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Op-Ed

Nigeria Week ahead: Trump disrupts market calm, unemployment data in focus

Market players will be looking to see whether improving domestic conditions have translated to a drop in the unemployment rate.

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SEC approves MTN Nigeria’s NSE listing

The economic calendar for Nigeria is relatively light this week with PMI figures and unemployment data under the radar.

Sentiment towards the nation has already received a boost today after the Stanbic IBTC Bank Nigeria PMI expanded to 55.5 in April 2019 from 53.6 in the previous month. With the reading suggesting signs of improving health and stability in Nigeria’s private sector, this positive sentiment has the potential to support local equities in the near term.

However, external forces in the form of renewed trade tensions and geo-political risks may fuel risk aversion consequently limiting upside gains. The next major event risk for the Nigerian economy will be on Friday when the unemployment rate for Q4 is scheduled for release.

Market players will be looking to see whether improving domestic conditions have translated to a drop in the unemployment rate.

Speaking of risk-off, financial markets started the week on an extremely cautious note after US President, Donald Trump unexpectedly raised the stakes in trade talks with China.

Risk aversion swept across Asian and emerging markets in early Monday trading, following the US President’s tweets about raising existing US tariffs on $200 billion worth of Chinese imports this Friday, while hinting at new tariffs “shortly” on a separate $325 billion worth of Chinese goods.

While it remains to be seen whether the Trump administration will press ahead with the added tariffs, it’s already evident that markets are taking some risk off the table, undermining the base case that investors had been pricing in: a formalized US-China trade deal in the near future.

With Chinese Vice Premier Liu He scheduled to lead a delegation to Washington this week, the timing of the tweets also suggests that President Trump is attempting to push through an immediate resolution to the drawn-out talks.

This latest development once again demonstrates how Trump’s tweets can be a wild card for any attempt to formulate a lasting outlook on global growth, as trade tensions remain a key overhang for markets.

Dollar creeps higher post US jobs report

Dollar creeps higher post US jobs report

King Dollar struggled for direction on Monday despite Trump’s tariff threats fueling risk aversion. The lack of action seen in the Greenback could be based on investors digesting last week’s mixed US jobs report.

Although the US labor force continues to display resilience, wage growth remains a sore spot for the Federal Reserve. Investors will most likely direct their attention towards Jerome Powell’s speech later in the week for more insight into interest rate timings.

Should the central bank head sound remotely dovish or fail to bring anything new to the table, the Dollar could end up weakening.

Commodity spotlight – Gold

Gold is positioned to be heavily influenced by US-China trade developments and the Dollar’s valuation this week.

The metal could push back above $1300 if risk aversion accelerates the flight to safety. However, a move back below $1280 signals further downside towards $1265.

The views expressed in this piece are the author’s own and do not necessarily reflect News Central’s editorial stance.

Op-Ed

Nigeria’s economic growth cools in Q1, Pound rattled by political risk

Growth in the largest economy in Africa slowed to 2.01% during the first quarter of 2019

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Nigeria's economic growth cools in Q1, Pound rattled by political risk

Growth in the largest economy in Africa slowed to 2.01% during the first quarter of 2019, thanks to external risks and contraction in the Oil sector.

Although the non-Oil sector grew by 2.47%, the Oil sector, which remains the country’s biggest foreign exchange earner, shrank by 2.40%. While Nigeria remains on a quest to break away from the chains of Oil reliance, the nation remains exposed to external shocks and this was reflected in the latest GDP figures.

Will the deceleration in growth momentum pressure the Central Bank of Nigeria to cut interest rates in an effort to jumpstart the economy? This is a question on the minds of many investors.

Sterling struggles to nurse wounds as political risk continues to bite

The return of domestic political turmoil in the United Kingdom has led to a flurry of selling momentum for the British Pound, which fell over 300 pips during the previous trading week.

The selling momentum returned once again in the early hours of Monday morning and the news flow circulating around UK Prime Minister Theresa May needing to state her leaving date, coupled with Labour leader Jeremy Corbyn stating that Brexit discussions have broken down makes it doubtful for buyers to be tempted back into the GBP-USD.

Taking a look at the technical picture, the GBPUSD remains firmly bearish on both the daily and weekly charts. There have been consistently lower lows and lower highs, while the MACD has crossed to the downside. The solid weekly close below 1.2820 has opened the doors towards 1.2700 and 1.2620 in the near term.

Nigeria's economic growth cools in Q1, Pound rattled by political risk

Commodity spotlight – Gold

The past few days have certainly not been kind to Gold and this continues to be reflected in the bearish price action.

Signals over the direction of US-China trade talks have caused risk sentiment to swing back and forth, ultimately impacting the appetite for Gold.

While Gold bulls are clearly losing the battle as prices trade towards $1274, the war still rages on.

Nigeria's economic growth cools in Q1, Pound rattled by political risk

The sentiment pendulum could easily swing in favour of bulls this week, if trade tensions intensify and concerns over slowing global growth accelerate the flight to safety.

With Gold still supported by core themes in the form of a cautious Federal Reserve and speculation over a potential US rate cut in 2019, the precious metal remains shielded by downside shocks.

Looking at the technical picture, sustained weakness below $1280 is seen opening a path towards $1268 in the short-to-medium term.

The views expressed in this piece are the author’s own and do not necessarily reflect News Central’s editorial stance.

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Business

Nigeria week in review: trade hopes falter, Brexit talks collapse, Gold sinks

Markets remain uncertain at this point in time as to whether the weeks long US-China trade dispute actually spells trade doom.

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Nigeria week in review: trade hopes falter, Brexit talks collapse, Gold sinks

It has been a turbulent trading week for financial markets, as investors tussled with ongoing trade developments, Brexit uncertainty and geopolitical tensions across the globe.

Risk sentiment crumbled today on reports circulating around China’s lack of interest to resume trade discussions with the United States. Global equity markets were flashing red amid the uncertainty and this negative mood could roll over into the new trading week.

Markets remain uncertain at this point in time as to whether the seemingly confrontational rhetoric following the escalation in the US-China trade dispute over the past two weeks actually spells the death of any trade deal.

Perhaps the weekend couldn’t have come at a better time, allowing time for investors to digest the latest commentary and ascertain whether both sides are playing hardball as an intended signal, a show of brinkmanship, or just plain noise before the scheduled G20 meeting in Japan next month.

Pound hammered as Brexit talks collapse

Nigeria week in review: trade hopes falter, Brexit talks collapse, Gold sinks

It was already a terrible trading week for the British Pound thanks to the political risk circus in Westminster and Brexit-related uncertainty.

Recent reports of cross-party talks between the Conservative and Labour party concluding without a deal have compounded to the Pound’s woes today. With the failure of cross-party talks and Theresa May agreeing to set a date for her departure fueling concerns over the UK potentially crashing out the EU without a deal in October, Pound weakness is likely to remain a dominant theme.

With regards to the technical picture, the GBP-USD is bearish on the daily and weekly charts. The currency pair extended losses on the negative news this morning, with prices trading around 1.2750 as of writing. A weekly close below 1.2820 has the potential to open a path towards 1.2700 and 1.2620, respectively.

All eyes on Nigeria GDP in the week ahead

Next week kicks off with a bang for the Nigerian economy as GDP figures for Q1 are scheduled to be released on Monday. Investors will closely scrutinize the data for insights into the health of the nation during the first quarter of 2019. A figure that exceeds market expectations is likely to boost sentiment over the Nigerian economy.

Commodity spotlight – Gold

Nigeria week in review: trade hopes falter, Brexit talks collapse, Gold sinks

This has not been the best of trading weeks for Gold with prices trading around $1283 as of writing.

Conflicting signals over the direction of US – China trade talks caused risk sentiment to swerve back and forth which ultimately impacted appetite for Gold.

Although the yellow metal is trading back towards $1285 level at the time of writing, bulls remain in control above $1280.

With uncertainty over trade talks likely to stimulate the flight to safety, safe-haven assets like Gold are poised to remain buoyed. Technical traders will continue to closely observe how prices behave around the $1285 region.

Bulls need to break back above $1300 for prices to push higher in the medium term.

The views expressed in this piece are the author’s own and do not necessarily reflect News Central’s editorial stance.

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Op-Ed

Investors caught off-guard with CBN governor’s reappointment; Gold steady

The move could be a welcome development for local shares and the Naira.

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Investors caught off-guard with CBN governor's reappointment; Gold steady
Nigeria's Central Bank new governor Godwin Emefiele. AFP PHOTO/STRINGER (Photo by STR / AFP)

Investors were caught completely off guard this week after Nigeria’s President Muhammadu Buhari reappointed the CBN governor, Godwin Emefiele for a second term.

Although the market reaction has been somewhat mixed with the All-Share Index (ASI) edging -0.26% lower today, it is too early to come to any conclusions about how this will impact domestic markets moving forward.

With the re-appointment of the CBN governor signaling continuity and removing an element of uncertainty over policy direction, this could be a welcome development for local shares and the Naira.

However, more time will be needed to carefully assess what this means for inflation, interest rates and economic growth in the medium to longer term.

Stocks push higher as US tariffs kick in

Stock markets pushed higher on Friday, despite the United States hiking tariffs on Chinese goods. It seems investors are still cautiously optimistic over both sides finding a middle ground on trade.

If a trade deal becomes reality, this is likely to boost global equities and emerging market assets. However, a situation where talks descend into disagreements is likely to rekindle risk aversion – ultimately boosting appetite for safe-haven assets.

Gold fights to defend $1280

Gold bulls fought incredibly hard to keep prices above the $1280 support level this week, as uncertainty over US-China trade talks supported the flight to safety.

With escalating trade tensions and renewed concerns over slowing global growth fueling risk aversion, the precious metal punched above $1,290 before later surrendering gains.

We expect Gold to transform into a battleground for bulls and bears in the week ahead as conflicting market themes influence the precious metal.

If the Dollar remains depressed and heightened trade tensions encourage investors to stay clear of riskier assets, Gold has the potential to shine towards $1300.

However, a breakdown below $1280 is seen opening the gates towards $1265.

Commodity spotlight – WTI Oil

The story defining Oil’s valuation in recent weeks continues to revolve around supply and demand-side factors. On one side of the equation, Oil is supported by OPEC-led supply cuts, the US ending sanction waivers on Iranian Oil and supply disruptions in Venezuela and Libya.

On the other side of the equation, Oil is pressured by robust production from US Shale, rising crude inventories and concerns over slowing growth impacting demand.

Oil markets are likely to remain volatile and highly sensitive ahead of the OPEC meeting in June.

In regards to the technical picture, WTI Oil is trading around $62.00 on the daily charts. A weekly close above this level is seen opening a path towards $63.00.

The views expressed in this piece are the author’s own and do not necessarily reflect News Central’s editorial stance.

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