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

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3 weeks ago

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Global stock markets faced a mixed outlook on Wednesday as investors contemplated the notion of extended higher interest rates, even after the Federal Reserve’s perceived halt in raising them.

Following the relatively favorable outcome of a benchmark 10-year Treasury note auction and the belief that the Fed has likely concluded its rate hike cycle, yields across the Treasury curve experienced declines.

Amid this uncertainty, the dollar saw a rebound from a recent sharp sell-off, supported by the increasing conviction that the Fed has suspended its rate hikes.

However, the consensus on whether a rate cut is imminent remains divided, given the lingering impact of inflation surpassing the Fed’s 2% target.

Marvin Loh, senior global macro strategist at State Street in Boston, expressed that the possibility of more aggressive rate cuts is still uncertain, as the market continues to grapple with questions that initially pushed up yields.

The market is presently pricing in nearly a 50% probability of a rate cut of at least 25 basis points as early as May, according to the CME Group’s FedWatch Tool.

Nevertheless, futures indicate that the Fed’s overnight lending rate is expected to remain above 5% through the following June.

While MSCI’s all-country world stock index closed flat, Europe’s STOXX 600 index experienced a 0.28% increase.

Wall Street presented a mixed picture, with the S&P 500 and Nasdaq Composite extending their winning streaks while the Dow Jones Industrial Average saw a minor decline.

On the European front, rising healthcare stocks and robust earnings reports contributed to the growth of European shares.

Meanwhile, investors scrutinized economic data and central bankers’ statements to decipher the European Central Bank’s approach to rate hikes.

An ongoing consensus that the Fed’s tightening cycle has ended has left most FX strategists anticipating the dollar’s weakness for the remainder of the year.

However, the forex market remains dynamic, and further developments are awaited with interest.

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Nigerian Exchange Limited

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

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2 days ago

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November 30, 2023

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Nigerian Exchange Limited - 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.

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Stock Market

Robinhood Expands to UK, Introducing Commission-Free Stock Trading

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2 days ago

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November 30, 2023

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Robinhood

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.

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Bonds

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

Published

3 days ago

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November 29, 2023

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Bonds- 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.

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