Last week was a period most investors hurriedly wish to forget as the coronavirus outbreak continued its negative impacts across the globe. Stock markets in the US, Europe and Asia slipped into bear territory this week, marking an end to the longest bull run.
In an attempt to limit this negative impact, the Bank of England, following on from the US Federal Reserve last week, cut their main interest rate by 50bps to a historic low of 0.25%.
The Fed, meanwhile, made an additional $1.5 trillion available for overnight lending markets soon after. On the fiscal leg, Trump signed a $8.3 billion emergency spending bill to stimulate the economy.
The European Central Bank, meanwhile, surprisingly left its interest rates and marginal lending rate unchanged at 0% and -0.5% respectively.
Instead, a series of other stimulus programs was introduced to support the economy, including an increase in the monthly bond purchasing program by an additional 120 billion Euros over the rest of the year.
Finally, In addition, in the energy market, the continuous price war caused by the division in OPEC+ Russia has put oil prices on track for its worst week since the 2009 financial crisis as prices plunging to about $33 per barrel.
Nigerian Economic Fundamentals
While coronavirus and its impact on financial markets remained, the rumour of a potential currency devaluation by CBN took the central stage in the domestic scene. This rides on the back of lower crude oil prices and less inflow of dollars.
Consequently, this led to panic buying at the FX markets with the NGN/USD closing the week at 405 at black market.
However, the Central Bank in a press release on Thursday debunked rumours of a devaluation, stating clearly that the Forex reserves is still at comfortable levels to meet genuine demand for the US dollar
Nigeria’s bourse joined global route, as domestic stocks suffered one of the worst weeks on record. The NSE ASI declined by 13.49% WoW rounding off at 22,733.35 with market capitalization shedding off N1.8 trillion closing at N11.8 trillion.
All sectors experienced losses, bulk of which stemmed from the Oil and Gas 24.39%, Banking -24.07% and Brewers sectors -26.80%. Losses were also witnessed in the Telecoms -12.37%, Personal Care (-11.63%, Cement -7.10% and Food (-8.87%) sectors.
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