Markets

Market Outlook Jan 28 – Feb 1

Published

6 years ago

January 27, 2019

Market Outlook Jan 28 – Feb 1

This week will set the tone for the rest of the year as investors await Federal Reserve position on rate increase, Italy’s GDP to validate slowdown in Europe’s third-largest economy, Chinese Purchasing Managers Index to assess the level of global slow down, Australia’s inflation report to see if the improved unemployment rate and 21,600 jobs created pressured prices in December, BOJ monetary policy after lowering inflation projection for 2019 and the number of jobs created in the U.S in January following government shutdown.

The International Monetary Fund lowered its global growth projection for 2019 from 3.7 per cent to 3.5 percent last week, citing trade disputes and slowing growth in China after data showed the economy grew at a 28-year low in 2018. Signalling the effect of trade war on the world’s second-largest economy despite the People’s Bank of China’s stimulus to enhance productivity and sustain growth.

The weaker than expected growth stalled commodity prices – halted crude oil bullish move- as market confidence drop on possible slow down in oil demand. China is the world’s largest importer of crude oil.

Still, despite the increase in global risk, haven assets (currencies) failed to attract enough buyers to sustain 2018 growth momentum as investors fear risks could spread across the financial markets with the slowing growth in Euro-area, Brexit uncertainty, U.S shutdown and Fed wait and see approach.

In Euro-Area, the Bank of Italy cuts its 2019 growth projection for Italy from 1 percent to 0.6 percent, while the European Central Bank maintained current interest rates and warned on rising risks to growth.

“The risks surrounding the euro area growth outlook have moved to the downside on account of the persistence of uncertainties related to geopolitical factors and the threat of protectionism, vulnerabilities in emerging markets and financial market volatility,” Draghi said at a press conference.

The Euro currency dropped to a month-low against the U.S dollar after Mario Draghi, the ECB president, acknowledged that near-term data are likely to be weaker than expected. Further validating global perspective after a series of purchasing managers index showed growth in the region is slowing down. This week investors will look for more clues in the Italian economic report and ECB monetary policy to better assess the level of slowdown in the region.

Crude oil remained in a range ahead of U.S-China meeting this week, a positive outcome should boost oil outlook and support emerging assets. Still, the U.S. Fed’s monetary stance will determine capital inflow into the emerging markets.

Up Next

AUDJPY Outlook Jan 28 – Feb 1

Don't Miss

Borrowing Cost: Malaysia Cancels $20bn China-Backed Rail Project

Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

Comments

Crude Oil

Oil Prices Rebound on OPEC+ Output Delay Talks and U.S. Inventory Drop

Published

4 days ago

September 5, 2024

Samed Olukoya

Oil prices made a modest recovery on Thursday on the expectations that OPEC+ may delay planned production increases and the drop in U.S. crude inventories.

Brent crude oil, against which Nigerian oil is priced, rose by 66 cents, or 0.9% to $73.36 per barrel while U.S. West Texas Intermediate (WTI) crude appreciated by 64 cents or 0.9% to $69.84 per barrel.

The rebound in oil prices was a result of the American Petroleum Institute (API) report that revealed that the U.S. crude oil inventories had fallen by a surprising 7.431 million barrels last week, against analysts 1 million barrel decline projection.

The decline signals better than projected demand for the commodity in the United States of America and offers some relief for traders on global demand.

John Evans, an analyst at PVM Oil Associates, attributed the rebound in crude oil prices to the API report.

He said, “There is a pause of breath and light reprieve for oil prices.”

Also, discussions within the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are fueling speculation about a potential delay in planned output increases.

The group was initially expected to increase production by 180,000 a day in October 2024.

However, concerns over softening demand in China and potential developments in Libya’s oil production have prompted the group to reconsider its strategy.

Despite the recent rebound, analysts caution that lingering uncertainties around global oil demand may continue to weigh on prices in the near term.

Energy

Power Generation Surges to 5,313 MW, But Distribution Issues Persist

Published

5 days ago

September 4, 2024

Samed Olukoya

Nigeria’s power generation continues to get better under the leadership of President Bola Ahmed Tinubu.

According to the latest statement released by Bolaji Tunji, the media aide to the Minister of Power, Adebayo Adelabu, power generation surged to a three-year high of 5,313 megawatts (MW).

“The national grid on Monday hit a record high of 5,313MW, a record high in the last three years,” the statement disclosed.

Reacting to this, the Minister of Power, Adebayo Adelabu, called on power distribution companies to take more energy to prevent grid collapse as the grid’s frequency drops when power is produced and not picked by the Discos.

He added that efforts would be made to encourage industries to purchase bulk energy.

However, a top official of one of the Discos was quoted as saying that the power companies were finding it difficult to pick the extra energy produced by generation companies because they were not happy with the tariff on other bands apart from Band A.

“As it is now, we are operating at a loss. Yes, they supply more power but this problem could be solved with improved tariff for the other bands and more meter penetration to recover the cost,” the Disco official, who pleaded not to be named due to lack of authorisation to speak on the matter, said.

On Saturday, the ministry said power generation that peaked at 5,170MW was ramped down by 1,400MW due to Discos’ energy rejection.

Crude Oil

Again NNPC Raises Petrol Price to N897/litre

Published

5 days ago

September 4, 2024

Investors King

The Nigerian National Petroleum Company (NNPC) Limited has once again increased the price of Premium Motor Spirit (PMS) from N855 per litre on Tuesday to N897 on Wednesday.

The increase was after Aliko Dangote, the Chairman of Dangote Refinery, announced the commencement of petrol production at its refinery.

The continuous increase in pump prices has raised concerns among Nigerians despite the initial excitement from the refinery announcement.

According to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the 650,000 barrels per day refinery will supply 25 million litres of petrol to the Nigerian market daily this September.

This, NMDPRA said will increase to 30 million litres per day in October.

However, the promise of increased fuel supply has not yet eased the situation on the ground.

Tunde Ayeni, a commercial bus driver at an NNPC station in Ikoyi, said “I have been in the queue since 6 a.m. waiting for them to start selling, but we just realised that the pump price has been changed to N897. This is terrible, and yet they still haven’t started selling the product.”

The price hike comes as NNPC continues to struggle with sustaining regular fuel supply.

On Sunday, the company warned that its ability to maintain steady distribution across the country was under threat due to financial strain.

NNPC cited rising supply costs as the cause of its difficulties in keeping up with demand.