Economy
US Stocks Open Sharply Lower After Fed Slashes Rates
By Investors Hub
The major U.S. index futures are currently pointing to a sharply lower open on Monday, with stocks likely to give back ground following the rally seen going into the close of trading last Friday.
Traders may look to cash in on the previous session’s gains amid escalating concerns about the economic impact of the coronavirus pandemic.
Central banks around the world, including the Federal Reserve, are taking steps to provide economic stimulus to combat the effects of the virus, but the moves may only serve to exacerbate concerns about the impact of the outbreak.
On Sunday, the Fed took the unusual step of slashing interest rates by 100 basis points just days ahead of its scheduled monetary policy meeting this week.
The Fed lowered the target range for the federal funds rate to zero to 0.25 percent from 1 to 1.25 percent, noting the coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the U.S.
The central bank said it expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.
In addition to cutting rates, the Fed also announced a new quantitative easing program, revealing plans to increase its holdings of Treasury and mortgage-backed securities by at least $700 billion.
“The Fed’s decision to slash interest rates to near-zero won’t stop the economy falling into a recession, but the package of liquidity-boosting measures will help prevent credit markets seizing up, reducing the risks a deeper downturn,” said Michael Pearce, Senior U.S. Economist at Capital Economics.
He added, “We expect the Fed to do whatever it takes to keep markets functioning smoothly, and to announce further QE & forward guidance to support demand should the crisis worsen significantly.”
The drastic moves by the Fed, which come ahead of the two-day monetary policy meeting set to begin on Tuesday, have raised some concerns that central banks around the world will run out of ammunition to deal with a deepening crisis.
A day after the worst drop by the Dow in over thirty years, stocks showed a substantial move back to the upside during trading on Friday. The major averages fluctuated over the course of the session before experiencing a late-day rally.
The major averages spiked going into the close of trading, ending the session at their best levels of the day. The Dow soared 1,985.00 points or 9.4 percent to 23,185.62, the Nasdaq skyrocketed 673.00 points or 9.3 percent to 7,874.80 and the S&P 500 surged up 230.38 points or 9.3 percent to 2,711.02.
Despite the rebound on the day, the major averages moved sharply lower for the week. The Dow plummeted by 10.4 percent, while the Nasdaq and the S&P 500 plunged by 8.2 percent and 8.8 percent, respectively.
The late-day spike on Wall Street came after President Donald Trump declared the coronavirus outbreak a national emergency.
The declaration by Trump would free up as much as $50 billion in additional funding to combat the outbreak and allow officials to waive certain regulations to accelerate testing and care for coronavirus patients.
Trump said during a press conference in the White House Rose Garden that he expects the U.S. to have 1.4 million coronavirus test kits available within a week and a total of 5 million kits within the next month.
The president said he is also working with private sector companies to develop “drive thru” testing facilities across the country.
However, Trump said he does not want everybody running out and taking the test, saying only people with certain symptoms should be tested.
Adding to the positive sentiment, a coronavirus test developed by Swiss drug giant Roche has been granted emergency use authorization by the FDA.
The FDA said this is the first commercially distributed diagnostic test to receive emergency authorization during the coronavirus outbreak.
Roche said it is committed to delivering as many tests as possible and is going to the limits of its production capacity.
The emergency authorization of the Roche test comes amid rising concerns about the relatively low levels of coronavirus testing in the U.S.
In U.S. economic news, a report released by the University of Michigan showed a relatively modest deterioration in consumer sentiment in the month of March in light of the rampant fear over the coronavirus outbreak and the subsequent sell-off on Wall Street.
The report showed the consumer sentiment index slid to 95.9 in March after rising to 101.0 in February, although the index still came in above economist estimates for a reading of 95.0.
“Importantly, the initial response to the pandemic has not generated the type of economic panic among consumers that was present in the runup to the Great Recession,” said Surveys of Consumers chief economist Richard Curtin.
He added, “Nonetheless, the data suggest that additional declines in confidence are still likely to occur as the spread of the virus continues to accelerate.”
Banking stocks saw considerable strength amid a continued increase in treasury yields, with the KBW Bank Index soaring by 14.8 percent.
Substantial strength also emerged among energy stocks in late-day trading after Trump pledged to purchase oil at the currently severely reduced prices to fill the U.S. strategic petroleum reserve.
Software stocks also moved sharply higher over the course of the session, driving the Dow Jones U.S. Software Index up by 12.7 percent. The index ended the previous session at a nine-month closing low.
Oracle (ORCL) and Adobe (ADBE) posted standout gains within the software sector after reporting better than expected quarterly earnings.
Steel, semiconductor, brokerage, and transportation stocks also moved sharply higher, while gold stocks bucked the uptrend amid a steep drop by the price of the precious metal.
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited was further pulled back by 0.50 per cent on Tuesday as a result of profit-taking in some heavyweight stocks.
Like the preceding session, the key sectors of Customs Street were depressed yesterday, with the banking index down by 2.82 per cent. The consumer goods declined by 0.52 per cent, the insurance space lost 0.10 per cent, and the energy counter shrank by 0.03 per cent, while the industrial goods segment was flat.
Consequently, the All-Share Index (ASI) eased by 1,437.54 points to 241,984.80 points from 243,422.34 points, and the market capitalisation contracted by N922 billion to N155.204 trillion from N156.126 trillion.
The worst-performing stock was International Energy Insurance, which gave up 10.00 per cent to close at N5.76. Vitafoam dipped by 10.00 per cent to N189.00, Austin Laz crashed by 9.93 per cent to N3.90, SUNU Assurances depleted by 9.82 per cent to N3.58, and Sovereign Trust Insurance lost 8.37 per cent to finish at N2.30.
On the flip side, Conoil gained 9.79 per cent to trade at N213.00, Prestige Assurance also expanded by 9.79 per cent to N1.57, Neimeth jumped 9.74 per cent to N8.45, eTranzact chalked up 9.40 per cent to close at N16.30, and Cornerstone Insurance improved by 9.09 per cent to N5.40.
The bourse witnessed heavy sell-offs in some equities, with Sterling Holdings recording the sale of 100.9 million units worth N782.8 million to lead the activity log. UAC Nigeria transacted 49.4 million units valued at N9.1 billion, Access Holdings sold 28.8 million units for N699.3 million, Zenith Bank exchanged 29.4 million units worth N3.0 billion, and GTCO traded 20.2 million units valued at N2.7 billion.
At the close of transactions, market participants bought and sold 535.5 million shares worth N36.8 billion in 55,123 deals compared with 569.1 million shares valued at N31.4 billion traded in 77,652 deals on Monday. This implied that the trading value went up by 17.20 per cent, while the trading volume and the number of deals went down by 5.90 per cent and 29.01 per cent, respectively.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange was further down by 0.48 per cent on Monday, June 16, as a result of the losses printed by three bellwethers, led by MRS Oil Plc, which fell by N15.80 to N142.20 per unit from N158.00 per unit.
Further, FrieslandCampina Wamco Nigeria Plc dipped by N2.94 to close at N180.14 per share versus the previous day’s N183.08 per share, and Central Securities Clearing System (CSCS) Plc crumbled by 38 Kobo to N80.24 per share from N80.62 per share.
Consequently, the market capitalisation of the trading platform moderated by N12.55 billion to N2.605 trillion from N2.605 trillion, while the NASD Unlisted Security Index (NSI) weakened by 20.98 points to 4,333.35 points from 4,354.33 points.
During the trading day, the value of transactions surged by 16.5 per cent to N45.6 million from the preceding session’s N39.2 million, and the number of deals soared by 34.8 per cent to 31 deals from 23 deals, while the volume of securities declined by 30.6 per cent to 688,290 units from 992,164 units.
At the close of trades, Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis with a turnover of 3.4 billion units valued at N8.4 billion. The second spot was occupied by Infrastructure Credit Guarantee (Infracredit) Plc, with 2.3 billion sold for N6.5 billion, and the third position was taken by CSCS Plc, with 66.9 million units exchanged for N4.6 billion.
GNI Plc also ended 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 Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
By Adedapo Adesanya
The Naira suffered a 0.55 per cent or 91 Kobo loss against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Tuesday, June 16, closing at N1,357.18 /$1 compared with the previous day’s N1,356.27/$1.
It also weakened against the Pound Sterling at the official market during the session by N11.53 to trade at N1,820.39/£1 versus Monday’s rate of N1,808.86/£1, but appreciated against the Euro by N2.06 to quote at N1,573.79/€1 versus the preceding session’s N1,575.85/€1.
In the black market, the Nigerian currency crashed against the Dollar yesterday by N5 to sell for N1,385/$1, in contrast to the N1,380/$1 it was traded a day earlier, and at the GTBank FX desk, it traded flat at N1,373/$1.
Nigeria’s gross external reserves surged to $50.505 billion, the highest international Dollar balance since January 2009, affirming expectations that the local currency will remain along a stable band. The FX reserves position was buoyed by inflows from oil sales.
In its Article IV consultation report on Nigeria, the International Monetary Fund (IMF) said that the Naira remains significantly undervalued despite recent gains from FX reforms. It noted that its Real Effective Exchange Rate (REER) assessment showed the local currency was still trading below levels supported by the country’s economic fundamentals, saying the Naira should have traded around N1,142.04/$1 using the end-of-2025 exchange rate benchmark, or N1,130.88/$1 when calculated using the average exchange rate for the year.
As for the cryptocurrency market, prices showed renewed risk appetite as total 24-hour trading volume jumped 51 per cent to $207 billion, open interest rose 2.4 per cent to $113.41 billion, and liquidations surged 64 per cent to $561 million, with shorts accounting for the bulk of the forced exits, according to Coindesk data.
Cardano (ADA) slid 2.7 per cent to $0.1731, Binance Coin (BNB) slumped 1.6 per cent to $605.80, Ripple (XRP) declined by 1.5 per cent to $1.22, Bitcoin (BTC) fell 0.8 per cent to $65,739.70, Dogecoin (DOGE) also tumbled by 0.6 per cent to $0.0873, and TRON (TRX) depreciated by 0.6 per cent to $0.3166.
However, Ethereum (ETH) grew by 0.5 per cent to $1,795.40, and Solana (SOL) rose by 0.2 per cent to $73.81, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
-
Feature/OPED6 years agoDavos was Different this year
-
Travel/Tourism10 years ago
Lagos Seals Western Lodge Hotel In Ikorodu
-
Showbiz3 years agoEstranged Lover Releases Videos of Empress Njamah Bathing
-
Banking8 years agoSort Codes of GTBank Branches in Nigeria
-
Economy3 years agoSubsidy Removal: CNG at N130 Per Litre Cheaper Than Petrol—IPMAN
-
Banking3 years agoSort Codes of UBA Branches in Nigeria
-
Banking3 years agoFirst Bank Announces Planned Downtime
-
Sports3 years agoHighest Paid Nigerian Footballer – How Much Do Nigerian Footballers Earn