Stock Market

Asian Markets Follow US Rally as Interest Rate Peak Looms

Published

4 weeks ago

November 6, 2023

Asian markets saw gains today, echoing Friday’s rally in US stocks and bonds as investors increasingly believe that interest rates have reached their peak for the current economic cycle.

Equities in Australia, Japan, South Korea, and China all posted gains, pushing a regional stock gauge to its highest level in nearly a month. This marked the fourth consecutive advance of more than 1%.

South Korea’s benchmark index jumped by 4% following Sunday’s announcement that the country would ban short-selling.

This restriction took effect on Monday and is set to last until the end of June next year, as declared by South Korea’s Financial Services Commission.

Investors have adjusted their predictions for Federal Reserve rate cuts next year, with swaps pricing suggesting that a cut by June is fully priced in. This increased expectation for rate cuts stems, in part, from projections of a weaker jobs report and a slight uptick in US unemployment.

Vasu Menon, Managing Director of Investment Strategy for OCBC Bank Singapore, commented, “There’s a bit more reason for investors to be more optimistic that the Fed is probably done with rate hikes, but one should not let one’s guard down. If the economy proves to be more resilient, if inflation proves to be more stubborn, bond yields could go up once again.”

Most Asian currencies advanced against the dollar, with the South Korean won and Indonesian rupiah leading the way. Meanwhile, 10-year Treasury yields inched up in Asian trading after a nine-basis-point drop on Friday.

Forecasts for Federal Reserve cuts next year challenge the narrative of “higher for longer” that policymakers have outlined in recent months, potentially setting the market and Fed officials on a collision course.

Bank of Japan Governor Kazuo Ueda, addressing the central bank’s inflation target, mentioned that the bank cannot yet see its inflation target within sight with enough certainty, although the chances of achieving the goal are gradually rising.

Looking ahead, investors will closely watch the Reserve Bank of Australia’s potential interest rate increase after a four-meeting pause in rate hikes. China is set to release trade data following Chinese Premier Li Qiang’s pledge to expand imports in Sunday’s comments.

In the commodities market, oil prices rose slightly in Asia following Saudi Arabia and Russia’s reaffirmation of their commitment to supply curbs of over 1 million barrels a day through the year-end.

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World Stock Markets React to Uncertainty in Interest Rates and Dollar Fluctuations

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Nigerian Exchange Stumbles as Inflation Soars to 26.72%, Investors Lose N89 Billion

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Nigerian Exchange Limited

Nigerian Stock Exchange Bounces Back, Gains N132 Billion in Market Cap

Published

2 days ago

November 30, 2023

Investors King

The Nigerian Exchange Limited rebounded on Wednesday with the market capitalization surging by N132 billion.

This uptick was propelled by the positive performance of key stocks, including Seplat Energy (+10%), Meyer Plc (+9.79%), Sunu Assurance (+9.56%), Nestle (+9.52%), and Consolidated Hallmark Holdings Plc (+9.24%).

The All-Share Index closed rose by 0.34% to 71,283.34 points, reflecting investors’ optimistic sentiment, particularly in medium and large-cap stocks with solid fundamentals while the market capitalization increased to N39.007 trillion.

Despite a decline in total deals and volume by 19.14% and 32.55% to 6,579 deals and 360.60 million units respectively, the total value for the day increased by 17.64% to N6.61 billion.

Among the gainers, Seplat, Meyer, Sunu Assurance, Nestle Plc, and Consolidated Hallmark Holdings Plc stood out, closing at N2.310, N3.59, N1.49, N1.150, and N1.30 per unit, respectively, after gains ranging from 10% to 9.24%.

The losers’ chart was led by Guinea Insurance, down 10%, followed by Omatek (-9.88%), Abbey Mortgage Bank (-9.68%), Neimeth Pharma (-9.45%), and Tantalizer (-8.62%).

Performance across sectors was predominantly bullish, with the Insurance, Consumer Goods, Oil/Gas, and Industrial Goods indexes recording notable advancements of 1.17%, 0.89%, 6.06%, and 0.01%, respectively.

However, banking stocks emerged as the only laggard for the day, declining by 0.56%.

GT Bank (GTCO) dominated trading activities, emerging as the most traded security in terms of volume and value, with 56.91 million units worth N2.19 billion traded in 261 deals.

This positive momentum signals a renewed fervor in the Nigerian stock market.

Stock Market

Robinhood Expands to UK, Introducing Commission-Free Stock Trading

Published

2 days ago

November 30, 2023

Investors King

Robinhood Markets Inc., the pioneer of commission-free stock trading, is venturing into the UK market, making its international debut by offering British retail investors access to more than 6,000 US-listed stocks and other securities.

This move follows the company’s success in the US during the Covid pandemic, where it gained popularity among first-time investors during the “meme-stock” frenzy.

While the enthusiasm among retail investors has cooled, Vlad Tenev, Robinhood’s CEO and co-founder, aims to disrupt the UK market by offering a range of attractive features.

Tenev stated, “We’d like to help lower fees for all customers in the UK, just like we did in the US back in 2019, right before Covid.”

The features include 5% interest on uninvested cash, zero trading commission, currency fees, and trading outside of market hours. Users can join a waitlist now, and the service aims to be fully available starting in 2024.

Despite facing regulatory scrutiny in the US for its role in the “meme-stock” frenzy and accusations of encouraging excessive risk-taking, Robinhood has ambitious plans for international expansion.

The company will compete with local platforms like Revolut and Freetrade, as well as US-based rival Public.com, which expanded to the UK in July.

Tenev believes that Robinhood’s technology-focused approach gives it an edge in expanding globally.

He emphasized, “The fact that we’ve built this platform from the ground up and we’re a technology company and financial services, not a brick and mortar institution, I think makes us more able to expand internationally in ways that traditional financial institutions can’t.”

Robinhood also plans to introduce crypto trading in the European Union in the coming weeks, further diversifying its offerings beyond traditional stocks.

Despite a recent 11% decline in transaction-based revenues in Q3 2023, Robinhood continues to explore new revenue streams, including the launch of a credit card in the US.

The company’s shares, although up 10% this year, remain 90% lower than their peak.

Bonds

Global Bonds Surge at Swiftest Pace Since 2008 Crisis as Rate Hike Speculations Subside

Published

3 days ago

November 29, 2023

Investors King

Global bonds are experiencing their most rapid surge since the 2008 financial crisis, with a Bloomberg measure of global sovereign and corporate debt returning 4.9% in November.

This marks the largest monthly gain since December 2008 when it soared 6.2% during the depths of the recession.

The surge is fueled by growing speculation that central banks, led by the Federal Reserve, have completed interest rate hikes and are poised to initiate cuts in the coming year.

The recent rally has been accentuated by comments from Fed Governor Christopher Waller, signaling a dovish stance. James Wilson, a senior portfolio manager, noted the significance of Waller’s dovish remarks, stating, “It sounds like the Fed is all but done in their hiking cycle.”

US 10-year yields slid to 4.26%, and Australian bonds experienced a surge, with 10-year yields dropping 14 basis points.

The current bond rally reflects a shift in expectations towards looser central bank policies, providing relief for corporate bonds.

Spreads on global investment-grade corporate debt are hovering near the lowest levels since April 2022, indicating increased investor optimism about a gentle economic slowdown.

The average yield on corporate bonds has retreated to around 5.3%, down from nearly 6% in October, according to Bloomberg data.

Despite this positive trend, there remains a divergence in views between credit investors and rates traders, with the latter anticipating more aggressive Fed rate cuts that would necessitate a more pronounced economic deceleration.

The resolution of this tension is likely to be a focal point as central banks navigate economic uncertainties in the months ahead.