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Asian Markets Tumble Amidst Fed’s Hawkish Signals, Posing Challenges for Investors

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Asian

Asian stocks and sovereign bonds faced a significant decline in response to hawkish signals from the Federal Reserve, sparking concerns about ongoing interest rate hikes in the U.S.

Hong Kong’s stock market notably underperformed, plummeting by as much as 3.4% upon reopening after a holiday, while other benchmark indexes across the region also dipped.

The MSCI Asia Pacific Index appeared headed for its lowest closing point since November, with China currently observing a week-long holiday.

In Australia, the central bank maintained its policy rate for the fourth consecutive meeting, but it cautioned that further monetary policy tightening might be necessary, causing the Australian dollar to retain its earlier losses and government bonds to remain relatively stable.

Simultaneously, bonds throughout Asia experienced a decline, with Australia’s 10-year bond yield remaining near its highest level since 2011.

These moves mirrored the slump in U.S. Treasuries following the Fed’s hawkish messaging, which overshadowed earlier optimism about avoiding a U.S. government shutdown.

Treasury yields across various maturities all surged approximately 10 basis points, while the benchmark 10-year note reached its highest level since 2007.

The market sentiment remained risk-averse, with a prevailing notion of “higher-for-longer” interest rates as U.S. economic data and central bank speakers maintained a slightly hawkish stance.

Asset allocators, including traditional 60/40 portfolio managers, were faced with challenging choices, but some saw bonds as an opportunity to lock in yields not seen in decades.

The global bond selloff gained momentum as traders increasingly bet on a November rate hike by the Fed, raising the likelihood from 25% to roughly one-in-three.

Federal Reserve Vice Chair for Supervision Michael Barr emphasized the key question of how long interest rates should remain elevated, while FOMC hawk Michelle Bowman reiterated her call for multiple rate hikes.

Cleveland Fed President Loretta Mester also expressed the likelihood of further rate hikes this year.

Despite these developments, the U.S. dollar strengthened against most major currencies, reaching a year-to-date high against the Japanese yen.

Meanwhile, gold stabilized after declining to its lowest point since March, and oil prices retreated, dropping below $90 a barrel, with waning demand from China expected to limit the impact of OPEC+ supply cuts.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Nigerian Exchange Limited

Investors Lose N720bn in Midweek Sell-Offs

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Nigerian Exchange Limited - Investors King

Investors at the Nigerian Exchange Group lost N720 billion on Wednesday, the third consecutive day of bearish activity on the exchange.

The Exchange has now lost a combined N1.54 trillion in the last three days.

On Wednesday, the All-Share Index plummeted by 1.31% to 99,302.37 points while market capitalization dropped to N54.32 trillion. This downward spiral brought the year-to-date returns to 32.80%.

Market breadth remained negative with only five gainers compared to 52 decliners.

Notable gainers included PZ Cussons, Juli Plc, and Axa Mansard, while FCMB Group, Lafarge Africa, and Nigerian Breweries led the decliners with losses of 10% each.

Bearish sentiments spread across various sectors, particularly Banking, Insurance, and Consumer Goods, experiencing declines of 6.90%, 3.72%, and 1.20%, respectively.

The negative trend was fueled by sell-offs in prominent stocks like Sterling Financial Holdings, Wema Bank, and AccessCorp.

Despite improved trading volume and total deals, which rose by 41.28% and 15.40% respectively, the total traded value fell by 4.80% to N5.83 billion.

Transcorp Plc emerged as the most traded security by volume, while Zenith Bank led in traded value at N1 billion, indicating mixed sentiments among investors amidst market uncertainties.

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Nigerian Exchange Limited

FBN Holdings, Multiverse, MTN Nigeria Lead Losers on Nigerian Exchange

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Stock - Investors King

FBN Holdings, Multiverse, and MTN Nigeria emerged as the top losers on the Nigerian Exchange Limited (NGX) on Tuesday as market capitalisation dipped by N773 billion.

FBN Holdings, one of the most capitalized financial firms, declined by 10% to close at N30.60 per share.

This drop comes after the company had recently risen to prominence in the financial sector.

Multiverse, an active player in the industrial goods sector, also shed 10% to settle at N15.30 per share while MTN Nigeria saw its shares dip by 9.94% to N222.90 per share.

The downward trend in these key stocks contributed to the overall bearish performance of the Nigerian Exchange as the All-Share Index dipped by 1.39% and market capitalisation moderated to N55.04 trillion.

Market sentiment remained negative, with 27 losers outweighing 10 gainers, indicating widespread sell-offs across various sectors. Africa Prudential Plc, Omatek, and Juli Plc were among the few gainers.

Despite the challenges faced by these companies, market analysts remain cautiously optimistic about the prospects of the Nigerian Exchange.

They emphasize the importance of monitoring market dynamics and making informed investment decisions amidst the prevailing volatility.

As the Nigerian Exchange navigates through turbulent waters, investors are advised to exercise prudence and diligence in their investment strategies to mitigate risks and capitalize on potential opportunities that may arise in the market.

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Nigerian Exchange Limited

Nestle, Eterna, Fidson Drag Nigerian Exchange Down, Wiping Out N51bn

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stock bear - Investors King

The Nigerian Exchange (NGX) opened the week in the red as Nestle Plc, Eterna, and Fidson Healthcare Plc closed lower to wipe out a combined N51 billion from the market capitalization.

Nestle Plc shed 10 percent to close at N990 per share while Eterna and Fidson Healthcare Plc plummeted by 9.97 percent and 9.82 percent to settle at N15.80 and N15.15 per share, respectively.

At the close of trading, the All-Share Index (ASI) dipped by 0.09 per cent to 101,995.53 points and the NGX market capitalization fell to N55.81 trillion.

This downturn reflects investors’ concerns about the stability of these key companies amidst broader economic uncertainties.

Analysts had anticipated a bearish sentiment as investors sought guidance from economic policymakers and corporate earnings reports.

With the NGX struggling to find solid footing, investors remain cautious about their portfolio allocations, especially with rising fixed-income yields and impending monetary policy decisions.

The trading session saw a marginal increase in transaction volume, rising by 1.14 percent to 294.32 million units.

However, the value of transactions surged by 12 per cent to N6.72 billion, indicating intensified trading activity despite the overall market decline.

Also, the number of deals rose by 29 percent to 9,957, showcasing heightened market participation.

While the banking sector recorded a modest 1.35 percent gain, driven by increased interest in FBN Holdings, JaizBank, and Sterling Financial Holdings Plc, other sectors faced challenges.

The consumer goods and oil/gas sectors experienced notable declines, contributing to the overall negative sentiment.

As market participants await corporate earnings reports and the outcome of the Monetary Policy Committee meeting, the NGX remains susceptible to volatility, highlighting the need for cautious investment strategies in the current economic landscape.

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