Markets

Stock Market Hits 9-month High

Published

7 years ago

May 15, 2017

Stock Market Hits 9-month High

It was a record breaking week with the NSE ASI posting the largest singular gain of 3.18per cent , since 15th of June 2016.

Analysts at Cordros Capital Limited, an investment banking firm, said judging by market activity in the past three weeks, and more specifically, the spike in the number of deals and volume traded last week, “we sense improved investors, both local and foreign, appetite for risk assets on domestic bourse, following the: reduced apprehension in the macroeconomic environment; impressive 2016 full year and first quarter (Q1) performance of highly capitalised names, and increased confidence about the stability and liquidity of the foreign exchange (FX).

Apart from the ASI, that appreciated, all other indices finished higher during the week with the exception of the NSE ASeM Index that closed flat.

Daily Market Performance

The stock market opened for trading in the week on a positive note, sustaining its bullish trend, following high demand for fast moving consumer goods, insurance and banking stocks. Having gained 1.85 per cent last week, some level of profit taking was expected as trading resumed for the week yesterday. However, it appears investors are delaying their profit taking as bargain hunting remained high. Consequently, the NSE All-Share Index appreciated by 0.70 per cent to close at 26,418.33, while market capitalisation added N63.2 billion to close at N9.1 trillion.

Monday’s performance reduced the year-to-date decline to 1.70 per cent. The market recorded 26 price gainers, while 12 stocks depreciated. Although bellwether stocks such as Nestle Nigeria Plc, Nigerian Breweries Plc, Zenith Bank Plc, GTBank Plc were among the price gainers, Oando Plc led the chart with 10.0 per cent, trailed by Seven-Up Bottling Company Plc with 9.7 per cent. Continental Reinsurance Plc and AIICO Insurance Plc chalked up 9.4 per cent and 7.5 per cent respectively among others.

Conversely, Champion Breweries Plc led the price losers with 4.6 per cent, followed by Jaiz Bank Plc with a decline of 4.5 per cent. African Prudential Plc and Dangote Flour Mills Plc shed 3.3 per cent and 2.3 per cent in that order.

In terms of sectoral performance, all indices advanced except the NSE Industrial Goods Index that shed 0.02 per cent following price loss by Cement Company of Northern Nigeria(-1.9 per cent). The NSE Consumer Goods Index recorded the highest gain (+2.0) on account of buy sentiment in Nestle (+3.4 per cent), Seven-Up Bottling Company Plc (+9.7 per cent) and Nigerian Breweries Plc (+2.7 per cent). Similarly, the NSE Insurance Index went up by 1.8 per cent on the back of price appreciations in Continental (+9.4 per cent) and AIICO (+7.6 per cent) while the NSE Oil & Gas and NSE Banking indices appreciated 1.4 per cent and 0.4 per cent respectively.

Following continuous bull run, the market rallied to a year high on Tuesday after gaining for the eight consecutive days. Sustained demand lifted the NSE ASI by 1.28 per cent to close at year’s high of 26,756.21, while market capitalisation added N116.8 billion to be at N9.25 trillion. The gain was spurred mainly by demand for stocks such as Oando Plc, Access Bank Plc, FBN Holdings Plc, Guaranty Trust Bank Plc, Dangote Cement Plc, Nigerian Breweries Plc and Zenith Bank Plc.

According to analysts at Meristem Securities Limited, the increased investors’ appetite witnessed may be traced to the streams of positive news inflow as regards companies’ performance and economic recovery.

“Whilst we do not rule of some profit-taking activities at the end of the week, we reiterate that the current positive trend may persist,” they stated.

The bulls visited 34 stocks, while only six stocks played host to the bears. Just like Monday, Oando Plc led the price gainers with 10.1 per cent, trailed by Fidson Healthcare Plc with 9.5 per cent. Transcorp Plc chalked up 7.1 per cent just as May & Baker Nigeria Plc, Portland Paints and Products, Cement Company of Northern Nigeria Plc and Access Bank Plc appreciated by 5.9 per cent, 4.9 per cent, 4.8 per cent and 4.8 per cent in that order among others.

Conversely, Linkage Assurance Plc led the price losers with 3.7 per cent, followed by Dangote Sugar Refinery Plc with 3.5 per cent. Total Nigeria Plc shed 2.3 per cent, just as Lafarge Africa Plc and Seven-Up Bottling Company Plc depreciated by 2.2 per cent and 1.8 per cent respectively.

However, the value of stocks traded fell by 13.5 per cent to N2.815 billion, while volume rose by 101.4 per cent to 539.23 million shares. The three most actively traded sectors were Financial Services (488.45 million), Conglomerates (23.43 million) and Consumer Goods (9.78 million), while the three most actively traded stocks were: FCMB (243.86 million), Zenith Bank (52.29 million) and UBA (42.52 million).

Performance across sectors remained positive with three of the sectors appreciating, while only the NSE Industrial Goods Index, which dipped 0.3 per cent on account of profit-taking in Lafarge Africa.

The NSE Banking Index led sector gainers, rising by 2.2 per cent, followed by the NSE Oil & Gas Index with 0.7 per cent growth.

The bulls tightened their hold on the Nigerian Bourse on Wednesday as investors continue to react to improving macroeconomic fundamentals, particularly the recent introduction of an autonomous FX market for investors and exporters. At the close of trade, the NSE ASI rose 2.9 per cent to reach a 6-month high of 27,546.68 while the year to date return swung positive for the first time in the year to close at 2.5 per cent. Although the positive close was driven by broad-based buying interest across large, mid and small cap stocks, market bellwethers such as Dangote Cement, Nigerian Breweries, and Nestle supported performance. Investors gained N273.3 billion as market capitalisation advanced to N9.5 trillion.

In terms sectoral movement, on the NSE Industrial Goods Index fell by 0.9 per cent. The NSE Banking Index led with a gain of 4.1 per cent on the back of a broad-based rally in banking stocks across Tiers – Zenith (+5.6 per cent), GTBank (+2.4 per cent), UBA (+7.2 per cent), Fidelity Bank (+8.8 per cent) and Union Bank (+3.0 per cent). The NSE Consumer Goods Index trailed with 3.6 per cent, while the NSE Oil & Gas Index added 2.4 per cent. The NSE Insurance Index closed higher by 0.7 per cent.

In line with expectation, the bullish run in the equities market continued on Thursday, rising by 3.2 per cent to close at 28,423.70. As with previous sessions, the positive performance was driven by rally across sectors, but was largely buoyed by gains in bellwethers such as Dangote Cement, Nigerian Breweries Plc and GTBank.

Market Turnover

Meanwhile, investors traded 3.255 billion shares worth N28.738 billion in 25,370 deals, up from 1.154 billion shares valued at N10.439 billion that exchanged hands in 16,676 deals the previous week.

The financial services industry led the activity chart with 2.716 billion shares valued at N17.230 billion traded in 15,103 deals, thus contributing 83.4 per cent and 59.9 per cent to the total equity turnover volume and value respectively. The Consumer Goods Industry followed with 185.750 million shares worth N6.596 billion in 3,817 deals. The third place was occupied by Conglomerates Industry with a turnover of 156.010 million shares worth N385.427 million in 1,340 deals.

Trading in the top three Equities namely, FBN Holdings Plc, FCMB Group Plc and Zenith Bank Plc accounted for 1.419 billion shares worth N8.185 billion in 5,117 deals.

Also traded during the week were a total of 948 units of Exchange Traded Products (ETPs) valued at N16,591.16 executed in 14 deals compared with a total of 20 units valued at N110,000.00 transacted the preceding week in one deal.

A total of 5,201 units of Federal Government Bonds valued at N5.400 million were traded last week in three deals, compared with a total of 1,582 units valued at N1.608 million transacted two weeks ago in 10 deals.

Price Gainers and Losers

The price movement chart showed 57 equities that appreciated , up from 43 equities of the previous week, while 13 equities depreciated compared with 16 equities of the previous week. May & Baker Nigeria Plc led the price gainers with 31.9 per cent. Ecobank Transnational Incorporated trailed with 22.5 per cent, just as Fidson Healthcare Plc and PZ Cussons Nigeria Plc appreciated by 20.4 per cent.

Oando Plc and Unity Bank Plc appreciated by 20.2 per cent and 20 per cent in that order, just as Eterna Plc, Diamond Bank Plc, Nigerian Breweries Plc and Transcorp Plc chalked up 17.8 per cent, 17.6 per cent, 17.1 per cent and 16.3 per cent respectively.

Conversely, Jaiz Bank Plc led the price losers, shedding 9.1 per cent, trailed by Seplat with a decline of 5.8 per cent. Newrest ASL Nigeria Plc and Neimeth International Pharmaceuticals Plc went down by 5.6 per cent, 5.3 per cent and 4.8 per cent.

Other top price losers were: B.O.C Gases Plc, Trans-Nationwide Express Plc (4.8 per cent apiece); A-G Leventis Nigeria Plc (4.1 per cent); Lafarge Africa Plc (3.0 per cent); AIICO Insurance Plc (1.8 per cent0 and Learn Africa Plc (1.1 per cent).

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Samed Olukoya

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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Crude Oil

Oil Prices Drop Sharply, Marking Steepest Weekly Decline in Three Months

Published

1 day ago

May 4, 2024

Samed Olukoya

Amidst concerns over weak U.S. jobs data and the potential timing of a Federal Reserve interest rate cut, oil prices record its sharpest weekly decline in three months.

Brent crude oil, against which Nigerian oil is priced, settled 71 cents lower to close at $82.96 a barrel.

Similarly, U.S. West Texas Intermediate crude oil fell 84 cents, or 1.06% to end the week at $78.11 a barrel.

The primary driver behind this decline was investor apprehension regarding the impact of sustained borrowing costs on the U.S. economy, the world’s foremost oil consumer. These concerns were amplified after the Federal Reserve opted to maintain interest rates at their current levels this week.

Throughout the week, Brent experienced a decline of over 7%, while WTI dropped by 6.8%.

The slowdown in U.S. job growth, revealed in April’s data, coupled with a cooling annual wage gain, intensified expectations among traders for a potential interest rate cut by the U.S. central bank.

Tim Snyder, an economist at Matador Economics, noted that while the economy is experiencing a slight deceleration, the data presents a pathway for the Fed to enact at least one rate cut this year.

The Fed’s decision to keep rates unchanged this week, despite acknowledging elevated inflation levels, has prompted a reassessment of the anticipated timing for potential rate cuts, according to Giovanni Staunovo, an analyst at UBS.

Higher interest rates typically exert downward pressure on economic activity and can dampen oil demand.

Also, U.S. energy companies reduced the number of oil and natural gas rigs for the second consecutive week, reaching the lowest count since January 2022, as reported by Baker Hughes.

The oil and gas rig count fell by eight to 605, with the number of oil rigs dropping by seven to 499, the most significant weekly decline since November 2023.

Meanwhile, geopolitical tensions surrounding the Israel-Hamas conflict have somewhat eased as discussions for a temporary ceasefire progress with international mediators.

Looking ahead, the next meeting of OPEC+ oil producers is scheduled for June 1, where the group may consider extending voluntary oil output cuts beyond June if global oil demand fails to pick up.

In light of these developments, money managers reduced their net long U.S. crude futures and options positions in the week leading up to April 30, according to the U.S. Commodity Futures Trading Commission (CFTC).

Crude Oil

Oil Prices Rebound After Three Days of Losses

Published

3 days ago

May 2, 2024

Samed Olukoya

After enduring a three-day decline, oil prices recovered on Thursday, offering a glimmer of hope to investors amid a volatile market landscape.

The rebound was fueled by a combination of factors ranging from geopolitical developments to supply concerns.

Brent crude oil, against which Nigeria oil is priced, surged by 79 cents, or 0.95% to $84.23 a barrel while U.S. West Texas Intermediate (WTI) crude climbed 69 cents, or 0.87% to $79.69 per barrel.

This turnaround came on the heels of a significant downturn that had pushed prices to their lowest levels since mid-March.

The recent slump in oil prices was primarily attributed to a confluence of factors, including the U.S. Federal Reserve’s decision to maintain interest rates and concerns surrounding stubborn inflation, which could potentially dampen economic growth and limit oil demand.

Also, unexpected data from the Energy Information Administration (EIA) revealing a substantial increase in U.S. crude inventories added further pressure on oil prices.

“The updated inventory statistics were probably the most salient price driver over the course of yesterday’s trading session,” said Tamas Varga, an analyst at PVM.

Crude inventories surged by 7.3 million barrels to 460.9 million barrels, significantly exceeding analysts’ expectations and casting a shadow over market sentiment.

However, the tide began to turn as ceasefire talks between Israel and Hamas gained traction, offering a glimmer of hope for stability in the volatile Middle East region.

The prospect of a ceasefire agreement, spearheaded by Egypt, injected optimism into the market, offsetting concerns surrounding geopolitical tensions.

“As the impact of the U.S. crude stock build and the Fed signaling higher-for-longer rates is close to being fully baked in, attention will turn towards the outcome of the Gaza talks,” noted Vandana Hari, founder of Vanda Insights.

The potential for a resolution in the Israel-Hamas conflict provided a ray of hope, contributing to the positive momentum in oil markets.

Despite the optimism surrounding ceasefire talks, tensions in the Middle East remain palpable, with Israeli Prime Minister Benjamin Netanyahu reiterating plans for a military offensive in the southern Gaza city of Rafah.

The precarious geopolitical climate continues to underpin volatility in oil markets, reminding investors of the inherent risks associated with the commodity.

In addition to geopolitical developments, speculation regarding U.S. government buying for strategic reserves added further support to oil prices.

With the U.S. expressing intentions to replenish the Strategic Petroleum Reserve (SPR) at prices below $79 a barrel, market participants closely monitored price movements, anticipating potential intervention to stabilize prices.

“The oil market was supported by speculation that if WTI falls below $79, the U.S. will move to build up its strategic reserves,” highlighted Hiroyuki Kikukawa, president of NS Trading, owned by Nissan Securities.

As oil markets navigate a complex web of geopolitical uncertainties and supply dynamics, the recent rebound underscores the resilience of the commodity in the face of adversity.

While challenges persist, the renewed optimism offers a ray of hope for stability and growth in the oil sector, providing investors with a semblance of confidence amidst a volatile landscape.

Gold

Gold Soars as Fed Signals Patience

Published

3 days ago

May 2, 2024

Samed Olukoya

Gold emerged as a star performer as the Federal Reserve adopted a more patient stance, sending the precious metal soaring to new heights.

Amidst a backdrop of uncertainty, gold’s ascent mirrored investors’ appetite for safe-haven assets and reflected their interpretation of the central bank’s cautious approach.

Following the Fed’s decision to maintain interest rates at their current levels, gold prices surged toward $2,330 an ounce in early Asian trade, building on a 1.5% gain from the previous session – the most significant one-day increase since mid-April.

The dovish tone struck by Fed Chair Jerome Powell during the announcement provided the impetus for gold’s rally, as he downplayed the prospects of imminent rate hikes while underscoring the need for further evidence of cooling inflation before considering adjustments to borrowing costs.

This tempered outlook from the Fed, which emphasized patience and data dependence, bolstered gold’s appeal as a hedge against inflation and economic uncertainty.

Investors interpreted the central bank’s stance as a signal of continued support for accommodative monetary policies, providing a tailwind for the precious metal.

Simultaneously, the Japanese yen surged more than 3% against the dollar, sparking speculation of intervention by Japanese authorities to support the currency.

This move further weakened the dollar, enhancing the attractiveness of gold to investors seeking refuge from currency volatility.

Gold’s ascent in recent months has been underpinned by a confluence of factors, including robust central bank purchases, strong demand from Asian markets – particularly China – and geopolitical tensions ranging from conflicts in Ukraine to instability in the Middle East.

These dynamics have propelled gold’s price upwards by approximately 13% this year, culminating in a record high last month.

At 9:07 a.m. in Singapore, spot gold was up 0.3% to $2,326.03 an ounce, with silver also experiencing gains as it rose towards $27 an ounce.

The Bloomberg Dollar Spot Index concurrently fell by 0.3%, further underscoring the inverse relationship between the dollar’s strength and gold’s allure.

However, amidst the fervor surrounding gold’s surge, palladium found itself trading below platinum after dipping below its sister metal for the first time since February.

The erosion of palladium’s long-standing premium was attributed to a pessimistic outlook for demand in gasoline-powered cars, highlighting the nuanced dynamics within the precious metals market.

As gold continues its upward trajectory, investors remain attuned to evolving macroeconomic indicators and central bank policy shifts, navigating a landscape defined by uncertainty and volatility.

In this environment, the allure of gold as a safe-haven asset is likely to endure, providing solace to investors seeking stability amidst turbulent times.