Stock Market

Asian Stocks Follow Wall Street’s Decline, Await Powell’s Speech for Interest Rate Clues

Published

9 months ago

August 25, 2023

Asian stock markets mirrored a slump on Wall Street as traders eagerly anticipated Jerome Powell’s forthcoming speech for insights into the interest-rate outlook.

Equity markets in Japan, Australia, South Korea, and China all experienced declines, with Hong Kong-listed technology stocks notably affected, echoing the heavy sell-off in US tech shares on Thursday.

The Nasdaq 100 recorded a 2.2% drop, marking its most significant decline in three weeks while the S&P 500 also experienced a drop of over 1%, nearly erasing its weekly gains.

Futures contracts for these US benchmarks saw minimal changes during Asian trading.

In the bond market, Treasury yields, particularly the two-year yields, which are sensitive to immediate policy moves, surged above 5% on Thursday.

Meanwhile, Australian and New Zealand bond yields saw slight increases in Asian trading.

The greenback further strengthened against its G-10 peers, while the yen weakened, breaching 146 per dollar for the first time since Tuesday, following slightly lower-than-expected inflation data for Tokyo.

Even with Chinese authorities urging top financial institutions to support a struggling market, Chinese stocks experienced a slump.

Morgan Stanley, for the second time in three months, cut price targets for Chinese equity benchmarks. Meituan shares also slid after the company issued a warning about a slowdown in its core meal delivery business.

Investor attention is now focused on the annual gathering of top central bankers in Jackson Hole, Wyoming, where Powell is scheduled to deliver a speech at 10:05 a.m. Washington time on Friday.

Powell is expected to outline how officials will assess the necessity of rate hikes and when to initiate rate cuts.

Leading up to Powell’s address, Susan Collins, the President of the Federal Reserve Bank of Boston, indicated that rate increases may be necessary but refrained from signaling the peak point.

In contrast, Patrick Harker, the President of the Federal Reserve Bank of Philadelphia, anticipates interest rates remaining unchanged for the rest of the year, suggesting that policymakers have likely implemented sufficient tightening measures.

In an earlier interview on Bloomberg Television, former St. Louis Fed President James Bullard suggested that a surge in economic activity this summer could postpone the Fed’s plans to conclude interest-rate increases.

A survey conducted by 22V Research reveals that 78% of investors expect Powell to prioritize data dependency in his speech, with only 21% anticipating a “risk-off” market reaction, while 43% expect a mixed or negligible response, and 37% predict a “risk-on” reaction.

Dennis DeBusschere, founder of the New York-based research firm, commented, “If Powell focuses on data dependency, that ought to help 10-year yields stabilize,” highlighting the potential to provide a “tailwind” to the growth-versus-value trade.

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Nigerian Exchange Limited

Nigerian Stock Market Sinks as Benchmark Index Hits January Levels

Published

5 days ago

May 15, 2024

Samed Olukoya

The Nigerian equity market closed in the red on Tuesday as the benchmark index plummeted to levels last seen in January.

The All-Share Index (ASI) dropped to 97,473.98 points, mirroring the bearish sentiment that prevailed earlier in the year.

Similarly, the market capitalization of listed stocks also experienced a sharp decline, falling to N55.132 trillion, a level reminiscent of the market’s performance in January when it reached N55.583 trillion.

This decline marks a stark reversal from the bullish trend that characterized the latter part of 2023 and spilled over into the early months of 2024.

Analysts had long anticipated a correction in the market, citing the unsustainable nature of the rally driven largely by sentiment rather than fundamental economic or market improvements.

David Adonri, a seasoned stockbroker, described the previous bullish run as sentiment-driven, noting that while the equities market had recorded impressive gains of 39.84 percent in the first quarter of 2024, it lacked substantial support from economic or market fundamentals.

Despite efforts to reignite investor interest through corporate actions and announcements, such as the Central Bank of Nigeria’s plans for a recapitalization exercise, the market struggled to maintain momentum.

Other investment avenues offering better yields further diverted attention away from equities.

The day’s trading session saw notable declines in the share prices of key players such as Dangote Sugar and PZ Cussons, both recording a 10 per cent drop, extending their stay on the losers’ chart.

The Initiates Plc, a waste management firm, also witnessed a similar decline in its share price.

Trading activities painted a gloomy picture as total deals, volume, and value all depreciated significantly compared to the previous day.

Sectoral performance reflected the overall bearish sentiment with declines observed in banking, insurance, and consumer goods indices.

While the industrial goods index saw a marginal rise, the oil and gas sector remained stable amidst the turmoil.

AccessCorp emerged as the most traded security by volume, while GTCO led in traded value, highlighting investor interest in specific stocks despite the market-wide downturn.

Bonds

Investor Appetite Wanes as FG Bond Auction Sees Lowest Participation of the Year

Published

5 days ago

May 15, 2024

Samed Olukoya

Subscription for the Federal Government bond auction on May 13, 2024 was the lowest so far in 2024.

Despite the subdued interest, the government successfully raised N380.76 billion, albeit experiencing a 39 per cent reduction compared to the proceeds from the previous month’s auction.

The aggregate subscription across all tenors amounted to N551.316 billion, representing a decrease from the N920.08 billion recorded in the preceding month.

The Debt Management Office (DMO) reported a non-competitive allotment of N301.30 billion.

The auction featured various bond tenors with the new 9-year bond taking center stage. This bond attracted substantial interest, garnering N373.875 billion in subscriptions.

Of this amount, N285.124 billion was allotted, inclusive of N179.00 billion under non-competitive bids.

The bids ranged from 16.95 per cent to 22.00 per cent, eventually settling at a marginal rate of 19.89 per cent.

Meanwhile, the 7-year bond received bids totaling N76.875 billion, with N62.975 billion allotted. Non-competitive allotments accounted for N85.80 billion.

The bids ranged from 17.20 per cent to 20.80 per cent, resulting in a final marginal rate of 19.74 per cent.

In addition, the 5-year bond attracted bids amounting to N100.56 billion, with an allotment of N32.67 billion.

An additional N36.500 billion was allocated through non-competitive bids. Bids spanned from 17.50 per cent to 21.00 per cent, and the marginal rate was set at 19.29 per cent.

The subdued subscription level in May 2024 indicates a lack of robust investor participation in government bonds compared to previous auctions.

This decline in investor interest could be attributed to various factors, including prevailing market conditions, economic uncertainties, and evolving investment preferences.

Stock Market

Retail Traders Revive Meme-Stock Craze with GameStop and AMC Rally

Published

5 days ago

May 15, 2024

Samed Olukoya

Meme-stock traders have reignited the flame that propelled shares of GameStop Corp. and AMC Entertainment Holdings Inc. to record heights once again.

GameStop, the video-game retailer at the center of the meme-stock phenomenon, appreciated by 60% in stock price to gain as much as 113% earlier in the day.

Meanwhile, AMC, the struggling movie theater chain, saw its shares rise by 32%, triggering multiple trading halts throughout the trading session.

The abrupt and dramatic swings in both stocks indicated the resurgent fervor among retail investors.

This latest rally was sparked by the return of Keith Gill, famously known as “Roaring Kitty” on social media, who played a pivotal role in driving the meme-stock mania of 2021.

Gill’s reappearance online reignited enthusiasm among day traders on platforms like Reddit, reviving interest in GameStop and AMC.

Amid the fervent trading activity, AMC announced the successful completion of a previously announced at-the-market offering of shares, raising approximately $250 million in total.

The company sold 72.5 million shares at an average price of $3.45, bolstering its financial position amidst the stock surge.

Tuttle Capital Management CEO, Matthew Tuttle, commented on the developments, stating, “I think it shaped up pretty good for everybody here.

They did what they needed to do, and the shareholders didn’t get wiped out.”

The rally in AMC’s stock also had a significant impact on its bonds, with its notes experiencing substantial gains in high-yield trading.

AMC’s 10% bond due 2026 surged as much as 11.25 cents on the dollar to 87 cents, reflecting investor optimism fueled by the stock’s resurgence.

While the recent surge in GameStop and AMC stocks echoes the frenzy of 2021, trading volumes and activity still fall short of the peak reached during the meme-stock craze of that period.

Despite this, GameStop ranked as the second-most traded stock by retail investors for out-of-the-money call option volumes on Monday, signaling sustained interest in the meme-stock universe.

As retail traders continue to drive momentum in GameStop and AMC, market observers remain vigilant, watching closely for further developments in this evolving saga of retail-driven stock market dynamics.