Oil retreats, stock investors lose N1trn: Here’re five things to start your day
Oil plunges to $34 after Trump halts travel from Europe
Oil plunged after United States President Donald Trump said the U.S was suspending all passenger travel from continental Europe into the US for thirty days.
Brent crude, the international benchmark, fell 4.4 percent to $34 as of 1:03am EDT on Thursday.
The travel suspension starts Friday as the world’s top economy attempts to limit the spread of the coronavirus disease which has now been tagged a pandemic by the World Health Organisation (WHO).
Trump announced the travel ban on live television along with emergency funds to boost the U.S. economy, saying: “This is not a financial crisis. This is just a temporary moment of time that we will overcome together as a nation and as a world.”
Global markets plunged immediately after the announcement, with the U.S. S&P500 futures ESc1 down more than 3%, and Japan’s Nikkei and Australia’s S&P/ASX 200 down more than 4%. The dollar lost 1% against the yen.
The United States has reported 1,281 cases and 37 deaths caused by the virus.
Nigeria bond spreads widen as investors fret over naira, oil price
Nigeria’s 2021 bond spread widened by more than 600 basis points on Wednesday as jittery investors worried about the value of the naira currency after oil prices plunged. Investors were bidding to buy the 2021 bond at 12.79% while offers to sell were at 6.57%. Spreads for the bond which has a little over a year to maturity had been trading at around 100 basis points before the oil price rout. Spreads for the 2023 bond widened by more than 300 basis points.
Stock investors lose N1trn since Monday
Stocks continued their descent on Wednesday, recording their second-biggest decline in 2020 to widen the year’s loss by the most yet.
The most capitalised stock, Dangote Cement, shed 10 percent to N153 a unit after remaining relatively quiet in the previous market routs, pushing the market 3.35 percent lower and YTD to -12.18 percent. Stock investors have now lost over N1trn since Monday.
The cement maker makes up about 21 percent of the entire stock market.
Nestle, United Capital and Oando also declined.
However, 18 stocks were up on the day, the highest number of gainers since the start of trading this week, while the insurance index gained out of five other major sectoral indices tracked by BusinessDay.
Reps suspend Buhari’s US$22.79bn loan consideration indefinitely
The House of Representatives has indefinitely suspended the consideration of the US$22.79bn external loan request by President Muhammadu Buhari.
The House had listed the report by its Committee on Aids, Loans and Debt Management on the 2016–2018 Federal Government External Borrowing (Rolling) Plan as the last item for consideration on the order paper for Wednesday’s proceeding.
The Speaker, Femi Gbajabiamila, however, asked that the consideration be stood down without giving a new date.
High cost oil producers like Nigeria to suffer worst impacts of price war
As oil producers scramble to outdo one another in offering bargain prices for crude oil, countries that will hurt the most are those with a higher cost of production like Nigeria, a situation it has failed to address over the years.
Over 40 percent of Nigeria’s crude oil production now happens at offshore fields which are very expensive requiring huge capital outlay. The rest happens in onshore terrains marred by militancy, oil theft, and brigandage.
In addition, oil companies are now required to pay punitive taxes and royalty rates upon the revision of a Deep Offshore Act when compared with Nigeria’s OPEC peers.