Connect with us


Analysts Predict Weak Start for Capital Market



Egypt Stocks
  • Analysts Predict Weak Start for Capital Market

Financial analysts say the capital market is likely to start the week on negative note following the bearish trend that trailed the market last week.

Bearish sentiments pervaded the equities market last week, as the Nigerian Stock Exchange All-Share Index declined by 1.15 per cent week-on-week to peg the year-to-date return at -5.80 per cent.

The market closed negative on four out of the five trading days of the week.

“This week, we expect the current market mood to persist in the absence of positive news flow to sway investors’ sentiments. Therefore, we advise value-seeking investors to trade with caution,” analysts at Meristem Securities Limited said in the firm’s weekly report.

Third quarter 2016 earnings, releases flooded the market on Monday last week, being the deadline for result submission by listed companies. The results were mixed across board, thus generating varied reactions from investors.

However, the volume traded and value of transactions advanced by 2.29 per cent and 12.45 per cent week-on-week, respectively.

The naira depreciated against the United States dollar by 7.42 per cent week-on-week at the inter-bank segment of the market, as the spot rate settled at N328.90/dollar. However, at the parallel market, the currency traded flat week-on-week to close at N470/dollar at the end of the week.

There was net Open Market Operation sales of N31bn, arising from repayment and auction of N138bn and N169bn, respectively. Consequently, system liquidity declined, resulting to an increase in the Open-by-Back and Overnight rates by 3.83 per cent and 2.75 per cent week-on-week accordingly, to settle the average money market rate at 13.25 per cent at the end of last week.

On what will shape the markets this week, analysts at Vetiva Capital Management Limited said, “On the equity market, save for some late session spikes during Friday’s session, we note that the NSE ASI was on a downward trend over the final hour of trade amid sell pressure across board. This points to a weak open this week.

“Although the demand for Treasury bills remained resilient at the week’s close despite consistent Central Bank of Nigeria’s mop up, we anticipate a relatively tepid trading session at the week open across the fixed income space.

“Given the significant weakness recorded at the week close, we expect the CBN intervention at the week open.”

Investors’ demand for Treasury bond instruments was quite strong last week, with a noticeable bias for shorter-termed instruments. Consequently, the average bond yield trended southward to settle at 19.58 per cent as of November 3, 2016, reflecting a 0.14 per cent week-to-date decline.

Also, the result of T-bills auction held last week showed that rates were slightly higher than at the previous action. The stop rates for the 91-day, 182-day and 364-day instruments were 14 per cent, 17.50 per cent and 18.50 per cent, respectively.

In the Treasury bond space, there were mixed reactions, as the average yield remained flat at 16.16 per cent with investors’ sentiments tilting towards the shorter end of the curve.

“We expect this trend to continue in the short term,” the Meristem analysts said.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend




Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.


  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

Continue Reading

Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return



Crude oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

Continue Reading

Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather




Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

Continue Reading