Markets

A Wild 24 Hours

Stock markets aren’t faring too badly on Thursday, which is arguably surprising considering how eventful the last 24 hours have been.

Published

2 years ago

September 22, 2022

Samed Olukoya

By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA

Stock markets aren’t faring too badly on Thursday, which is arguably surprising considering how eventful the last 24 hours have been.

It’s hard to know where to start on a day like today. While the Fed’s hawkish rate hike is probably the dominant driver in the broader markets, the dangerous nuclear threats from the Kremlin are causing quite a stir and then there’s the small matter of Japan’s first FX intervention in 24 years which has triggered some huge moves in the yen.

Fed resists the urge

The Fed’s decision to hike by 75 basis points, despite the obvious temptation to opt for a full percentage point, was probably sensible given the scale of tightening we’ve already seen this year. It now expects to go further with rates, with markets pricing in another 125 basis points this year and 25 next, although as we’ve seen throughout the year, that will probably change as we get more data. In much the same way that investors got too excited by the July inflation data, it may prove to be the case that the August setback isn’t as bad as feared. In such uncertain times, overreaction is becoming the norm.

Japan finally intervenes as BoJ stands firm

The Bank of Japan is standing firm on its policy stance, despite the widening differential with the US and others. That has put considerable pressure on the currency this year, so much so that the Ministry of Finance completed its first intervention in 24 years as the yen neared 146 against the dollar. The move on the back of that was quite something and it may not be the last. Interestingly, the level the pair reached was only a little shy of that in 1998 when it last intervened, prompting further speculation about whether this is the unofficial line in the sand. That has been denied but the rate check also occurred around 145 so perhaps there is more to it than just volatility. It will be interesting to see how keen traders are to put that to the test in future.

BoE continues with conservative approach

The Bank of England raised rates by 50 basis points today; a move some may view as a little conservative under the circumstances. Of course, that’s an accusation that’s been levelled against the MPC a lot this year as it proceeded with 25 basis point hikes while others were accelerating them. But without the benefit of new economic projections and details of tomorrow’s mini-budget, the decision is that much harder as was evident from the vote split. Perhaps the BoE will regret passing up another opportunity to ramp up the pace of tightening, with inflation now seen peaking just below 11% in October and remaining in double-digits for a few months after. But with the economy potentially already in recession, the Bank – like many others – finds itself between a rock and a hard place.

CBRT keeps cutting despite soaring inflation

One central bank that isn’t concerned about the consequences of its actions is the CBRT. It cut rates by another 100 basis points today despite inflation sitting above 80% which sent the lira to a new record low against the dollar. You have to wonder what it will take for the central bank to accept that its experiment – at the worst possible time – has failed but clearly, we’re not nearly at that point. More pain to come, it seems.

Franc slides as SNB hikes by 75 basis points

The Swiss National Bank hiked rates by 75 basis points today which was at the lower end of expectations. The franc tumbled in the aftermath of the decision, slipping more than 1.5% against the dollar, euro and pound. That’s despite Chair Thomas Jordan hinting at more to come including potentially at an unscheduled meeting, should conditions warrant such action. He also suggested that FX interventions could take place as necessary – which is obviously a hot topic today – while also stressing that the stronger franc has actually aided the fight against inflation.

Oil rises amid more nuclear threats

Oil prices are rising again on Thursday after giving up initial gains a day earlier. Nuclear threats are increasingly becoming the norm from the Kremlin but energy prices remain very sensitive to them. Still, crude isn’t trading too far from the six-month lows and another round of aggressive tightening around the world today won’t be helping, as economic fears continue to weigh on demand prospects. A move below those lows – around $86-88 in Brent – could signal much gloomier economic forecasts and frustrate OPEC+ which has stated it could announce further output cuts, even before the next scheduled meeting.

Choppy trading in gold as the dollar pares gains

Gold has been quite choppy since breaking below $1,680 last week. It has fluctuated largely between here and $1,650 since then and even briefly moved above in the aftermath of the Fed decision. Even today, it slipped back towards the lower end of that range but has since recovered back to the upper end as the dollar has erased gains. Perhaps that’s a sign of a floor appearing, with the market now having priced in a large amount of tightening. I’m not convinced at this stage as the break of $1,680 appeared very significant but time will tell. A pull back in the dollar could certainly facilitate such a recovery in gold.

Bitcoin seeing strong support

Bitcoin is managing small gains after slipping earlier in the day. Once more, it slipped back towards $18,000 where it ran into some support. With the summer lows around $17,500 just a little below again, this is a huge test for bitcoin and cryptos overall. If risk appetite doesn’t improve, that support is at risk of breaking, with further support then potentially appearing around $16,000.

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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.

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Energy

NNPC Increases Fuel Price, Sells Pump at N1,030 Across Outlets

Published

4 hours ago

October 9, 2024

Ugwoke Ogbodo

Petrol pump price has risen to N1,030 per litre at various outlets of the Nigerian National Petroleum Company Limited (NNPCL) in Abuja on Wednesday.

The recent development comes after the NNPC decided to terminate its exclusive purchase agreement with Dangote Refinery.

The company had on Monday announced an end to its exclusive purchase agreement with Dangote Refinery, opening up the market for other marketers to buy petrol directly from the refinery.

This means the NNPC will no longer be the sole off-taker, and marketers can now negotiate prices directly with Dangote Refinery.

This development aligns with the current practices for fully deregulated products, where refineries can sell directly to marketers on a willing buyer, willing seller basis.

Investors King had reported on Tuesday that oil marketers accused Dangote Refinery of ignoring its call for lifting of petrol.

However, checks on Wednesday at NNPC Ltd outlets in the Central area of Abuja, the Federal Capital Territory, showed that the price of the Premium Motor Spirit had been adjusted upward with the pump price of petroleum hitting N1,030.

Customers at the station also confirmed that the price of fuel was changed from N897 to N1,030.

At several other outlets in the Wuse, Lugbe area of the capital city, the pump price equally jumped to N1,030 as motorists and commuters grumbled amid the uncertainty.

Crude Oil

Italian Prosecutors Sentenced to Jail for Concealing Evidence in $1.3 Billion Nigerian Oilfield Case

Published

5 hours ago

October 9, 2024

Ugwoke Ogbodo

An Italian court has sentenced two Milan prosecutors, Fabio De Pasquale and Sergio Spadaro, to eight months imprisonment for concealing evidence in an alleged corruption case involving a $1.3 billion oilfield in Nigeria.

The court found the duo guilty after it was established that they failed to file documents that could have supported Eni’s defense in the trial.

Regarded as one of the energy industry’s most significant corruption trials, the case which involves Eni and Shell centered around the $1.3 billion acquisition of a Nigerian oilfield.

In 2020, the Nigerian government filed a case against Shell/SNUD and Eni asking for compensation in the sum of $1.3 billion over an Oil Prospecting License 245, also known as OPL 245.

The case which had dragged on for over a decade came to a halt when the Ministry of Justice withdrew its petition in an Italian Court in March 2024.

Meanwhile, an international Court in Italy had already declared Shell and its affiliate partners not guilty on all counts.

Nigeria also decided to “irrevocably” suspend any future legal claims in Italy against Eni, its affiliates, as well as present and former officers concerning rights related to the field.

Meanwhile, delivering judgement on the refusal of the prosecutors to tender evidence, the court stated that De Pasquale and Spadaro had omitted key evidence, including a video from a former Eni external lawyer that could have been favourable to the defence.

The court sitting in Brescia and has jurisdiction over judicial matters in Milan had listened to the argument of the prosecutors who accused De Pasquale and Spadaro of withholding evidence that could have influenced the outcome of the Eni-Shell trial, thereby infringing on the defendants’ rights.

Responding to the charges, the prosecutors’ lawyer sought a full acquittal, arguing that no explicit rule mandated the filing of documents by prosecutors in such cases.

In March 2021, a Milan court acquitted Eni, Shell, and all other defendants, despite criticisms of the prosecutors’ conduct.

Judges ruled that the two prosecutors had a legal duty to submit evidence that might have aided the defense. The lawyer did not offer immediate comments following the conviction.

Afterward, the Brescia court sentenced the duo to eight-month jail term as requested by the prosecutors.

Energy

Direct Petrol Lifting: Oil Marketers Accuse Dangote Refinery of Frustrating Efforts at Making Fuel Cheaper

Published

10 hours ago

October 9, 2024

Ugwoke Ogbodo

Oil marketers in Nigeria have alleged that the Dangote 650,000 barrels per day Lagos-based refinery has been snubbing them on their demand to directly lift its Premium Motor Spirit, popularly known as petrol.

They hinted that the development is a setback on their efforts at making fuel sell cheaper across filling stations in the country.

The President of the Independent Petroleum Marketers Association of Nigeria, Abubakar Maigandi and the President of the Petroleum Products Retail Outlets Owners Association, PETROAN, Billy Gillis-Harry assured that if they are allowed to directly lift petrol from Dangote Refinery, it would make the product sell lesser.

Recall that the Nigerian National Petroleum Company Limited announced that it is quitting its role as sole off-taker of Dangote Petrol, thus forcing oil marketers and Nigerians to be in a waiting state.

Speaking on the development, Maigandi said all efforts put forward by IPMAN to meet with Dangote Refinery’s management have not yielded results and that messages sent to the refinery for direct lifting of its petrol were not replied to.

As of Monday this week, the oil marketers said they have not been able to have any of their proposed meetings with Dangote Refinery and neither has any feedback been given by Dangote Refinery on direct sales of its fuel.

They said it was difficult for them to make comments on the price of Dangote Petrol since they have not been able to buy it directly.

Notwithstanding, they assured that there would be a reduction in the price of petrol which currently goes between N950 and N1,200 per liter if Dangote Refinery agrees to sell the product directly to them.

Maigandi, while describing the expected reduction in the price of PMS as “small”, noted that NNPCL sold petrol to oil marketers at N840 and N870 per liter depending on the location, adding that “we sell at N950 in Abuja depending on the location.”

Speaking on NNPCL quitting role as sole off-taker of Dangote Petrol, Maigandi stressed that oil marketers are waiting to hear from Dangote Refinery on whether petrol could be lifted directly.

Gillis-Harry’s position was not different as he corroborated his counterpart’s submission that Dangote Refinery refused to sell its petrol directly to marketers.

According to him, despite attempts by petroleum marketers to have business discussions with Dangote Refinery, they have not received the green light.

He said the association had attempted to have a business discussion with Dangote Refinery on direct petrol lifting but as of the time of filing this report, the refinery has not given them greenlight.

Meanwhile, the spokesperson of Dangote Group, Anthony Chiejina said he was not aware of the allegations.

On September 15, the Dangote Refinery announced the inaugural distribution of its petrol with NNPCL as the sole buyer.

Upon the lifting of Dangote Petrol last month, had announced a fresh fuel price hike between N950 and N1,100 per litre across its retail outlets.

The fuel price adjustments came on the back of NNPCL’s stance that it bought Dangote petrol at N898 per liter, however, Dangote disagreed.

The oil firm, owned by Africa’s richest man, Aliko Dangote had hinted that its petrol pump price would be announced by the Presidential Implementation Committee on Naira-for-crude sales.

However, despite the kick-off of the Naira-for-crude with the expected supply of 24 million barrels by October and November 2024 by the Nigerian government, the price per liter of Dangote Petrol has remained a subject of controversy.

Last month, the House of Representatives urged Dangote Refinery to allow oil marketers to lift its petrol directly.

Earlier, refiners and marketers had hinted that the commencement of the Naira-for-crude sales deal with Dangote Refinery and other refineries would lead to a drop in the pump price of petrol.