Stock Market
U.S Stocks set to surge higher, on hopes of a stimulus package deal
The massive price increase in recent weeks has lured many speculators into profit-taking.
U.S stocks seem set to surge higher, rebounding after Tuesday’s trading losses as stock traders still remain optimistic about a stimulus package from U.S Congress.
Checks by Nairametrics revealed that the US 500 Stock Futures was up 0.7%. Also, the Dow Jones Index Futures contract gained by 0.9%, just as the Nasdaq 100 Futures rose by 0.9% as at the time this report was drafted.
At the close of Tuesday’s trading session, the Dow Jones Industrial Average lost 0.4%. Also, the S&P 500 index lost 0.8%, registering its first decline in eight sessions, even as the NASDAQ Composite index lost 1.7%.
Although negotiations between the Democrats and Republicans in Washington DC are currently on hold, most stock traders remain hopeful and expect Congress to find a compromise.
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In the meantime, investors have been mindful of the increasing tensions between the US and China. So far, Beijing has refrained from tough countermeasures and struck a more conciliatory note.
As investors increase their bets in risker assets like equities Milan Cutkovic, Market Analyst at AxiCorp in a note told Nairametrics, why stock traders seems to be bullish. He said;
While equity markets have remained relatively stable, volatility in precious metals has increased sharply. Gold has lost more than $200 in value since Friday and remains under pressure.
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The massive price increase in recent weeks has lured many speculators into profit-taking.
Furthermore, stock markets are rising again, decreasing the demand for safe havens, while the US Dollar is recovering from its recent sell-off.
Quick fact: The NYSE, commonly referred to as the New York Stock Exchange, is the biggest stock exchange in the world, with a market capitalization of over $25 trillion as of April 2020. It is followed by the following top three exchanges – the NASDAQ, London Stock Exchange, and the Tokyo Stock Exchange. Interestingly, their combined market capitalization size is still lower than that of the NYSE.
Stock Market
Apple, Amazon, Netflix drop over 4%, investors Jittery on COVID-19
Top tech brands drifted lower, as investors fretted over uncertainty around the COVID-19 pandemic.
U.S tech Stocks dropped massively at the last U.S trading session, adding to September’s woeful performance.
Top tech brands drifted lower, as investors fretted over uncertainty around the COVID-19 pandemic, and pending stimulus package awaited from the world’s largest economy.
What we know: Shares of Amazon and Netflix plunged by 4.1% and 4.2%, respectively, to lead Big Tech lower. Facebook dropped 2.3%. Alphabet closed 3.5% lower. Apple ended the day down 4.2%, and Microsoft dipped 3.3%.
READ: U.S stocks suffer biggest drop since June
The Dow Jones Industrial Average closed 525.05 points lower – 1.9%, at 26,763.13. Earlier in the session, the Dow was up 176 points. The S&P 500 dropped 2.4% to 3,236.92; and the Nasdaq Composite pulled back by 3%, to close at 10,632.99.
Stephen Innes, Chief Global Market Strategist at AxiCorp, in a detailed note to Nairametrics, gave deep insights on the bearish trend, in view of the tech-dominated stock index,
“Fading prospects for US fiscal stimulus, and the stepping up of mobility restrictions on concerns about the second wave of Covid-19, are smacking global stock markets again.
READ: OECD reduces global economic decline to 4.5% from earlier forecast of 6%
“The NASDAQ got hammered, after the US Department of Justice submitted a proposal for Congress to curb legal protections for tech companies, and compel them to take more responsibility for site content, following through President Donald Trump’s bid from earlier this year to crack down on tech giants,” Innes said.
He also spoke on the role of monetary stakeholders on the prevailing market condition, stating:
“The regulatory overhang is just such an imposing factor, and extremely difficult to the backburner
“Added to that, and in a not too subtle reminder, that we are still smack dab in the COVID-19 abyss, a procession of US Federal Reserve speakers voiced more concerns about the ongoing impasse on additional fiscal stimulus.”
Finally, you should note that global investors and stock traders are showing high rates of rotation out of tech, and into cyclical stocks in September.
Spotlight Stories
Nigerians in diaspora reveal their favourite Nigerian Stocks
Nigerians in the diaspora have given their thoughts on some of the Nigerian stocks that have caught their attention lately.
The Nigerian equities market has in recent weeks recorded impressive gains, as investors take positions in blue-chip stocks.
The All-Share Index and market capitalization, on Wednesday, gained 0.50%, to settle at 25,783.02 points and N13.474 trillion respectively, reducing the YTD loss to -3.92%.
As the COVID-19 virus continues to rattle global financial markets, including the Nigerian bourse, it became prevalent to seek diverse opinions about Nigerian equities. In this case, that of Nigerians living abroad.
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Nairametrics interviewed Investment Experts, Traders and an Engineer, seeking their opinions on what Nigerian Stocks they will presently consider for a BUY.
Their responses were varied, ranging from top Banking, Industrial, and unsurprisingly, Agriculture-based stocks.
London based, Lukman Otunuga, the Senior Research Analyst at ForexTime (FXTM) said,
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“In a world where the coronavirus menace has created widespread chaos, disruptions, and uncertainty, no prisoners were taken.
“Oil has been one of the biggest causalities of COVID-19, down roughly 40% year-to-date (YTD), as worldwide restrictions a few months back, crippled demand for the commodity. With a fair chunk of Oil & Gas companies losing billions of dollars to the pandemic, their respective stock prices declined considerably.
“Big names in Nigeria such as Oando, LekOil, Seplat Petroleum Development Company, and 11 Plc, among others, have seen their shares depreciate between 20 to 40% + YTD. However, if Oil rebounds on stabilizing global economic conditions and a possible breakthrough in finding a COVID-19 vaccine, this could provide an opportunity for Oil & Gas companies to roar back to life – ultimately pushing stocks higher.”
READ: Trading on Nigerian equities has dropped by 44%
According to France-based Computer Engineer, and COO, Feldel Gas Limited, Oladayo Oladele,
“Generally speaking, I will be interested in stocks in the IT/Telecoms sector, which includes MTN Nigeria, Airtel, because Nigeria has a digital economy that is growing at an exponential rate. Lots of tech startups like PiggyVest, Paystack, and Flutterwave are fast becoming internationally relevant, not forgetting agriculture-based stocks like Okomu oil, as the border closure by President Buhari’s administration seems to increase their profitability in the near term. Finally, FMCG stocks, like Nestle and Unilever, as significant buying pressures from their offshore-based parent companies, shows a high room for more upside.
“My bias is that, no matter how unstable Nigeria’s economy looks presently, these domains are the least affected in my opinion.”
READ: Can Agriculture replace Oil in Nigeria?
In the words of Scotland-based Market Analyst, and an Energy Trader, Dapo-Thomas Opeoluwa, “When it comes to picking stocks from overseas, it’s a bit difficult, because we do not know how the companies are faring in the country. Sometimes we go with Warren Buffet’s recommendation of investing in a good business.
“So, to be on the safe side, we invest in the household names that give us dividends, and hopefully capital appreciation in the long run.
“I invest in Zenith; GTB; Stanbic; Sahco PLC (which are particularly promising, because of its cheap price and high potential, given how tourism might pick up, the aviation company might benefit); and Dangote Plc.
READ: Nigeria’s stock market drops by N16.88 billion
“Sometimes we go through the financials of these companies, and check if the businesses are healthy and if they’ve got what we call ‘moat’.
“Notably, because our stock exchange isn’t as fundamentally driven, as it is in England or the United States, we can’t trade stocks like we do overseas.”
Explore the Nairametrics Research Website for Economic and Financial Data
It is imperative to note that, most of the professionals interviewed seem unsurprisingly attracted to banking, energy dominated stocks, and most especially, blue-chip stocks on their prevalence to Nigeria’s economy.
Many Nigerian stocks still look greatly undervalued, and exhibit high potential for more upsides, in terms of their present price action and also attraction attributes to foreign portfolio investors in the long term.
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