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US Stocks Open Sharply Lower After Fed Slashes Rates

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US Stocks report

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.

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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Economy

Naira Falls to N1,500/$1 at Official Market, Appreciates to N1,570/$1 at Black Market

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paying remittances in Naira

By Adedapo Adesanya

For the fourth consecutive trading session, the value of the Nigerian currency, the Naira, depreciated against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Thursday by 0.06 per cent or N89 Kobo to trade at N1,500.65/$1 compared with the previous day’s value of N1,499.76/$1.

However, the Naira improved its value against the Pound Sterling in the official market yesterday by N8.19 to sell for N1,859.98/£1 compared with Wednesday’s closing price of N1,868.17/£1, but against the Euro, the local currency depreciated by N1.77 to settle at N1,555.18/€1, in contrast to midweek’s value of nN1,553.41/€1.

At the black market, the local currency gained N20 against the greenback during the session to quote at N1,570/$1 versus the N1,590/$1 it was traded a day earlier.

In the cryptocurrency market, it was majorly red on Thursday due to profit-taking as the US Securities and Exchange Commission took the first step toward allowing new crypto exchange-traded funds (ETFs) tracking the price of assets like Litecoin and Solana, as well as new ways of redeeming funds from existing crypto ETFs.

Meanwhile, companies took another step toward launching Ripple (XRP) ETFs in a further sign of the new crypto-friendlier administration at the agency.

Data indicated that Cardano (ADA) went down by 5.1 per cent to trade at $0.7169, Solana (SOL) slumped by 4.8 per cent to finish at $192.63, and Dogecoin (DOGE) depreciated by 4.5 per cent to sell at $0.2509.

In addition, Ethereum (ETH) went down by 4.3 per cent to close at $2,713.47, Ripple (XRP) weakened by 3.6 per cent to end at $2.36, Litecoin (LTC) retreated by 1.9 per cent to close at $103.95, and Bitcoin (BTC) dipped by 0.5 per cent to sell for $97,344.70.

However, the price of Binance Coin (BNB) went up by 0.4 per cent to trade at $579.91, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.

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Economy

Buying Pressure Buoys NGX All-Share Index by 0.10%

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All-Share Index NGX

By Dipo Olowookere

The Nigerian Exchange (NGX) Limited witnessed continued buying interest from offshore and domestic investors on Thursday, strengthening the market further by 0.10 per cent at the close of transactions.

Data revealed that the All-Share Index (ASI) was up by 105.26 points yesterday to 105,430.15 points from the preceding day’s 105,324.89 points, and the market capitalisation expanded by N65 billion to close at N65.287 trillion compared with the previous session’s N65.222 trillion.

Business Post observed that the market participants showed interest in equities across the key sectors of the exchange because of their prospects to yield better value later.

The insurance counter gained 0.63 per cent, the consumer goods index appreciated by 0.18 per cent, the energy index improved by 0.13 per cent, the banking space jumped by 0.09 per cent, and the industrial goods industry grew by 0.04 per cent.

Eterna chalked up 9.88 per cent to trade at N33.35, Cadbury Nigeria also gained 9.88 per cent to finish at N26.70, Fidson increased its value by 9.77 per cent to N19.10, UPDC rose by 9.77 per cent to N2.36, and Deap Capital soared by 9.38 per cent to N1.05.

On the flip side, Tripple G lost 9.72 per cent to end at N2.23, Golden Breweries receded by 8.91 per cent to N7.87, Veritas Kapital slumped by 7.81 per cent to N1.18, Caverton dipped by 5.53 per cent to N2.05, and Regency Alliance slipped by 4.05 per cent to 71 Kobo.

When the bourse closed for the session, there were 33 price advancers and 23 price decliners, indicating a positive market breadth index and strong investor sentiment.

Yesterday, investors bought and sold 537.2 million shares valued at N23.0 billion in 15,450 deals versus the 1.1 billion shares worth N28.8 billion traded in 15,080 deals on Wednesday, representing a rise in the number of deals by 2.45 per cent, and a decline in the trading volume and value by 49.19 per cent and 20.14 per cent, respectively.

Access Holdings led the activity log with 61.6 million stocks valued at N1.7 billion, Sterling Holdings exchanged 50.2 million equities for N296.2 million, Zenith Bank traded 40.5 million shares worth N2.0 billion, FBN Holdings sold 38.8 million equities valued at N1.3 billion, and UPDC transacted 23.6 million stocks worth N54.4 million.

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Economy

Crude Oil Market Dips as Trump Reiterates US Plans to Boost Production

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crude oil market

By Adedapo Adesanya

The crude oil market continued its downward movement on Thursday after the US President, Mr Donald Trump, repeated a pledge to raise his country’s oil production.

Consequently, the price of Brent crude futures fell by 32 cents or 0.4 per cent to $74.29 a barrel and the US West Texas Intermediate (WTI) crude declined by 42 cents or 0.6 per cent to $70.61 per barrel.

President Trump repeated a pledge to boost US production in a bid to lower oil prices and ease consumer inflation. The US is already the biggest crude producer in the world.

This move unnerved traders a day after the country reported a much bigger-than-anticipated jump in crude stockpiles.

Market analysts have questioned whether US oil producers will be willing to pump more barrels in the current market especially with Trump’s tariffs on Canadian and Mexican imports looming.

US government data from the Energy Information Administration (EIA) showed domestic crude stockpiles rose by 8.7 million barrels last week on Wednesday.

Prices also drew support from new US sanctions against individuals and entities for facilitating shipments of Iranian oil to China.

This is as President Trump reimposed a maximum pressure campaign against Iran, but also said he was open to a deal with the oil producing country.

The US said the tankers onboarded Iranian crude from storage in China as part of a scheme involving Iran’s military, which stands to profit from the sale of the oil.

The sanctions block access of the individuals and entities to any of their assets in the US and prohibit US foreign assistance.

China is also not sitting on its oars, it responded to the US blanket tariff of 10 per cent on all Chinese imports with several measured retaliatory tariffs, including a 15 per cent levy on LNG and 10 per cent on crude oil imports from the US.

US crude exports could slide to 3.6 million barrels per day this year, especially if the Trump Administration enacts the tariffs on Mexico and Canada – currently on pause until March 4.

Amid these developments, Saudi Arabia’s state oil company, Aramco has sharply raised prices for buyers in Asia.

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