein, the value of securities bought and sold by investors declined by 86.6 per cent to N3.02 million from the N22.5 million recorded in the preceding trading day.
But the number of deals carried out during the session remained unchanged at 21 deals, according to data obtained by Business Post.
When trading activities ended for the day, Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units sold for N3.9 billion, Okitipupa Plc came next with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc was in third place 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.
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