Global stock markets witnessed a sharp decline yesterday as the United States imposed tariffs ranging between 10 and 25 percent on imports from Canada, Mexico, and China.
The move has heightened fears of a global trade war, leading to a broad sell-off across major indices.
In Europe, the FTSE 100 dropped by 1.4 percent, while Germany’s DAX and France’s CAC declined by 1.6 percent and 1.5 percent, respectively.
The ripple effect extended to the United States, where Dow Jones Industrial Average futures fell by more than 500 points, S&P 500 futures dropped 1.9 percent, and Nasdaq futures plunged 2.8 percent.
The fallout has particularly impacted key sectors such as automotive, semiconductors, and banking, with investors worried about supply chain disruptions and inflationary pressures. Hedge funds have responded by offloading stocks across multiple regions, redirecting funds towards real estate stocks, which are perceived as a hedge against inflation.
The technology sector has also faced turbulence, with U.S. tech stocks suffering heavy losses. Fears of an AI market bubble have intensified following significant declines in the valuations of major firms, including Nvidia.
Despite the global downturn, the Nigerian Exchange Limited (NGX) remained resilient, closing on a positive note. However, analysts caution that continued instability in global markets could have broader implications for Nigeria’s financial landscape.
They warned that a prolonged market downturn, combined with heightened trade tensions, could lead to increased oil price volatility. Given Nigeria’s heavy reliance on oil exports, a decline in crude prices could impact revenue projections, potentially widening the country’s budget deficit.
Analysts also noted that foreign investors might reassess their exposure to emerging markets, including Nigeria. Stocks of multinational companies and oil-related firms with significant foreign exposure are expected to face the most pressure should investors begin reducing their risk in emerging economies.
Meanwhile, Nigerian equities opened the week on a positive note, with market capitalization rising by N83 billion amid increased investor positioning in blue-chip stocks ahead of earnings season.
At the close of trading, the All-Share Index (ASI) gained 134.18 points, marking a 0.13 per cent increase, bringing it to 104,630.3 points. Market capitalization also grew to N64.792 trillion, driven by gains in medium and large-capitalized stocks such as Presco, Okomu Oil, Beta Glass, Northern Nigeria Flour Mills (NNFM), and MTN Nigeria Communications (MTNN).
Analysts at United Capital Plc said “The equities market is expected to maintain its positive momentum as investors continue to position themselves ahead of the full-year 2024 earnings season and possible corporate action declarations. Nevertheless, given the elevated interest rate environment in the fixed-income market, we still expect bearish sentiments to linger in the background.”
Investor sentiment remained mixed, as 21 stocks advanced while 35 declined. Beta Glass and Presco led gainers, rising 10 percent each to close at N78.65 and N643.50, respectively. Okomu Oil followed with a 9.99 percent increase, closing at N537.20.
On the flip side, University Press led the losers’ chart, falling 10 percent to close at N5.04, while Omatek Ventures and SCOA Nigeria declined by 9.88 percent and 9.83 percent, respectively.
The total volume of traded shares dropped by 59.6 percent to 510.569 million units, valued at N13.253 billion across 14,611 deals. Transactions in FBN Holdings (FBNH) topped the activity chart, with 83.990 million shares traded at N2.480 million, followed by Zenith Bank (54.533 million shares valued at N2.725 billion) and Universal Insurance (32.587 million shares worth N21.011 million).
As global markets continue to navigate heightened economic and geopolitical risks, analysts suggest that the coming weeks will be critical in determining the long-term impact of U.S. trade policies on global investor confidence.
