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Stocks Appreciate Marginally, AXA Mansard, UPDC Top Losers

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Stock Investors
  • Stocks Appreciate Marginally, AXA Mansard, UPDC Top Losers

The Nigerian equity market traded relatively flat on Wednesday (the last trading day of the month), with AXA Mansard Insurance Plc, UACN Property Development Company Plc and Nascon Allied Industries Plc emerging as the top three losers.

The Nigerian Stock Exchange market capitalisation rose to N8.689tn from N8.686tn, while the All-Share Index closed at 25,241.63 basis points from 25,233.42 basis points.

The NSE ASI rose by three basis points as bargain hunters snap up beaten-down stocks. Nonetheless, the ASI ended the lackluster month in the red, posting a negative month-to-date return of 7.3 per cent – the worst performance since January.

A total of 414.155 million shares valued at N3.418bn were traded in 2,567 deals.

The oil and gas sector led advances after Mobil Oil Nigeria Plc closed limit up for the second consecutive session, riding on positive sentiment on deal valuation of ExxonMobil’s proposed sale of 60 per cent stake to Nipco, as well as gains in Oando Plc and Total Nigeria Plc by 4.99 per cent and 1.59 per cent, respectively.

The financial services and consumer goods sectors also closed in positive territory following gains across Guaranty Trust Bank Plc, Stanbic IBTC Holdings Plc, Zenith Bank Plc, Cadbury Nigeria Plc and Nigerian Breweries Plc by 3.9 per cent, 3.88 per cent, 2.07 per cent10.15 per cent and 1.4 per cent, accordingly.

However, the industrial goods sector underperformed yet again, dragged down by a 2.53 per cent loss in Dangote Cement Plc.

Market breadth turned even with 20 advances and 20 declines.

On what would shape the next trading session, analysts at Vetiva Capital Management Limited, in the firm’s daily market report, said, “We expect the mixed trading pattern to persist in coming sessions as investors continue to pick up battered bellwethers.”

On the global front, Asian markets (which closed earlier) were mixed amidst an overnight decline in oil prices ahead of Organisation of Petroleum Exporting Countries’ meeting. However, European and the United States markets were higher following a jump in oil prices as OPEC agreed its first cut (1.2 million barrels per day) on oil output since 2008.

Meanwhile, the interbank call rate moderated 58 basis point to 10 per cent amid a relatively unchanged liquidity system.

At the foreign exchange interbank market, the naira appreciated N0.25 against the dollar at the Central Bank of Nigeria spot market to close at N305 at the CBN forex spot market while the one year forward rate remained unchanged at N349.

With no Open Market Operations announcement in Wednesday’s session, buying momentum resurfaced in the Treasury bills market with yields declining 37 basis points on the average particularly across the short to mid-dated maturities.

Specifically, yields on the 15 day-to-maturity, 36DTM and 113DTM bills declined to 10.01 per cent, 10.05 per cent, and 15.83 per cent, respectively.

However, trading remained bearish in the bond market as yields on benchmark bonds rose by four basis points on the average.

Sell offs were most apparent on the long end of the space with yields on the 12.1493 per cent FGN July 2034 and 12.40 per cent FGN March 2036 bonds rising seven basis points and three basis points to close at 15.94 per cent and 16.06 per cent,respectively.

Notwithstanding the improvement in buying momentum, analysts expect Thursday’s market activity to be guided by the yet-to-be-released results of the Primary Market Auction held yesterday (Wednesday). In addition, they expect bearish sentiment to persist in the bond market.

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

Crude Oil

Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

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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.”

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Gold

Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin

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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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Crude Oil

Oil Prices Extend Gains to $64.32 Ahead of OPEC+ Meeting

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Oil Prices Rise to $64.32 Amid Expected Output Extension

Oil prices extended gains during the early hours of Thursday trading session amid the possibility that OPEC+ producers might not increase output at a key meeting scheduled for later in the day and the drop in U.S refining.

Brent crude oil, against which Nigeria oil is priced, gained 0.4 percent or 27 cents to $64.32 per barrel as at 7:32 am Nigerian time on Thursday. While the U.S West Texas Intermediate gained 19 cents or 0.3 percent to $61.47 a barrel.

“Prices hinge on Russia’s and Saudi Arabia’s preference to add more crude oil production,” said Stephen Innes, global market strategist at Axi. “Perhaps more interesting is the lack of U.S. shale response to the higher crude oil prices, which is favourable for higher prices.”

The Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, are looking to extend production cuts into April against expected output increase due to the fragile state of the global oil market.

Oil traders and businesses had been expecting the oil cartel to ease production by around 500,000 barrels per day since January 2021 but because of the coronavirus risk and rising global uncertainties, OPEC+ was forced to role-over production cuts until March. Experts now expect that this could be extended to April given the global situation.

“OPEC+ is currently meeting to discuss its current supply agreement. This raised the spectre of a rollover in supply cuts, which also buoyed the market,” ANZ said in a report.

Meanwhile, U.S crude oil inventories rose by more than a record 21 million barrels last week as refining plunged to a record-low amid Texas weather that knocked out power from homes.

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