- Market Sheds N44bn as 21 Stocks Depreciate
The equities market, on Tuesday, lost N44bn following depreciation in 21 stocks at the close of trading on the floor of the Nigerian Stock Exchange.
The NSE market capitalisation dropped to N8.901tn from N8.945tn, while the All-Share Index declined to 25,857.06 basis points from 25,986.81 basis points.
A total of 189.725 million shares worth N905.102m were traded in 2,417 deals.
The NSE ASI, therefore, maintained its losing streak, paring by 0.50 per cent to settle the year-to-date return at -9.72 per cent. The volume of transactions advanced by 17.91 per cent while market turnover declined by 18.90 per cent relative to the previous day’s trading.
With 95 million shares traded, Standard Alliance Insurance Plc emerged as the most actively traded stock in the market. Nine stocks appreciated in value while 21 declined at the end of the day’s trading activities, indicating a negative market stance.
The highest gaining counters for Tuesday were Custodian and Allied Plc, Airline Services and Logistics Plc, Nigerian Aviation Handling Company Plc, Nascon Allied Industries Plc and Guaranty Trust Bank Plc, which appreciated by 4.96 per cent, 4.93 per cent, 4.89 per cent, 4.87 per cent and 4.29 per cent, respectively.
On the other hand, Lafarge Africa Plc, Conoil Plc, Oando Plc, Transnational Corporation of Nigeria Plc and International Breweries Plc emerged as the highest losers, declining by 8.33 per cent, 4.99 per cent, 4.89 per cent, 4.82 per cent and 4.47 per cent, respectively.
Market performance, as measured by the NSE indices, reflected the generally negative sentiments in the market, as the industrial sector declined by 4.09 per cent; the insurance sector dropped by 1.05 per cent; and the oil and gas sector also depreciated by 0.39 per cent.
Commenting on the performance, analysts at Meristem Securities Limited, in the firm’s daily market report, said, “In spite of the price recovery witnessed by some large-cap tickers, the equities market was awash with weak sentiments which were further pressed by the price depreciation on Dangote Cement Plc.
“We expect the rest of the week to be swayed by mixed investor sentiment, possibly skewed more towards bargain-hunting.”
Meanwhile, there was an uptick in activities in the bond space, as average bond yield declined marginally by 0.03 per cent to close at 16.43 per cent at the close of the day’s trading.
Significant demand was witnessed at the shorter end of the curve, as yields declined across these instruments. The Debt Management Office will be conducting a bond auction on November 16, 2016, through the reopening of the July 2021, January 2026, and March 2036 instruments.
Average money market rate advanced by 0.75 per cent to settle at 26.38 per cent at the close of trading on Tuesday, as the open-buy-back and overnight rates advanced by 0.33 per cent and 1.17 per cent, respectively
The naira traded flat against the United States dollar at both the interbank and parallel market to close at N305.25/dollar, and N455/dollar, respectively.
As earlier anticipated, demand weakened further in the Treasury bills space as average T-bills yield advanced by 0.81 per cent to close at 19.12 per cent. The Meristem analysts said, “We attribute this decline in activities to investors shift towards the coming primary auction.
“The Central Bank of Nigeria is expected to hold a Primary Market Auction on November 16, 2016. T-bills worth N119.46bn will be sold in 91, 182, and 364 days instruments.”
Brent Crude Oil Approaches $70 Per Barrel on Friday
Nigerian Oil Approaches $70 Per Barrel Following OPEC+ Production Cuts Extension
Brent crude oil, against which Nigerian oil is priced, rose to $69 on Friday at 3:55 pm Nigerian time.
Oil price jumped after OPEC and allies, known as OPEC plus, agreed to role-over crude oil production cuts to further reduce global oil supplies and artificially sustain oil price in a move experts said could stoke inflationary pressure.
Brent crude oil rose from $63.86 per barrel on Wednesday to $69 per barrel on Friday as energy investors became more optimistic about the oil outlook.
While certain experts are worried that U.S crude oil production will eventually hurt OPEC strategy once the economy fully opens, few experts are saying production in the world’s largest economy won’t hit pre-pandemic highs.
According to Vicki Hollub, the CEO of Occidental, U.S oil production may not return to pre-pandemic levels given a shift in corporates’ value.
“I do believe that most companies have committed to value growth, rather than production growth,” she said during a CNBC Evolve conversation with Brian Sullivan. “And so I do believe that that’s going to be part of the reason that oil production in the United States does not get back to 13 million barrels a day.”
Hollub believes corporate organisations will focus on optimizing present operations and facilities, rather than seeking growth at all costs. She, however, noted that oil prices rebounded faster than expected, largely due to China, India and United States’ growing consumption.
“The recovery looks more V-shaped than we had originally thought it would be,” she said. Occidental previous projection had oil production recovering to pre-pandemic levels by the middle of 2022. The CEO Now believes demand will return by the end of this year or the first few months of 2022.
“I do believe we’re headed for a much healthier supply and demand environment” she said.
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.
OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.
Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”
Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.
Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.
Experts have started predicting $75 a barrel by April.
“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”
Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin
Gold Struggles Ahead of Economic Recovery as Bitcoin, New Gold, Surges
Global haven asset, gold, declined to the lowest in more than eight months on Tuesday as signs of global economic recovery became glaring with rising bond yields.
The price of the precious metal declined to $1,718 per ounce during London trading on Thursday, down from $2,072 it traded in August as more investors continue to cut down on their holdings of the metal.
The previous metal usually performs poorly with rising yields on other assets like bonds, especially given the fact that gold does not provide streams of interest payments. Investors have been jumping on US bonds ahead of President Joe Biden’s $1.9 trillion coronavirus stimulus package, expected to stoke stronger US price growth.
“We see the rising bond yields as a sign of economic optimism, which has also prompted gold investors to sell some of their positions,” said Carsten Menke of Julius Baer.
Another analyst from Commerzbank, Carsten Fritsch, said that “gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs”.
Experts at Investors King believed the growing demand for Bitcoin, now called the new gold, and other cryptocurrencies in recent months by institutional investors is hurting gold attractiveness.
In a recent report, analysts at Citigroup have started projecting mainstream acceptance for the unregulated dominant cryptocurrency, Bitcoin.
The price of Bitcoin has rallied by 60 percent to $52,000 this year alone. While Ethereum has risen by over 660 percent in 2021.
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