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Around the World

Oil Prices slide as China posts slowest growth in 27-years

Oil prices slide on Monday after China’s economy recorded the slowest quarterly growth in almost three decades. Earlier on Monday, it was revealed that China’s economy grew 6.2% for the second half of 2019, but inches down by 0.2% when compared to 6.4% ..

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Oil prices have slid down after China’s economy posted the slowest quarterly growth in almost three decades. Earlier on Monday, it was revealed that China’s economy grew 6.2% for the second half of 2019, down by 0.2% when compared to 6.4% recorded in the corresponding period of 2018.

The slow pace of growth posted by China has been attributed to the ongoing trade standoff with the U.S, which has largely affected market expectations. Following China’s slow growth, there are growing concerns over crude oil demand in the global oil market.

China’s growth in Q2: Strings of weak economic data in recent months and continuous escalation in the U.S-China trade war have sparked questions on whether the country’s policymakers need to introduce forceful easing to get the economy on a steady growth path.

  • The slow growth of 6.2% posted on Monday indicated a loss of momentum for the economy from the first quarter’s 6.4%, amid expectations that Beijing needs to do more to boost consumption and investment to restore business confidence.
  • Data from the country’s Bureau shows that industrial output climbed 6.3% from a year earlier, and rose from the 17-year low recorded in May.
  • Industrial production rose by 6.3% year-on-year in June, up from 5% in May.
  • Also, investment in the manufacturing sector grew by 3%, while investment in infrastructure also went up by 4.1%.
  • Data shows China has already slashed its Reserve Requirement Ratios (RRR) six times in 2018 to free up funds for lending to the economy.

Meanwhile, despite Donald Trump’s efforts to cut China’s trade surplus with America, analysts believe the economy doesn’t appear to be falling over. Also, there are upbeats in factory output and retail sales in the economy, which indicate signs of improvement that the economy may be picking up.

[ALSO READ: Difference between an Emerging Market and a Frontier Market]

Oil price drop: China is regarded as the world’s largest crude oil importer and following slow down in its growth, crude oil prices have inched down.

  • Brent Crude Futures fell 21 cents to $66.51 a barrel while U.S. crude was down 28 cents at $59.93 a barrel.
  • Oil prices have recorded extended gains due to OPEC production cut and growing demands.
  • Last week, both contracts posted their biggest weekly gains in three weeks on cuts in U.S. oil production and diplomatic tensions in the Middle East.

A standstill: Following China’s slow growth which has affected oil prices in the early hours of today, investors’ sentiments may further be clouded and slow down to further observe policy moves from China which hold oil prices at a standstill or further decline.

  • In the meantime, Nigeria may count some loses as demand for the country’s oil may slow down due to markets interplay as a result of investors’ sentiments of China’s economy slow down. 
  • On the other hand, Nigeria’s import bill may jack up as China’s policymakers will be looking at stimulating its export strategies to spur growth.
  • Nigeria’s biggest imports come from China. According to the recent statistics, Nigeria’s highest import in Q1 2019 came from China and it was estimated at N979 billion.

[READ FURTHER: Critical times for Nigeria’s oil money as US-China trade war escalates]

 

Samuel is an Analyst with over 5 years experience. Connect with him via his twitter handle

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Around the World

Covid-19: US economy grappling with 10 million job losses, adds 379,000 jobs in February 

The Covid-19 pandemic has led to the mandatory lockdown of major businesses and factories in the US.

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The World’s biggest economy is grappling with the loss of 10 million jobs due to the Covid-19.

The Covid-19 pandemic led to the mandatory lockdown of major businesses and factories in the country. This meant downsizing for most companies who could not continue paying salaries with no incoming revenue

According to the Nasdaq, the unemployment rate in the United States economy was at its highest in April last year, reaching a record high of 14.7%. The unemployment rate dropped to 6% but that is still a significant number.

According to CNN, the US economy added 379,000 Jobs in February this year. This is a clear sign of the world biggest economy getting back on track. Although the US economy is still missing around 9.5 million jobs since the beginning of Covid-19.

Biggest losers 

According to Nasdaq, the most affected industries in the Covid 19 economic decline is the Hospitality and Outdoor industry. Hotels and restaurant workers were mostly put out of jobs. They also fall into a category regarded as the long-term unemployment category. This category is used to define those who have been without a job for 27 weeks.

Big government to the rescue 

The United States government has rolled out the following packages to cushion the effect of the Covid 19:

  • The Joe Biden Administration has postulated a 1.9 trillion Covid Relief Package for Americans. The Bill made it through a house vote and now needs to pass the senate-house too.
  • Jobless American workers will be entitled to an extra $400 a week.
  • The Joe Biden new relief bill will also contain a $1,400 stimulus check for citizens.

 What to know 

  • The US economy is gradually shifting to the post-Covid-19 era adding 379,000 jobs in February alone. It added a paltry 166,000 jobs in January.
  • The United States major economic rival China is already in the post-Covid-19 era, the only major economic country in the post-Covid-19 era.

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Around the World

Jack Dorsey’s Square set to acquire majority stake in Jay Z’s Tidal for $297 million

Jack Dorsey’s company, Square set to acquire Tidal, the streaming music service owned by Jay-Z for a $297 million deal.

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Square, the mobile payments company owned by Jack Dorsey, announced on Thursday its plan to acquire a “significant majority” of Tidal, the streaming music service owned by Hip-hop music mogul, Jay-Z.

Square said it expects to pay $297 million, in a combination of cash and stock, for a stake in Tidal. Shawn “Jay-Z” Carter will join Square’s board, subject to the closing of the transaction while Tidal will operate independently within Square.

Existing artist shareholders will still remain stakeholders. Other Tidal artist-owners include Beyoncé, Alicia Keys, Coldplay’s Chris Martin, Kanye West, Madonna, Nicki Minaj, and Rihanna.

In a tweet made by Jay-Z today, he highlighted that “from the beginning that TIDAL was about more than just streaming music, and six years later, it has remained a platform that supports artists at every point in their careers. Artists deserve better tools to assist them in their creative journey.”

He also commented that “Jack is one of the greatest minds of our times, and our many discussions about TIDAL’s endless possibilities have made me even more inspired about its future. This shared vision makes me even more excited to join the Square board.

“This partnership will be a game-changer for many. I look forward to all this new chapter has to offer!”

Jack Dorsey, who is CEO of both Square and Twitter, also commented on this deal “comes down to one simple idea: finding new ways for artists to support their work.”

“New ideas are found at intersections, and we believe there’s a compelling one between music and the economy. I knew Tidal was something special as soon as I experienced it, and it will continue to be the best home for music, musicians, and culture.”

Jesse Dorogusker, a Square executive will lead Tidal on an interim basis. He added that Square will offer financial tools to help Tidal’s artists collect revenue and manage their finances. “There are other tools they need to be successful and that we’re going to build for them,”.

What you should know

  • Last month, Jack Dorsey and Jay-Z announced a Bitcoin fund focused on developing the cryptocurrency’s adoption in Africa and India.
  • In 2017, Sprint bought a 33% stake in Tidal. This week, Jay-Z bought back those shares from T-Mobile (which acquired Sprint).
  • Last month, Jay-Z announced that he would sell 50 percent of his champagne company, Armand de Brignac — better known as Ace of Spades — to LVMH Moët Hennessy Louis Vuitton amid a downturn in the entertainment industry caused by the pandemic that has affected some of Jay-Z’s holdings.

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