Economy
US Stocks Open Lower as Traders React to Earnings News
By Investors Hub
The major U.S. index futures are pointing to a lower opening on Thursday, with stocks likely to move back to the downside following the strength seen in the previous session.
The downward momentum for the markets comes as traders react to the latest batch of earnings news from several big-name companies.
Shares of J.C. Penney (JCP) are moving sharply lower in pre-market trading after the department store chain reported a narrower than expected first quarter adjusted loss but cut its full-year earnings guidance.
Network equipment maker Cisco Systems (CSCO) may also come under pressure after reporting better than expected fiscal third quarter earnings but providing a disappointing forecast.
On the other hand, shares of Wal-Mart (WMT) are likely to move to the upside after the retail giant reported first quarter results that exceeded analyst estimates on both the top and bottom lines.
Stocks fluctuated over the course of the trading session on Wednesday but largely maintained a positive bias before closing mostly higher. The upward move on the day came on the heels of the sharp pullback seen in the previous session.
The major averages closed in positive territory but well off their highs of the session. The Dow rose 62.52 points or 0.3 percent to 24,768.93, the Nasdaq advanced 46.67 points or 0.6 percent to 7,398.30 and the S&P 500 climbed 11.01 points or 0.4 percent to 2,722.46.
The strength on Wall Street partly reflected a positive reaction to earnings news from Macy’s (M), with the department store operator surging up by 10.8 percent.
Macy’s jumped to its best closing level in over a year after reporting better than expected first quarter results and providing upbeat guidance.
Buying interest was somewhat subdued, however, with geopolitical uncertainty keeping some traders on the sidelines after North Korea threatened to cancel an historic meeting between leader Kim Jong Un and President Donald Trump.
In a statement published by the state-run Korean Central News Agency, North Korean First Vice Minister of Foreign Affairs Kim Kye Gwan suggested that Trump must accept the reclusive communist country as a nuclear power.
“If the U.S. is trying to drive us into a corner to force our unilateral nuclear abandonment, we will no longer be interested in such dialogue and cannot but reconsider our proceeding to the DPRK-U.S. summit,” Kim said.
Kim pointed to “unbridled remarks” by U.S. officials such as National Security Adviser John Bolton calling on North Korea to abandon nuclear weapons first and be compensated afterward.
The statement from Kim came after North Korea canceled high-level talks with South Korea planned for Wednesday over U.S.-South Korean military drills.
Despite the threats, White House Press Secretary Sarah Sanders said the administrations remains hopeful the meeting will take place.
On the U.S. economic front, the Commerce Department released a report showing a sharp pullback in new residential construction in the month of April.
The report said housing starts plunged by 3.7 percent to an annual rate of 1.287 million in April after jumping by 3.6 percent to an upwardly revised 1.336 million in March.
Economists had expected housing starts to drop to an annual rate of 1.310 million from the 1.319 million originally reported for the previous month.
The Commerce Department said building permits also tumbled by 1.8 percent to an annual rate of 1.352 million in April after surging up by 4.1 percent to an upwardly revised 1.377 million in March.
Building permits, an indicator of future housing demand, had been expected to edge down to 1.350 million from the 1.354 million originally reported for the previous month.
A separate report from the Federal Reserve showed industrial production increased by slightly more than anticipated in the month of April.
The Fed said industrial production climbed by 0.7 percent in April, matching the upwardly revised increase in March. Economists had expected industrial production to rise by 0.6 percent.
Steel stocks turned in some of the market’s best performances, resulting in a 2.1 percent jump by the NYSE Arca Steel Index. With the gain, the index reached its best closing level in well over two months.
Considerable strength also emerged among computer hardware stocks, as reflected by the 1.5 percent gain posted by the NYSE Arca Computer Hardware Index. The advance lifted the index to a record closing high.
Hard drive and memory chip maker Western Digital (WDC) lead the hardware sector higher, surging up by 4.9 percent on the day.
Semiconductor stocks also showed a significant move to the upside, driving the Philadelphia Semiconductor Index up by 1.4 percent.
Micron Technology (MU) posted a standout gain after RBC Capital initiated coverage of the chipmaker’s stock with an Outperform rating.
Tobacco, oil service, and natural gas stocks also saw notable strength on the day, while weakness was visible among utilities stocks.
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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