Trading Tuesday
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*Data as of 4pm WAT
Market News
Local
Subsidy removal: Nigeria’s fuel consumption rate drops by 33% – Kunle Salako - Naira Metrics
Nigeria's fuel consumption rate has decreased by 33% following the removal of fuel subsidies, according to the Minister of State for Petroleum Resources, Timipre Sylva. This significant drop is attributed to market forces now dictating fuel prices, reducing consumption.
Listed FGN Bonds crash 99.9% to 148bn - Vanguard
Listed Federal Government of Nigeria (FGN) bonds have seen a 99.9% decrease in value, plummeting to 14.8 billion naira. This sharp decline is attributed to investors shifting to more attractive options due to low yields on FGN bonds and the Central Bank's policies aimed at curbing inflation.
Global
Bond crush stifles markets as $134 billion hits - Reuters
Global markets face another week of turmoil driven by surging U.S. bond yields, the Federal Reserve's hawkish stance, and looming government debt sales of $134 billion. The U.S. dollar's strength is felt worldwide, pushing dollar/yen exchange rates to yearly highs and causing the dollar's DXY index to surge.
Russia hits Ukrainian port and grain facilities in air strikes - Reuters
Russia carried out a drone strike on Ukrainian port infrastructure and grain storage facilities in Izmail, damaging a border checkpoint building, storage facilities, trucks, and cars. Two people were injured, and operations at an international checkpoint were temporarily suspended.
ChatGPT can now ‘speak,’ listen and process images, OpenAI says - CNBC
OpenAI's latest update for ChatGPT enables voice conversations with synthetic voices and image processing. Users can opt for five different synthetic voices and share images with the chatbot. While voice functionality will be limited to the iOS and Android apps, image processing will be available on all platforms.
Weekly Investment Watchlist
Market Commentary:
Asia and Australia:
Asian equities ended the day with widespread losses on Tuesday. The Greater China region saw further declines, particularly impacting the property sector, leading the Hang Seng index to 10-month lows. Australia was primarily led lower by its mining sector, while Taiwan and South Korea also saw declines of over 1%.
A filing on the Shenzhen exchange issued on Monday revealed that China Evergrande subsidiary Hengda Real Estate defaulted on CNY4 billion (approximately $547 million) in principal and interest payments due on September 25. It's worth noting that this unit had missed an interest payment on this bond back in March.
Bond yields in Asia continued to rise, reaching new highs on Tuesday. The Treasury yield curve saw a bear flattening, with the 10-year yield reaching a 16-year high. Similarly, the JGB (Japanese Government Bond) 10-year yield hit its highest level in a decade, while the Australian 10-year rate approached its highest level since mid-2011.
Japan's Finance Minister, Taro Suzuki, joined in on FX verbal intervention, stating his willingness to respond to excessive volatility "without ruling out any options." This comes following Prime Minister Kishida's comments on Monday, emphasizing the authorities' monitoring of FX developments with a high level of urgency and expressing concern about excessive volatility.
Europe, Middle East, Africa:
The ECB's bond reinvestment plan might become the next focus in the battle to curb inflation. While the previous ECB meeting earlier this month did not discuss its PEPP (Pandemic Emergency Purchase Programme) reinvestment, comments from ECB officials suggest that this could be the next point of focus in policy discussions as it keeps rates in restrictive territory.
ECB President Christine Lagarde indicated in a hearing with EU lawmakers that recent economic indicators suggest further weakness in economic activity in the third quarter. She noted that while headline inflation has decreased, domestic price pressures remain strong, and inflation is expected to reach the target by the end of 2025.
The Bank of England (BoE) published the terms of reference for its review on Monday, indicating its willingness to consider reforms, potentially including an approach similar to the Fed's Summary of Economic Projections.
Italy's Treasury is set to release its new economic targets on Wednesday, providing a framework for Prime Minister Meloni's budget. Sources have indicated that the 2024 budget deficit target may be raised to a range between 4.1% and 4.3%, compared to April's forecast of 3.7%.
London offices have reportedly lost almost a fifth of their value over the past year, significantly more than most other European countries, according to data from BNP Paribas cited by The London Times. On average, London office values have declined by 17.1% since the summer of 2022, with drops recorded in the past five quarters.
The Americas:
As we approach the start of earnings season, companies are entering a blackout period, leading to lower buybacks. Approximately 84% have already begun their blackout period, and by the end of the week, 90% are expected to be in blackout.
The Dallas Fed Manufacturing Index for September came in at -18.1, compared to -17.2 in the previous month. Notably, "uncertainty regarding outlooks picked up notably," with the corresponding index rising 14 points to 27.0, marking its highest reading in nearly a year.
A Fed study has shown that the bottom 80% of earners in the United States have exhausted their cash savings and now have less cash than they did before the pandemic.
There is increased interest in tax loss harvesting, particularly among mutual funds, according to Goldman Sachs. Mutual funds with year-end reporting at the end of October are expected to book gains before that date, which has implications for tax planning.
The Week Ahead:
Monday:
Tuesday:
US CB Consumer Confidence declines to 103.00 in September
Wednesday:
Thursday:
Final GDP q/q (US)
Unemployment Claims (US)
Friday:
Core PCE Price Index m/m (US)
Revised UoM Consumer Sentiment (US)
Investment Tip of The Day
Keep Up with Regulatory Changes: Stay informed about changing financial regulations and tax laws. These changes can have significant implications for your investments and overall financial planning.
Meme of the Day
