Stock Markets Sink, Dollar Jumps On Central Bank Watch

Asian and European stock markets sank and the dollar rallied Thursday after the Federal Reserve warned US interest rates would go higher than previously expected in its fight against decades-high inflation.

The Fed on Wednesday unveiled a fourth straight 0.75-percentage-point increase as expected – the sixth hike this year to cool rampant prices.

The dollar on Thursday rose strongly against main rival including the pound and as the Bank of England was set to deliver its own bumper interest-rate hike in a decision due at 1200 GMT.

READ ALSO: Bank Of England Set For Biggest Rate Hike In 33 Years

The BoE is tipped to lift its key rate by 0.75 percentage points to three percent — the most in 33 years and putting British borrowing costs at the highest level since 2008.

Norway’s central bank raised its policy rate for a fourth consecutive time, with a quarter-point increase that took it to its highest level since 2009 at 2.5 percent.

Oil prices also fell heavily on Thursday as aggressive rate hikes increase expectations of a global recession.

Hong Kong led stock market losses as the city’s central bank hiked rates in line with the Fed, owing to their policy link via the dollar peg.

Traders gave back a chunk of the previous two days’ gains, which came on the back of speculation China was planning to roll back some of its painful zero-Covid policies.

Adding to the selling was confirmation from Beijing’s health authority that it intended to stick to the strategy.

‘Some way to go’

“Stocks fell… after the Federal Reserve raised benchmark interest rates and warned that there was still some ways to go in its efforts to tame inflation,” said Mark Haefele, chief investment officer at UBS Global Wealth Management.

Before the Fed announcement, stocks had rallied for more than a week on speculation the US central bank would indicate that its rate tightening could soon reach a peak as the world’s biggest economy showed signs of slowing.

Yet Powell poured cold water on those hopes, telling a news conference that “incoming data since our last meeting suggests that ultimate level of interest rates will be higher than previously expected”.

He added that “we still have some ways” until borrowing costs were at the necessary level and that it “is very premature to be thinking about pausing”.

Investors now expect Fed rates to top out at more than five percent, compared with four percent previously.

Global equities have slumped this year on mounting fears that rising borrowing costs will curtail consumer and business spending and spark a global recession.

“The Federal Reserve… didn’t offer any real crumbs of comfort for traders or indeed the global economy when it came to how rapidly the now relentless — and potentially damaging — run of rate hikes may conclude,” said Scope Markets analyst James Hughes.

Key figures around 1030 GMT

 

London – FTSE 100: DOWN 0.4 percent at 7,113.98 points

Frankfurt – DAX: DOWN 0.8 percent at 13,156.90

Paris – CAC 40: DOWN 0.6 percent at 6,238.31

EURO STOXX 50: DOWN 0.8 percent at 3,593.41

Hong Kong – Hang Seng Index: DOWN 3.1 percent at 15,339.49 (close)

Shanghai – Composite: DOWN 0.2 percent at 2,997.81 (close)

Tokyo – Nikkei 225: Closed for a holiday

New York – Dow: DOWN 1.6 percent at 32,147.76 (close)

Pound/dollar: DOWN at $1.1258 from $1.1390 Wednesday

Euro/dollar: DOWN at $0.9754 from $0.9816

Dollar/yen: UP at 148.16 yen from 147.90 yen

Euro/pound: UP at 86.64 pence from 86.17 pence

Brent North Sea crude: DOWN 1.4 percent at $94.80 per barrel

West Texas Intermediate: DOWN 1.8 percent at $88.40 per barrel

AFP

World Markets Plunge On Growing Recession Fears

 

 

Stock markets tumbled, the pound crashed against the dollar and oil prices slumped Friday on growing recession fears after central banks this week ramped up interest rates to fight decades-high inflation.

With price rises showing no solid sign of letting up, monetary policymakers have been forced to go on the offensive, warning that short-term hits to economies are less painful than the long-term effects of not acting.

The Federal Reserve’s decision Wednesday to lift borrowing costs by 0.75 percentage points for a third successive meeting was followed by a warning that more big rises were in the pipeline and that rates would likely come down only in 2024.

That came along with similar moves by banks in several other countries including Britain, Sweden, Norway, Switzerland, the Philippines and Indonesia — all pointing to a dark outlook for markets.

“We see this new even-higher-for-longer rate path as associated with a substantially higher likelihood of a hard landing, and so not just unambiguously hawkish but unambiguously bad for risk,” said Krishna Guha, vice-chair of Evercore ISI.

In a sign that recession expectations are rising, the 10-year US Treasury yield jumped to 3.7 percent, its highest level in a decade, while on Wall Street the S&P 500 has sunk to its weakest level since June and just above its 2022 lows.

The UK 10-year yield struck at an 11-year high at 3.84 percent Friday.

The pound slumped to $1.1021, the lowest level since 1985, even as the UK government unveiled a tax-cutting budget aimed at driving growth.

In the eurozone, recession fears deepened as data showed its economic activity fell once again in September.

The S&P eurozone PMI dropped to 48.2 in September — with a score under 50 representing economic contraction.

“A eurozone recession is on the cards as companies report worsening business conditions and intensifying price pressures linked to soaring energy costs,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

He added that falling UK business activity this month indicates that the British economy is likely already in recession.

Traders were keeping a close eye also on developments following the Japanese finance ministry’s intervention to support the yen, after it hit a new 24-year low of 146 against the dollar.

The first such intervention since 1998 helped strengthen the yen to just above 140.

But analysts warned the move was unlikely to have much long-term impact and the yen remained vulnerable owing to the Bank of Japan’s refusal to tighten policy — citing a need to boost the economy.

Recession fears also caused oil prices to fall by more than three percent.

– Key figures at around 1115 GMT –
London – FTSE 100: DOWN 2.4 percent at 6,984.85 points

Frankfurt – DAX: DOWN 2.6 percent at 12,201.91

Paris – CAC 40: DOWN 2.4 percent at 5,777.00

EURO STOXX 50: DOWN 2.6 percent at 3,337.10

Hong Kong – Hang Seng Index: DOWN 1.2 percent at 17,933.27 (close)

Shanghai – Composite: DOWN 0.7 percent at 3,088.77 (close)

Tokyo – Nikkei 225: Closed for a holiday

New York – Dow: DOWN 0.4 percent at 30,076.68 (close)

Pound/dollar: DOWN at $1.1059 from $1.1252 Thursday

Euro/dollar: DOWN at $0.9760 from $0.9839

Euro/pound: UP at 88.27 pence from 87.40 pence

Dollar/yen: UP at 142.90 yen from 142.35 yen

West Texas Intermediate: DOWN 3.4 percent at $80.68 per barrel

Brent North Sea crude: DOWN 3.2 percent at $87.56 per barrel

Family Sues Trading App Robinhood Over Suicide

The online trading platform Robinhood restricted trading in GameStop and other stocks that have soared recently due to rabid buying by smaller investors. (Photo: AFP)

 

 

The family of a college student who killed himself after thinking he’d lost a fortune using Robinhood sued the free trading app Monday.

A message left behind by Alex Kearns asked how it was that a 20-year-old with no income could get access to nearly $1 million of financial leverage using Robinhood, according to the suit filed in Silicon Valley, where the app is based.

“Robinhood’s website entices young, inexperienced users,” the suit contends.

“By marketing its online trading platform like a video game, it implied that trading stock and options was a fun way to make money, perhaps even to get rich.”

The suit accuses Robinhood of causing the Illinois man’s death along with unfair business practices, and asks for unspecified damages.

In response to an AFP query, Robinhood said it was “devastated” by Kearns’ death last June and has since improved trading features along with guidance and education features for users.

“We remain committed to making Robinhood a place to learn and invest responsibly,” a spokesperson said.

Kearns was in his final year of high school when he opened a Robinhood account, according to the suit.

He used the app to start trading options in his freshman year of college, and a series of trades resulted in him finding his account was $730,000 in the red, the suit detailed.

“Tragically, Robinhood’s communications were completely misleading, because, in reality, Alex did not owe any money,” the lawsuit contended.

“He held options in his account that more than covered his obligation.”

The suit comes after traders who banded together over Reddit and other social media platforms in recent weeks used Robinhood to make massive share purchases of GameStop, AMC Entertainment and other struggling companies that wealthy investors had bet against.

The campaign, intended to make hedge funds and other large investors suffer, caused the share prices of these companies to soar, and caught the attention securities regulators.

An app popular among retail investors whose stated goal is to “democratize finance for all,” Robinhood at one point limited trades on the most volatile stocks, before reversing course the next day.

Hong Kong Stocks Finish With Losses

An Investor (not shown) looks at screens showing stock market movements at a securities company in Beijing on August 26, 2019.
WANG Zhao / AFP

Hong Kong shares closed Tuesday on a negative note following a hefty sell-off on Wall Street fuelled by concerns about a resurgence in coronavirus cases in Europe and the United States.

The Hang Seng Index dipped 0.53 percent, or 131.59 points, to 24,787.19.

The benchmark Shanghai Composite Index added 0.10 percent, or 3.20 points, to 3,254.32, while the Shenzhen Composite Index on China’s second exchange gained 0.45 percent, or 1.86 points, to 2,223.92.

-AFP

US Stocks Fall Again Amid Economic Fears

Traders work on the floor of the New York Stock Exchange (NYSE) on January 03, 2019 in New York City. As a decline in Apple product sales in China continues to depress global markets, the Dow Jones Industrial Average fell over 200 points in morning trading. Spencer Platt/Getty Images/AFP
SPENCER PLATT / GETTY IMAGES NORTH AMERICA / AFP

 

Wall Street stocks fell early Thursday, extending a pullback from the prior session on worries about economic weakness in the wake of the coronavirus.

About 15 minutes into trading, the Dow Jones Industrial Average was down 0.7 percent to 26,589.86.

The broad-based S&P 500 shed 0.6 percent to 3,216.90, while the tech-rich Nasdaq Composite Index shed 0.7 percent to 10,560.68.

US jobless claims last week rose slightly to 870,000 as the world’s biggest economy continues to face headwinds following the upheaval of the coronavirus pandemic.

Thursday’s early losses extended the downward trend from Wednesday when stocks retreated on disappointment at the lack of new fiscal stimulus in the United States and worries over the reinstatement of some coronavirus restrictions in parts of France and Britain.

On Wednesday, “there was a palpable sense of uncertainty about the economy, the election, China, the coronavirus and the behaviour of the mega-cap stocks,” said Briefing.com analyst Patrick O’Hare.

“The selling… will keep going this morning, as this market seems to be trading on the momentum factor than anything else, only this time the momentum is cutting to the downside.”

AFP

Apple Profits Slips But Revenue Grows Slightly Amid Pandemic

A closed Apple Store in Washington, DC, on April 29, 2020, ahead of their expected first quarter earnings report after market close on April 30. SAUL LOEB / AFP
A closed Apple Store in Washington, DC, on April 29, 2020, ahead of their expected first-quarter earnings report after market close on April 30.
SAUL LOEB / AFP

 

Apple on Thursday reported revenue slipped in the first three months of this year as revenue inched higher despite the pandemic’s hit.

Apple said it made a profit of $11.2 billion on sales of $58.3 billion in the quarter, compared to net income of $11.7 billion on revenue of $58 billion in the same period a year earlier.

“Despite COVID-19’s unprecedented global impact, we’re proud to report that Apple grew for the quarter, driven by an all-time record in services and a quarterly record for wearables,” chief executive Tim Cook said in an earnings release.

Apple shares were down nearly two percent in after-hours trades that followed release of the earnings figures.

Revenue from iPhones — the big earnings segment for Apple in recent years — dropped some seven percent from a year earlier to $29 billion in a period where smartphone sales have been sagging.

Stock Markets Tumble As Geopolitical Fears Set In

Pedestrians look at the share prices for the Tokyo Stock Exchange on a stock indicator board in Tokyo on October 23, 2018. Tokyo stocks dropped sharply on October 23 morning trade with investors concerned with an array of geopolitical risks and cautious ahead of corporate earnings season. Behrouz MEHRI / AFP

Stock markets slumped on Tuesday on geopolitical risks stretching from US tensions with Russia and Saudi Arabia to trade issues and Italy’s budget stand-off with the European Union.

European stocks picked up where Asia left off, with Frankfurt losing more than two percent in morning deals after Hong Kong closed down more than three percent.

The dollar was down versus the euro, yen, and pound.

Frankfurt was dragged down additionally by a near eight-percent plunge in the share price of chemicals and pharmaceuticals giant Bayer to 70.50 euros.

A San Francisco judge on Monday upheld a jury verdict that found Bayer-owned Monsanto liable for not warning a groundskeeper that its weed killer product Roundup might cause cancer.

Judge Suzanne Bolanos denied Monsanto’s request for a new trial but cut the $289 million damages award to $78 million to comply with the law regarding how punitive damages awards must be calculated.

Bayer said it would appeal the latest ruling.

There is meanwhile growing unease about Italy’s row with the EU over its purse-busting budget, which Brussels said breaks the bloc’s financial rules.

The populist government in Rome has refused to back down and cut its spending promises despite warnings about the country’s economic outlook.

The standoff comes as officials struggle to hammer out a Brexit agreement with a deadline for Britain to leave the EU looming in the background.

Pressure is also growing on Saudi Arabia after it admitted that a journalist critical of Riyadh had been killed at its Istanbul consulate.

Oil prices slid Tuesday as the market discounted concerns about potential supply disruptions in the Middle East.

Saudi Arabia said Monday it had no plans to repeat its harsh 1973 oil embargo, even as relations with the West sour following the death of Khashoggi.

In stocks, Wall Street closed mixed Monday as investors wait on company earnings.

The sharp losses Tuesday in Asia brought an end to a rally in previous sessions fuelled by China’s top brass issuing coordinated statements of support for the country’s markets and officials unveiling tax cut plans.

Nerves have been tested by US President Donald Trump’s warning that he will pull out of a nuclear treaty with Russia and bolster America’s arsenal.

Traders are also turning their attention to next month’s US midterm elections, which could turn control of Congress over to the Democrats.

Key figures around 0900 GMT

London – FTSE 100: DOWN 1.1 percent at 6,966.10 points

Frankfurt – DAX 30: DOWN 2.3 percent at 11,262.21

Paris – CAC 40: DOWN 1.6 percent at 4,970.24

Milan – FTSE MIB: DOWN 1.1 percent at 18,750.36

EURO STOXX 50: DOWN 1.6 percent at 3,138.01

Tokyo – Nikkei 225: DOWN 2.7 percent at 22,010.78 (close)

Shanghai – Composite: DOWN 2.3 percent at 2,594.83 (close)

Hong Kong – Hang Seng: DOWN 3.1 percent at 25,346.55 (close)

New York – Dow: DOWN 0.5 percent at 25,317.61 (close)

Euro/dollar: UP at $1.1470 from $1.1466 at 2100 GMT

Pound/dollar: UP at $1.2995 from $1.2967

Dollar/yen: DOWN at 112.20 from 112.81 yen

Oil – Brent Crude: DOWN $1.05 at $78.78 per barrel

Oil – West Texas Intermediate: DOWN 59 cents at $68.77.

AFP

NSE All-Share Index Hits 10-Month High

Nigeria’s stock market rebounded this week with the all share index reaching a 10-month high, following improved stability and liquidity in the currency space and stability in the macro environment, as the MPC, left key parameters unchanged.

The key index added 3.38 percent to close at 29,064.52, boosted by Friday’s gain of 2.10 percent.

The banking index recorded the largest gain, owing to demand for the shares of Gtbank, Zenith Bank And Stanbic IBTC.

Market breadth remained positive, with 41 gainers topped by UAC-Property with 25.88 percent versus 25 losers led by Cadbury with 11.55 percent.

Total volume traded declined by 17.35 percent to 1.88 billion shares, with Diamond Bank, Access, and Zenith Bank accounting for 42.60 percent of the market volume.

The value of trades also reduced by 18.92 percent to N20.05 billion.

Stock Market Extends Bullish Run

Nigerian Stock ExchangeThe Nigerian Equity Market grew marginally by 0.04 per cent, extending the bullish run to four days in a row.

The upturn was impacted by gains recorded in medium and large cap stocks, namely SEPLAT, UBA and WAPCO.

The all-share index gained 11.75 absolute points, coming in at 28,113.38 while 4.06 billion Naira was added to the total market value to settle at 9.71 trillion Naira.

Investors exchanged 5.39 billion Naira over 305.97 million shares in 4,100 deals as Transcorp, Zenith Bank and UBA boosted the volume.

While Law Union and Rock was the top most gainer leading 21 other stocks, Unity Bank, Diamond Bank and Transnational Express topped the decliners league.

Financial Markets Close For Holiday

Nigerian Stock Exchange, NS, Financial Market, Stock Market, Independence HolidayFinancial markets across Nigeria are closed for the country’s 56th independence holiday.

Markets had closed on Friday to reopen tomorrow, Tuesday October 4.

Before the holiday, the financial markets had closed largely bearish but marginal gains were recorded in the equity market.

The last trading in September ended marginally positive as the all share index and market capitalisation rose further by more than a quarter of a percent, on the back of price advance by some mid-cap stocks.

However, market breadth was negative with 16 gainers against 22 losers on the price table.

The top three gainers for the day were Pharmadeko, NAHCO and Honeywell Flour Mills while Caverton, Nothern Nigeria Flour Mills and Conoil were the three most significant decliners.

Nigerian Stock Exchange, NS, Financial Market, Stock Market, Independence Holiday

Friday’s transaction was lower than the previous session, as it recorded a total turnover of 217.8 million shares worth 2.38 billion naira in 2,804 deals.

The most traded stocks were banking giants, Ecobank Transnational Incorporated, FCMB and Zenith Bank.

Research analysts believe that markets direction will be shaped by the third quarter numbers this week as yields in the local bonds market tend to inch higher.

Meanwhile, the Central Bank plans to auction 135.7-billion-naira worth of treasury bills on Wednesday with a view to curb speculations against the naira at the foreign exchange market as well as inflation.

FG Being Political By Claiming Sanusi’s Suspension Won’t Affect Economy – Analyst

An Economist, Dr Abiodun Adedipe, on Saturday said that the controversial suspension of the CBN governor, Lamido Sanusi, is “a very critical issue for our economy” stressing that the manner in which the act was carried out will affect the economy and that the Federal Government’ s claim that it wouldn’t is merely a ‘political statement.’

Speaking on Sunrise (Saturday), Dr Adedipe said “Immediately that pronouncement was made, the exchange rate market began to react. Also the stock market started to react,” maintaining that macroeconomic indices began to move in adverse directions.

According to him “the major issue is new capital formation “which is simply new investment.” He added that “any investor, whether domestic or foreign, will naturally look at the development and say it is not the time for me to put in fresh money.”

“Ultimately, if we get back on track, that little space of time where we lost momentum willensure that the prospect for growth that the economy had at the beginning of the year will certainly fall short by the end of the year.”

He stressed that the position of the CBN Governor is very key to the financial industry and the national economy hence comments made by the person in the position are important and are key indicators of the direction of policy and response of the system to developments in the economic space.

“Whatever actions are taken or utterance made by such a person is a reflection of the data and information available to him.

The way the government deals with whoever is in that position becomes important and that is why in my opinion, the government has not handled it in a way that will help this economy.”

While speaking on the programme, Social Commentator, Biodun Sowunmi, said that, that the suspended CBN governor erred “may not necessarily be in doubt”

“The fact of the matter is that there are so many allegations made against Sanusi. Whether they are right or not, we don’t know because it has not been investigated.

However, “where people have problems now is not whether there are no issues, indictments against Sanusi. They are mere allegations which have not been investigated. The real issue is whether the president has the powers under the law to suspend Sanusi.”

He stressed that the president has a right to appoint, nominate while the Senate confirms. “That means the President is sharing that authority with Senate and when it comes to the issue of removal, it’s only under section 1F that made an explicit provision that you can only remove the governor of Central Bank if for instance the President recommends the removal and is backed by two-thirds of the Senate.”

He continued by saying “interestingly, there’s only one aspect of section 11 that made reference to removal. The section relating to that is section 11(1)(D), you can only be suspended from office if the professional body that he belongs to finds him guilty of one thing or the other.

“There’s no provision for suspension, there’s only provision for removal and you can only suspend somebody if he has been found guilty by his professional body. That is not the case.”

He attributed the suspension to the president’s desire to accelerate his transformation agenda.