Stocks see first negative close this week after APC primaries
Nigeria’s stock market recorded its first loss this week, declining by N41billion or 0.14 percent on Wednesday, June 8. The record negative on the Bourse comes on the heels of a long-drawn Presidential primaries contest by the nation’s ruling All Progressives Congress (APC) which Bola Ahmed Tinubu finally emerged as the party’s Presidential candidate.
Financial Derivatives Company (FDC) analysts in their June 3 presentation at LBS Breakfast Club had expected the NGX to maintain a horizontal – downward trend, adding that the institutional investors will rebalance their portfolio for attractive fixed-income yields.
“Telco stocks will continue to rally. Banking stocks will drift as they struggle with market share and cut costs. Expect an increase in their cost of funding and impairment. Corporate margins will shrink due to expensive borrowings,” FDC analysts added.
Amid the kick-off of Nigeria’s longest election cycle, traders on its Bourse in 4,265 deals exchanged 248,958,637 shares valued at N1.861billion.
Currently, foreign inflows into the Nigerian equities market remain low. Investors had after a-two days continued to trade cautiously in the absence of major catalysts to spur activities on Custom Street.
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UBA redeems $500m 5-year Eurobond
The United Bank for Africa (UBA) announced on Wednesday, June 8, that its $500 million 5-year Eurobond notes, with a maturity date of June 8, 2022, have been redeemed.
The Eurobond, which is its first, offered a coupon rate of 7.75 percent to investors and was directed towards supporting the bank’s focus in key areas of the economy.
According to a statement issued by the bank, the Eurobond is part of the bank’s liability management strategy directed to assist the bank to achieve its core business objectives while still proving value to customers and shareholders.
The GMD/CEO of the bank acknowledged that the successful redemption of the Eurobond is a testament to “UBA’s robust and prudent liquidity management strategies, coupled with a very strong and diversified asset and liability management process. This, in spite of macroeconomic headwinds underpinned by FX illiquidity, double-digit inflation and currency devaluation.”
World Bank warns of global recession, stagflation
The World Bank has warned that the global economy will be faced with recession and stagflation this year.
The bank’s President, David Malpass, in a report stated, “that for many countries, a recession will be hard to avoid.”
Taking a look at the current happenings such as the war in Ukraine, the lockdowns in China, and the disruptions in the global supply chain for valuable inputs, coupled with the risk of stagflation, the prospect of growth is a lofty dream this year.
However, Malpass warned that for many countries, the prospect of a recession is unavoidable.
He advised that the global economy should avoid trade restrictions at all costs while at the same time encouraging production through systematic changes in fiscal, monetary, climate, and debt policy.
Crude oil prices steadies amid falling US stockpiles
This morning, Brent and WTI futures steadied above $123 and $122 per barrel amid news of falling US crude stockpiles.
According to data made available by the US Energy Information Administration (EIA), crude oil stocks dropped to their lowest level since the war in Ukraine began, while gasoline inventories are at the lowest seasonal level in eight years.
According to tradingeconomics, fuel consumption has not been deterred by a rising fuel price despite the price in the US approaching $5 per gallon.
Apparently, global oil prices are steadily rising as production returns back to pre-pandemic levels amid crude oil supply disruption caused by Russia’s invasion of Ukraine and the tightening of trade restrictions taken by many countries.
However, China’s gradual reopening of its economy after more than a month of lockdown in Shanghai and some other cities will also add to the demand for crude oil.
Wall Street closes lower
The fear of further tightening by central banks to fight inflation, which has been forecasted to affect corporate earnings, drove investors’ cautious behavior, which pushed all US major indexes to close lower.
Thus the S&P 500 lost 1.1 percent or 44.91 basis points to close at 4,115.77 basis points while the Dow Jones fell 269.24 points to close at 32,910 basis points. The tech-savvy Nasdaq shook off 89 points to close at 12,086 basis points.
According to tradingeconomics, a lack of any significant stimulus to drive consumer spending along with high Treasury yields continued to dictate the momentum on Wall Street.
Meanwhile, taking an isolated look at some individual stocks, the US-traded shares of Credit Suisse fell by over 0.92 percent after the leading financial services company issued a profit warning for the second quarter.
Microchip manufacturing behemoth Intel, on the other hand, lost 5 percent of its trading value after management warned of a likely drop in semiconductor demand.
