Wealth Wednesday
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Market Data
Local
Global
*Data as of 4pm WAT
Market News
Local
‘We may open border for importation of cement’: FG warns - Vanguard
The Federal Government has warned manufacturers of cement in the country that it may open the border to allow for the importation of cement if they keep on increasing their prices indiscriminately. Minister of Housing and Urban Development, Arc Ahmed Dangiwa, issued this warning at an emergency meeting held with cement and building materials manufacturers in Abuja on Tuesday.
FG seeks $10bn to stabilise exchange rate as naira tumbles - Punch
The Nigerian Federal Government is planning to raise $10bn to improve liquidity in the foreign exchange market. On Tuesday, the naira fell to an all-time low of 1,850 per dollar at the parallel market. President Bola Tinubu, who was represented by Vice President Kashim Shettima, disclosed this at the inaugural Public Wealth Management Conference in Abuja on Tuesday.
Customs blocks illegal food export to mitigate shortage - BNR
Nigerian Customs Service, NCS has put in place measures to block unlawful food export from the country in it’s bid to mitigate food shortage in the country. The Service action is in response to the critical challenges of food security and soaring costs of essential food items in the country.
Currency Outside Banks Drops to N3.3tn, Now 89% of CIC - This Day
A report by the Central Bank of Nigeria (CBN) has revealed that currency outside banks as of January 2024 marginally declined to N3.28 trillion representing 89 per cent of the N3.65 trillion total currency in circulation (CIC). The report showed an improved ratio of currency outside banks compared to currency in circulation, which was 94 per cent in December 2023, a staggering N3.43 trillion currency outside bank from N3.65 trillion total currency in circulation (CIC).
Global
US asset managers ready for China recovery with products stacked up - Reuters
Three straight years of losses from Chinese markets and anti-Beijing rhetoric from Washington have not deterred some U.S. asset managers from introducing products they hope will thrive if Chinese stocks rebound.
China's markets have been hit by a long-lasting property crisis, slowing growth and geopolitical tension.
Conference Board gives up on U.S. recession call - Reuters
The Conference Board on Tuesday abandoned a long-running call for the U.S. economy to fall into recession, although its Leading Economic Index still sees economic output flatlining in the months ahead. The business research group's index, meant to be a gauge of future economic activity, fell 0.4% in January to 102.7, the lowest level since April 2020 when the U.S. was in a brief recession after the onset of the COVID-19 pandemic and related shutdowns.
Amazon to replace Walgreens in Dow Jones Industrial Average - Reuters
Amazon is set to join the Dow Jones Industrial Average, replacing Walgreens Boots Alliance, effective next week, S&P Dow Jones Indices said on Tuesday.
Shares of Amazon rose 1.3% in extended trade after the announcement, while Walgreens dipped 3%.
Apple Readies AI Tool to Rival Microsoft’s GitHub Copilot - Bloomberg
Apple Inc., racing to add more artificial intelligence capabilities, is nearing the completion of a critical new software tool for app developers that would step up competition with Microsoft Corp. The company has been working on the tool for the last year as part of the next major version of Xcode, Apple’s flagship programming software.
Market Commentary:
Currencies/Macro:
The US dollar experienced a significant decline against most major currencies but managed to recoup some of its losses during the New York afternoon. The EUR/USD pair climbed from 1.0780 to 1.0839 before settling at 1.0810, marking a net gain of 0.3%. The GBP/USD increased by 0.2% to 1.2670, peaking at 1.2668 amidst several Bank of England (BoE) announcements. The USD/JPY saw a modest decrease of 10 pips, closing at 150.00 after fluctuating between 149.69 and 150.44. The Canadian dollar emerged as the weakest among the G10 currencies, with the USD/CAD rising from 1.3475 to 1.3525 following softer than expected CPI data from Canada.
Canada's Consumer Price Index (CPI) for January showed a month-over-month decrease of 0.4% and a year-over-year increase of 2.9%, below the forecasted figures. The core median CPI year-over-year rose to 3.3%, also below expectations.
In the US, the Conference Board’s Leading Index for January indicated a decline of 0.4%, suggesting continued sub-trend growth.
The European Central Bank’s (ECB) quarterly wage rate indicator for the fourth quarter dropped to 4.5% year-over-year, hinting that wage inflation might have reached its peak.
BoE Governor Bailey discussed interest rates, stating that it was not necessary for inflation to return to the target before cutting rates. He highlighted that while the market expects rate cuts within the year, the BoE does not align with this expectation nor provides specific predictions. His colleagues expressed varied perspectives, with concerns over wages, economic risks, and the relationship between headline inflation, wage growth, and domestic inflation. The 2-year gilt yield in the UK fell by 8 basis points, a more significant movement compared to the 4-5 basis point decline observed in most of Europe.
Interest Rates:
After the long holiday weekend, the US 2-year treasury yield reopened at approximately 4.65%, then gradually decreased to 4.57%, before slightly rising to 4.61%. The 10-year yield began the day around 4.31%—up from Friday's close of 4.28%—fell to 4.24%, and then returned to 4.28%. Market expectations for the Federal Reserve's funds rate, currently at 5.375%, anticipate no change at the upcoming meeting in March, but there's a consensus on a 100% probability of a rate decrease by June.
Credit spreads showed mixed movements; the Main index widened by a basis point to 57, the CDX remained unchanged, and US investment-grade cash spreads improved by 1-2 basis points. The resumption of market activity in the US led to an increase in primary market volumes. In Europe, eight issuers priced a total of EUR 4.1 billion, while in the US, nine issuers entered the market, raising USD 14.3 billion in new funds.
Commodities:
Crude oil markets experienced a downturn due to softer risk sentiment and the approaching March expiry, with the March West Texas Intermediate (WTI) contract falling by 1.28% to $78.18 and the April Brent contract decreasing by 1.15% to $82.60. Despite the decline, the supply landscape remains favorable, supported by OPEC+ commitments to adhere to voluntary production cuts and the impact of recent drone attacks on Russian refinery operations, which have reduced run rates and exports. Bloomberg reported that damages to six refineries have pushed daily operations to their lowest since October of the previous year. Approximately 15 million barrels of Russian Sokol crude oil are reportedly anchored off the South Korean port of Yeosu, affected by US sanctions and Houthi attacks in the Red Sea. The Wall Street Journal highlighted that US crude production growth is expected to slow significantly this year, with only a 170,000 barrels per day increase, marking the smallest annual rise since 2016, excluding the pandemic period. Morgan Stanley has updated its Brent price forecast to $80-85, with the Brent prompt spread reaching its highest level since October of the previous year, buoyed by a significant increase in money managers' long positions and a notable rise in Nymex heating oil net longs. Equinor expressed optimism about achieving record natural gas export volumes this year.
In the metals sector, prices were buoyed by a significant mortgage rate cut in China, with copper rising by 1.1% to $8,531 and aluminium by 1.2% to $2,223. The potential for further sanctions related to the Navalny case added to the positive price momentum. The White House and US National Security Advisor discussed plans for sanctions targeting various segments of the Russian economy. BHP reported a substantial decline in net income for the first half, following a $2.5 billion write-down on its nickel assets. The International Aluminium Institute (IAI) noted a 2.36% year-on-year increase in global aluminium production, with China's output rising by 2.83%. Norsk Hydro raised concerns about a demand slump in the European construction sector, comparing the situation to the COVID-19 crisis.
Iron ore prices continued to fall, driven by concerns over Chinese demand despite a larger-than-anticipated 25 basis point cut in the Loan Prime Rate (LPR). The March Singapore Exchange (SGX) iron ore contract dropped by $6.40 to $119.70, and the 62% Mysteel index decreased by $5.90 to $122.20. Despite efforts to boost market confidence in China, iron ore, rebar, and hot-rolled coil contracts have reached their lowest levels since November of the previous year.
Investment Tip of The Day
Implement a disciplined approach to saving and investing by setting aside a fixed percentage of your income regularly. This habit, often referred to as "paying yourself first," ensures that you consistently contribute to your wealth-building goals, promoting financial stability and growth over time. It's a foundational practice in effective wealth management.