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Market News
Local
Nigeria’s fiscal deficit balloons to N7.5trn in 2022 - Business Day
Nigeria's fiscal deficit has significantly increased, reaching N7.5 trillion in 2022. This rise is attributed to the country's rising debt service costs and shrinking revenues. As the fiscal deficit grows, the Nigerian government is faced with the challenge of financing it without further exacerbating the country's debt burden.
FBN Holdings to raise N139bn by Rights Issue - Business Day
FBN Holdings, a Nigerian financial services company, plans to raise N139 billion through a rights issue. The company aims to boost its capital base to meet regulatory requirements and strengthen its balance sheet. This move is part of FBN Holdings' strategy to enhance its financial position and improve its competitiveness in Nigeria's financial services sector.
NUPRC Grants 1st Petroleum Exploration Licence Under PIA - Leadership
The NUPRC has granted its first petroleum exploration license under the Petroleum Industry Act (PIA). This marks a significant milestone in the implementation of the PIA, which was designed to reform and regulate the country's petroleum industry. The license is expected to facilitate increased exploration and production activities promoting investment and growth.
Global
Dreams of big treasury gains backfire with $10B ETF loss - Bloomberg
Investors are pumping money into the iShares 20+ Year Treasury Bond ETF (TLT), even as it faces a sharp decline, with a 50% drop from its 2020 peak. They are betting that the Fed might have to cut rates due to economic concerns, making the risk-reward ratio attractive, especially for long-duration Treasuries, which could offset stock losses during a recession.
Wells Fargo’s Q3 revenue increases 6% to $20.9B - Reuters
Wells Fargo reported a rise in its quarterly profit for Q3 2023, primarily due to higher interest income. The bank's revenue reached $20.86 billion, surpassing the expected $20.11 billion for the quarter.
UN says over 400,000 people displaced in Gaza, appeals for $300 million - Reuters
The United Nations has stated that over 400,000 people have been displaced in Gaza, prompting an urgent appeal for $300 million in humanitarian aid. The displacement is a result of the recent hostilities in the region, and the funds are needed to provide essential assistance to those affected by the crisis.
Weekly Investment Watchlist
Market Commentary:
Asia and Australia:
Asian equities concluded lower on Friday, with the sharpest losses in Hong Kong after flat Consumer Price Index (CPI) and trade data raised concerns about deflation. Mainland Chinese markets were also in the red. Seoul and Taipei surrendered gains after a few positive days. Australia and Japan closed at their daily lows, while Southeast Asia saw mixed performance. India extended its early losses.
Major data from China revealed a mixed picture. The focus was on the decline in CPI data and weak export data, despite some improvement. The credit data was also not promising enough to suggest strong economic support:
China faced a deflation threat, with the CPI coming in at 0% year-on-year, down from 0.1%. Core CPI was at 0.8%, and the biggest drag came from food prices, which dropped by -3.2% year-on-year.
The Producer Price Index (PPI) declined by -2.5% year-on-year after a 3.0% drop in August, suggesting further deflation. While this is beneficial for global inflation, it indicates subdued activity in the country.
On a more positive note, China’s trade surplus increased to $77.1 billion, improving from $68.3 billion. Exports and imports both declined, but the decreases were less severe than in previous months. Exports fell by -6.2% year-on-year in September, which was an improvement compared to the -8.8% decline in the previous month. Imports also fell by -6.2% year-on-year, slightly better than the -7.3% fall in the previous month.
China’s credit data was mixed, but the People’s Bank of China (PBOC) reaffirmed that it has ample policy room to support the economy. M2 money supply slowed for the seventh consecutive month to +10.3% year-on-year, the lowest level since March 2022. Outstanding loan growth also fell slightly from 11.9% to 10.9%. New loans increased compared to the previous month but remained below consensus.
Europe, Middle East, Africa:
European equity markets closed lower, following the overall weakness in Asia.
Eurozone industrial production rebounded by 0.6% month-on-month in August, a positive shift from the -11% drop in the previous month. However, on a year-on-year basis, production was still down by -5.1%, which was worse than the previous month’s reading of -2.2%. While some countries like Italy and smaller economies showed improvement, Germany, Spain, and France continued to experience negative readings.
In the UK, Bank of England (BoE) Chief Economist Pill stated on Thursday that it would be a long and gradual process before the central bank could confidently assert that its tightening cycle is over. The slowdown in the UK economy suggests that a recession over the winter cannot be ruled out. This factor is likely causing the BoE to reconsider aggressive rate hikes and opt to let higher rates work for a while.
The Americas:
Kaiser Permanente resumed talks with a healthcare workers union a week after a strike.
California prepared a lawsuit to block the Kroger-Albertsons deal.
Qualcomm announced the cutting of 1,200 jobs in California as part of cost reduction efforts.
Ford stated that its offer of a 23% pay raise to the United Auto Workers (UAW) is the best it can do.
UnitedHealth delivered a double beat with improvements in their revenues and Medical Care Ratio. OptumHealth, which was creating a drag on earnings, also showed improved performance.
JPMorgan reported a double beat. Loans were up 17%, but deposits were down 4%. Provisions were lower than estimates, but net charge-offs increased to $1.5 billion. Investment banking revenues were up 8%, with Assets under Management up 22%. Despite reporting $669 million in net investment securities losses and $665 million in legal fees, they posted a solid report.
BlackRock reported Assets under Management up 11%. Revenue was up 5%, and Net Income increased by 14%. This was in contrast to declines in the previous quarter. The operating margin was up 14%.
The Week Ahead:
Monday:
Tuesday:
Wednesday:
US Producer Price Index (PPI) rose 0.5%
Thursday:
Gross Domestic Product (GDP) (UK)
The US Consumer Price Index (CPI) stood at 3.7% in September
US initial jobless claims unchanged at 209,000
Friday:
US UoM Consumer Sentiment is at a current level of 68.10, down from 69.50 last month
Investment Tip of The Day
Consider ESG Factors: Environmental, social, and governance (ESG) factors can influence investment performance. Consider investments in companies with strong ESG practices for long-term sustainability.
Meme of the Day
