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Global Financial Market Summary For 9th March 2020

The Nigeria’s local bourse began on Monday morning on a bearish note amid a slump in crude prices, which fell over ▼10% , as Brent oil was trading below $35 causing a shortfall in revenue to Nigeria’s 2020 budget,

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Global stocks tumble on "corona" sell off, BLOODY WEEKS: Coronavirus cost investors N1 trillion, triggers devaluation fears, Global Market Summary on Tuesday, Analysis: The economy is crashing, avoid falling knives,, Debt crisis looms in emerging markets,Debt crisis looms in emerging markets

The Nigeria’s local bourse began on Monday morning on a bearish note amid a slump in crude prices, which fell over 10% , as Brent oil was trading below $35 causing a shortfall in revenue to Nigeria’s 2020 budget, as crude oil is trading far below its official benchmark pegged at $57 per barrel.

This is compounding Nigeria’s fiscal woes with a deficit of more than $54 million dollars daily, coupled with continuous threat to the global economy posed by an increase in Coronavirus attacks across the world.

Nigeria’s ASI index lost over N220billion. The value of listed stocks decreased to N13.474trillion from an open level of N13.694trillion down ▼ 2.39%

In Asia’s trading session, the Japanese stock index, Nikkei 225 fell to 14-month lows on Monday, on rising fears that the widening reach of the coronavirus outbreak could severely disrupt the global economy. The Nikkei 225 index lost about -5.1% to ▼19,473.07, its lowest closing level since January,2019. It recorded the biggest one-day fall since June 2016.

READ ALSO: Stocks close February in deep red as investment options dry up for Nigerians

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The European stock index recorded a heavy drop on Monday falling 7%, with the benchmark STOXX 50 entering a bearish territory, as fears of a global recession was heightened by a huge drop in oil prices and the Italian coronavirus siege, it closed at ▼2,991.42, after losing about 239.31 points

The British commodity-dominated FTSE 100 index fell more than 6% caused by two major oil players, British Petroleum and Royal Dutch Shell both plummeting about 20% of their stock price and set for their worst day ever. The FTSE 100 index closed at 6,010.42 at 2pm Nigerian local time.

At the American trading session the Dow 30 index clawed back some gains, but the dampened global outlook continued to cloud over stocks amid a historic fall in crude oil prices after Saudi Arabia launched a price battle against the Russians and spread of the new coronavirus continued to dent investor sentiment.

The Dow Jones Index fell 1,373 or 5.29%, but was down more than 2,000 points at lows, the S&P fell 5.15%, after trading was paused just after the open following a 7% slump. The Nasdaq 100 index fell more than 5% trading at 8,057.75 at 6.36pm Nigerian local time.

In the commodities market Oil prices lost more than 10% after Saudi Arabia sold its oil at discounted prices, putting crude oil prices on track for its biggest daily slump since the first Gulf War. This is based on failed alliance between Saudi’s led OPEC and the Russians over oil production cut, Brent oil was trading at ▼$35.11 at 2.30pm Nigerian local time.

READ ALSO: Oil price war threatens Nigeria’s economic stability

Gold spot prices rose on Monday gained modestly at +0.05%, as a rout in global capital markets on concern over the economic fallout from the coronavirus outbreak lifted investors appetite for safe-haven assets. Gold spot price trading at $1674 per ounce at 6.45pm Nigerian local time. Gold is mostly viewed as a safe haven asset, used to hedge against inflationary prone assets like equities and cash

In the cryptocurrencies market, the bearish trend continued recording a heavy fall in value following a plummet in energy prices and sell-off in global equities

The cryptocurrencies market capitalization was down over $25 billion at 2.30pm Nigerian local time. According to data from Coinmarketcap.com. The bearish trend continued throughout Monday’s trading session.

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Bitcoin, the biggest cryptocurrency by value, fell over -10% trading at ▼7842.93 at 2.40pm Nigerian local time. The other popular digital coins such as Ethereum,XRP and bitcoin cash, also recorded a double-digit percentage point losses.

Olumide Adesina is a French-born Nigerian. He is a Certified Investment Trader, with more than 15 years of working expertise in Investment Trading. Member of the Chartered Financial Analyst Society. Behavioral Finance, Duke University. You can follow Olumide on twitter @tokunboadesina or email [email protected]

4 Comments

4 Comments

  1. Chioma Okpagu

    March 10, 2020 at 6:10 am

    Investment Analyst par excellence

  2. Adrian Aibangbee

    March 10, 2020 at 10:23 am

    Very insightful and analytical. Awesome as always…

  3. Owolabi Tosin

    March 10, 2020 at 10:54 am

    Detailed analysis…. Great job!👌

  4. OLUATA Toluwani

    March 10, 2020 at 8:42 pm

    Very incisive and on point .

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US government to ban WeChat and TikTok from app stores

Chinese-owned social media apps are facing a ban in the US over national security concerns.

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Reasons why a record number of people are giving up their US citizenship, US approves chloroquine as treatment for coronavirus COVID-19, Nigeria U.S. Donald Trump-oil prices

The United States government says it will ban the services of Chinese tech giants, WeChat and TikTok, from online mobile application stores in the U.S. It also plans to prohibit any funds transfer/payment services through the WeChat mobile application.

This was announced by the U.S Commerce Secretary, Wilbur Ross, in a statement on Friday, following President Donald Trump’s Executive Orders (E.O.) 13942 and E.O. 13943, on the 6th of August.

“In response to President Trump’s Executive Orders signed August 6, 2020, the Department of Commerce (Commerce) today announced prohibitions on transactions relating to mobile applications (apps) WeChat and TikTok to safeguard the national security of the United States,” said Wilbur Ross.

He added that the Chinese Communist Party (CCP), has proven it has the means and the motive to use Chinese tech apps, to threaten America’s national security foreign policy, and the economy of the U.S.

He said the following transactions will be prohibited from September 20th for WeChat and November 12th for TikTok

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  • Any provision of service to distribute or maintain the WeChat or TikTok mobile applications, constituent code, or application updates, through an online mobile application store in the U.S.
  • Any provision of services through the WeChat mobile application, for the purpose of transferring funds or processing payments within the U.S.

Mr. Ross said that with the Executive Order, the US government has taken a ‘significant action’ in fighting China’s malicious personal data breach on American citizens, and also promote democratic rule-based norms, and aggressive enforcement of U.S. laws and regulations.

The U.S government announced that further prohibitive measures, relating to both companies may be announced in the future.

“Should the U.S. Government determine that WeChat’s or TikTok’s illicit behavior is being replicated by another app somehow outside the scope of these executive orders, the President has the authority to consider whether additional orders may be appropriate to address such activities.”

President Trump has given until November 12, to resolve the TikTok security concerns of the US. He added that the prohibitions may be lifted, if they are addressed.

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WTO: Okonjo-Iweala still in contention as 3 candidates depart race for DG

Okonjo-Iweala and the remaining 4 other candidates hope to succeed the current DG, Mr Roberto Azevêdo.

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Ngozi Okonjo Iweala, World Bank, Davos, World Economic Forum, WTO accepts nomination of Okonjo-Iweala as DG despite opposition from Egypt

Three candidates running for the post of the Director-General of the World Trade Organisation have fallen out of the race after failing to secure enough votes in the first rounds of voting, leaving only 5 candidates left, including Nigeria’s Ngozi Okonjo-Iweala.

This was disclosed by Bloomberg on Thursday, before the meeting on Friday. The Candidates that are out of the race are Jesus Seade (Mexico), Tudor Ulianovschi (Moldova), and Hamid Mamdouh (Egypt). The candidates were not able to secure the support needed for the first round of 3 rounds of voting.

READ: China’s Covid-19 vaccine may be ready for general public in November 2020

Dr. Ngozi Okonjo Iweal joins 4 other candidates for the next round of voting. The candidates are; Liam Fox (UK), Amina Chawahir Mohamed Jibril (Kenya), Yoo Myung-hee ( South Korea), and Mohammad Maziad Al-Tuwaijri ( Saudi Arabia).

Ngozi Okonjo-Iweala disclosed last month some of her plans for the Organization if made President. Nairametrics reported she noted that part of her vision is to build a trade institution where there is greater trust among its members. She also stressed that the WTO, at this critical time, is needed to ensure that trade and global markets remain open.

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READ: Soybean Futures reach 2-year high, following U.S sales to China 

On healing the rift between the US and China, Okonjo-Iweala admitted that it is going to be challenging and not be easy. She said:

Well, this is not going to be easy, if it was easy, it could have been done a long time since. So it would be very challenging but it is not an impossible job. It is very clear that both the US and China have been helped and benefitted from the multilateral trading system in the past. Hundreds of millions have been lifted out of poverty. They have experienced shared prosperity in the economies and their countries.’

She added she would listen to both countries to find out what really are the issues causing distrust among them. She said that she will not want to be involved in the larger political problems, but will rather separate the trade issues and focus on them and build this trust.

READ: Amaechi pleads with NASS to halt questioning of loan agreement with China

You need to begin to find areas where there can be confidence-building and trade. Building trust is not talking about it, you have to have areas where both can work together and agree and we have a golden opportunity in the fisheries subsidies negotiations that are going on now because the US is a party to it, China is a party, the EU, all other members,’’ she said.

Okonjo-Iweala and the 4 other candidates will present themselves to the members of the global trade body for the later stages of voting in the hopes of securing the highest number of votes to succeed the current DG, Mr. Roberto Azevêdo.

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WTO: Selection of new DG might be tied to the upcoming US presidential election

The eventual winner could be dependent on the outcome of the November 3 US Presidential elections.

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Global fight against covid-19 at risk over export restrictions - WTO
There has been a growing interest in the heavily lobbied Director-General, World Trade Organization role, following the stepping down of Roberto Azevedo on August 31. For the first time ever, two African women – Nigeria’s Ngozi Okonjo Iweala and Kenya’s Amina Mohammed, have a real chance at emerging as the first female leader of the embattled multilateral organization, in its 25 years history.
However, beyond their impressive resumes as a criterion for appointment, the eventual winner of the top job is expected to be dependent on the outcome of the November 3 US Presidential elections, keenly contested by Republican incumbent Donald Trump, and Democratic nominee Joe Biden.

The WTO’s effort to select a new leader entered a new stage this week, as the ambassadors from 164-member countries met for private consultations, on who they would support.

Six former WTO officials and trade experts revealed that the politicking in Geneva, Switzerland – WTO headquarters, could be a wild goose chase, as the decisive developments that will shape the future of the embattled global trade organization, are unfolding miles away in Washington, ahead of the November 3 presidential elections.

Although, the support of a particular candidate by the United States is critical; 4 trade experts, including former WTO employees, believe that the Trump administration is unlikely to breathe life into a multilateral body that he once threatened to leave. Donald Trump launched a trade war with China, repeatedly imposed tariffs on US allies, and destroyed WTO’s ability to intervene in disputes, by blocking the appointment of members to its Appellate Body.

David Tinline, a former adviser to Azevedo said, “I find it hard to imagine that the Trump administration would shift tack and do something very positive for the system.’

READ: Women entrepreneurs in Africa get $251 million support from G7 leaders

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The US Trade Representative (USTR), Robert Lighthizer, had in June told US lawmakers that, “the WTO needed a reform-driven leader and that he would veto any candidate who showed any whiff of anti-Americanism.”

The former WTO officials and trade experts said that the US-China economic conflict is a further divisive factor, as both countries will likely reject any candidate backed by the other.

The 8 candidates in contention for the top job, are expected to be trimmed down to 5 after the first confessional meetings on September 16. This will be further cut down to 2, and the final decision designed to be taken by convention before the November 7 deadline – just four days after the US elections.

READ: Where next for oil prices?

Aside from the two influential African women vying for the role, Liam Fox, Britain’s former Trade Secretary, is a force to reckon with. If a favorite candidate does not emerge, some WTO members might prefer to wait until after the US election in case Joe Biden wins the US presidential election; especially, as Voting, seen as a last resort, has never occurred in WTO’s history.

A former member of WTO, Peter Van Den Bossche said, “They could play a waiting game, but that would push the decision until at least February or March 2021.”

Even though WTO is member-led, a strong leader who can facilitate decision making, and galvanize its 164 member nations, is crucial to reviving a severely embattled global organization.

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