Economy

US Stock Markets Open Lower as Fed Considers One More Rate Hike

Published

6 years ago

18/10/2018

By Investors Hub

The major U.S. index futures are pointing to a lower opening on Thursday, with stocks likely to move to the downside after ending the previous session roughly flat.

Lingering concerns about the outlook for interest rates may weigh on the markets as traders continue to digest the minutes of the Federal Reserve?s latest monetary policy meeting.

The minutes released Wednesday afternoon showed the Fed continues to favor a ?gradual approach? to raising interest rates, with the meeting participants generally judging that the economy was evolving about as anticipated.

The Fed?s forecasts point to one more rate hike before the end of this year, with CME Group?s FedWatch indicating a nearly 80 percent chance of a quarter-point rate increase in December.

After recovering from an early move to the downside, stocks showed a lack of direction over the course of afternoon trading on Wednesday. The major averages spent the afternoon bouncing back and forth across the unchanged line.

The major averages eventually ended the day in negative territory. While the Dow fell 91.74 points or 0.4 percent to 25,706.68, the Nasdaq slipped 2.79 points or less than a tenth of a percent to 7,642.70 and the S&P 500 edged down 0.71 points or less than a tenth of a percent to 2,809.21.

The lackluster performance in the afternoon came after the Federal Reserve released the minutes of its September monetary policy meeting.

The Fed argued the “gradual approach” would balance the risk of raising rates too quickly, causing a slowdown in the economy, and raising rates too slowly, leading to inflation above the central bank’s 2 percent objective.

Looking ahead, the minutes said a few meeting participants expected rates would need to become modestly restrictive for a time.

A number of participants also determined it would be necessary to temporarily raise rates above the longer-run level in order to reduce the risk of a sustained overshooting of the Fed’s inflation target.

Meanwhile, a couple of participants indicated they would not favor adopting a restrictive policy stance in the absence of clear signs of an overheating economy and rising inflation.

During the meeting, the Fed decided to raise rates by a quarter point for a third time this year to 2 to 2.25 percent and forecast another rate hike before the end of the year. The central bank’s forecasts also pointed to three rate hikes in 2019.

The Fed’s assessment that the “gradual approach” to raising rates remains appropriate comes even as President Donald Trump has repeatedly attacked the central bank for hiking rates too quickly.

Trump continued his assault on the Federal Reserve in an interview with Fox Business on Tuesday, calling the central bank the “biggest threat” to his presidency.

Profit taking contributed to the early weakness on Wall Street, as traders cashed in on yesterday’s gains amid lingering uncertainty about the near-term outlook for the markets.

A negative reaction to the latest batch of earnings news also weighed on the markets, with tech giant IBM Corp. (IBM) falling after reporting third quarter earnings that beat analyst estimates but weaker than expected revenues.

On the other hand, shares of Netflix (NFLX) surged higher after the video streaming service reported better than expected third quarter earnings, revenues, and subscriber growth.

Negative sentiment was also generated by the release of a report from the Commerce Department showing a much bigger than expected pullback in housing starts in the month of September.

Despite the recovery attempt by the broader markets, housing stocks ended the day significantly lower. The Philadelphia Housing Sector Index tumbled by 1.9 percent after jumping by 2.4 percent in the previous session.

Housing stocks pulled back after moving higher for three straight sessions, with the disappointing housing starts data weighing on the sector.

Considerable weakness was also visible among energy stocks, which moved lower along with the price of crude oil. Reflecting the weakness in the energy sector, the NYSE Arca Natural Gas Index slumped by 1.6 percent, the Philadelphia Oil Service Index dropped by 1.4 percent and the NYSE Arca Oil Index fell by 1.1 percent.

On the other hand, tobacco stocks showed a substantial move to the upside on the day, driving the NYSE Arca Tobacco Index up by 1.6 percent. The index rebounded after closing lower for five consecutive sessions.

Economy

Aradel Holdings Acquires Equity Stake in Chappal Energies

Published

49 minutes 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

5 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

5 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.