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European Stocks Rise as Fed Outlook Sinks Dollar; Brent Near $50

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European shares rose for the first time in a week and emerging markets advanced as a gauge of commodities climbed for the sixth straight day and minutes of the Federal Reserve’s last meeting damped prospects for a U.S. interest-rate hike.

Miners led gains on the Stoxx Europe 600 Index and energy producers also rallied after Brent crude traded above $50 a barrel, while an MSCI index of emerging-market equities advanced to a one-year high. The dollar weakened versus all of its major peers following the release of the Fed record, which showed officials saw little risk of a sharp uptick in inflation and pushed odds of a rate increase this year back below 50 percent. The pound surged on a jump in U.K. retail sales.

Speculation that central banks in the world’s biggest economies will remain accommodative amid uneven growth propelled global equities to a one-year high this month and sent the dollar tumbling. The Fed minutes struck a more dovish tone when compared with comments this week from New York Fed chief William Dudley, who flagged the prospect of a rate hike as soon as next month. Dudley will hold a press briefing on Thursday in New York and his San Francisco counterpart, John Williams, is also due to speak.

“The message appears to be that as much as a September hike is a possibility, the Fed is unlikely to move until there is a consensus on the outlook for growth, hiring and inflation,” said Rodrigo Catril, a currency strategist at National Australia Bank Ltd. in Sydney. “Recent data would therefore suggest a hike is not imminent.”

Stocks

The Stoxx 600 added 0.7 percent at 10:19 a.m. in London, with all industry groups rising.

Vestas Wind Systems A/S surged 10 percent after increasing its annual guidance. Nestle SA, which has the highest weighting in the Stoxx 600, advanced 1.2 percent as Chief Executive Officer Paul Bulcke forecast pricing will rebound in the coming months, after the world’s biggest food company reported the slowest first-half sales growth since 2009.

S&P 500 futures were little changed, after shares eked out gains on Wednesday following the release of the Fed minutes. Cisco Systems Inc. fell 1.6 percent in German trading after the biggest maker of equipment that runs the Internet announced plans to cut about 7 percent of its workforce.

As well as jobless claims data, investors will look to earnings reports from companies including Wal-Mart Stores Inc. for indications of the state of the U.S. economy. Fewer than 30 of the S&P 500’s companies have yet to report. Of those that have already done so, 78 percent beat profit projections and 56 percent topped sales predictions.

The MSCI Emerging Markets Index rose 0.7 percent, led by technology stocks. Tencent Holdings Ltd. jumped to an all-time high after a 47 percent surge in profit beat analysts’ estimates. Samsung Electronics Co. also climbed to a record. The two stocks have the biggest weightings in the MSCI equity benchmark.

Japan’s Topix index dropped 1.6 percent, while the Philippine Stock Exchange Index erased losses after the government reported better-than-expected economic growth for the second quarter.

Currencies

The Bloomberg Dollar Spot Index fell 0.3 percent, approaching a three-month low. It posted a 0.2 percent gain on Wednesday, having been up as much as 0.5 percent ahead of the Fed minutes’ publication.

Britain’s pound was the biggest winner against its U.S. counterpart, climbing after a report showed U.K. retail sales jumped more than economists forecast in the month after Britain voted to quit the European Union. Sterling strengthened 0.9 percent to $1.3160.

The Aussie climbed 0.4 percent after a report showed Australia’s unemployment rate unexpectedly fell to 5.7 percent in July.

The MSCI Emerging Markets Currency Index added 0.2 percent, after falling 0.5 percent on Wednesday. South Africa’s rand was among the biggest gainers, rising 0.4 percent, while Mexico’s peso and Malaysia’s ringgit both appreciated a similar amount.

Mongolia’s tugrik fell for a record 24th day even as the central bank raised its key rate to 15 percent from 10.5 percent.

Commodities

The Bloomberg Commodity Index was set for the most enduring rally in more than two months as the dollar weakened.

West Texas Intermediate crude rose for a sixth day, the longest advance in more than a year, as U.S. crude and gasoline stockpiles dropped from the highest seasonal level in at least two decades. Oil added 0.4 percent to $46.96 a barrel after gaining more than 12 percent over the previous five sessions. Brent added as much as 0.4 percent to trade above $50 for the first time in more than a month.

Industrial metals also rose, with copper gaining 1.4 percent to $4,839 a metric ton and nickel adding 1.5 percent.

Bonds

Treasuries due in a decade were little changed, leaving the yield at 1.56 percent. Morgan Stanley recommends buying five-year notes, saying the absence of inflationary pressures in the world’s biggest economy will push the probability of a Fed rate increase this year to 30 percent in coming weeks. The likelihood was 49 percent on Wednesday, according to Bloomberg calculations based on Fed fund futures.

The yield on Australia’s 10-year bonds fell four basis points to 1.87 percent, while that on similar-maturity notes in Germany declined one basis point to minus 0.06 percent.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Forex

Naira to Dollar Rate Today: Naira Exchanges at N463 to Dollar on Black Market

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Naira to Dollar Rate on Black Market Today Stood at N463

The Nigerian Naira to dollar rate slid slightly against the United States dollar on Tuesday on the black market as social unrest continues to weigh on the nation’s economic outlook.

The local currency lost N1 against the US dollar to N463 while against the British pound it remains pressured at N592.

This decline continues against the European Union’s common currency, the Euro. The Naira traded at N540 to a single Euro on the black market.

Naira to dollar rate plunged amid rising economic uncertainties and unclear policy path caused by both COVID-19 and government limited fiscal buffers to cushion the negative impacts of the virus on Africa’s largest economy.

This coupled with the ongoing social unrest by the Nigerian youths to force decorum across the Nigerian Police Force and call global attention to decades of systemic intimidation and harassment of innocent citizens.

The Nigerian Stock Exchange has been closing flat since Thursday and continued this week, suggesting that investors are concerns and wary of eventualities as they look to safeguard their investments.

Again, the projected third-quarter recession, low foreign revenue generation, weak consumer spending and the rising cost of living are some of the factors hurting the Nigerian Naira outlook.

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Naira to a Dollar Exchange Rate Dips to N462 at Black Market Amid Social Unrest

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Youth Protests Weigh on Naira to a Dollar Exchange Rate on Black Market

The ongoing youth protest in Nigeria continues to weigh on the economic outlook and investors’ sentiment across the board.

The Nigerian Naira to a US dollar exchange rate declined by N1 from N461 on Tuesday to N462 on Wednesday and in the early hours of Thursday at the black market.

Against the British Pounds, the Naira exchanged at N600, down from the N592 it traded on Tuesday. This decline continues against Europe’s common currency as the Naira dipped against the Euro by N2 from N538 to N540 on the black market.

The nationwide protest by the Nigerian youth to curb police brutality and harassment on daily basis continues to disrupt business activities in Africa’s largest economy.

Nigerian youths are saying enough is enough after the death of several youths by the law enforcement agency, Special Anti-Robbery Squad (SARS), that was constituted to curb robbery but gone rogue and made extortions, harassments and in some cases killing of innocent citizens their means of livelihood.

Despite the government disbanding the unit and promise to redeploy officers to other existing units, commands and formations, the youths are saying they want a total discharge of corrupt officers and the entire reform of the Nigerian Police Force (NPF) before they will even consider backing down on the ongoing protest, especially after politicians started sponsoring thugs to attack peaceful protesters in Lagos and Abuja.

The Nigerian Stock Exchange closed flat on Wednesday amid rising uncertainty surrounding the government’s ability to de-escalate the situation given the fact that the youths no longer trust the administration or Nigerian government.

The Naira remained weak against global counterparts and expected to plunge further once the National Bureau of Statistics (NBS) release third-quarter Gross Domestic Product (GDP) report expected by many experts to plunge the nation into its second recession in four years.

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Naira Declines on the Black Market on Tuesday

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Naira Plunges Against Global Counterparts on Tuesday on the Black Market

The Nigerian Naira declined on Tuesday on the black market despite efforts by the Central Bank of Nigeria to prop up the value of the local currency against global counterparts.

The Naira declined by N4 from N457 per US dollar it traded on Friday to N461 on Tuesday morning. Against the European common currency, the Naira fell by N1 to N538 from N537.

However, the local currency improved by N3 against the British pound from N595 it exchanged on Friday to N592 on Tuesday.

Nigeria’s weak economic outlook continues to weigh on the Naira outlook, especially with the economy projected to enter recession in the third quarter.

Despite efforts to cushion the negative effect of COVID-19 on the nation’s economy, unclear policy path amid weak business sentiment and low foreign revenue generation needed to sustain economic productivity in a majorly import-dependent economy drag on Nigerian Naira value and the entire economic outlook.

 

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