By Bakare Olutunde
The imposition of between 10 and 25 per cent tariffs on importation from Canada and Mexico and Chinese goods by the United States has heightened fears of a global trade war, causing global stock markets to witness a significant decline yesterday.
In Europe, the FTSE 100 fell by 1.4 per cent. Germany’s DAX and France’s CAC also declined by 1.6 per cent and 1.5 per cent.
Similarly, in the United States, the Dow Jones Industrial Average futures dropped over 500 points while S&P 500 futures fell by 1.9 per cent. Nasdaq futures tumbled by 2.8 per cent.
Specific sectors, including automotive, semiconductors and banking, have been particularly affected due to concerns over disrupted supply chains and inflationary pressure.
Hedge funds have responded by selling off stocks across various sectors and regions, except in developed markets in Asia.
Notably, there has been increased investment in real estate stocks, which are seen as a hedge against inflation.
Also, the technology sector has faced turbulence, with significant sell-offs in U.S. tech stocks. This was triggered by fears of an AI bubble, following substantial market value losses by companies such as Nvidia.
These developments underscore the volatility in global markets, driven by geopolitical tensions and sector-specific challenges.
Despite the Nigerian Exchange Limited (NGX) remaining resilient and closing on a positive note yesterday, analysts warned that the decline in global stocks, especially due to trade tension and geopolitical risks, could have severe implications for the Nigerian market.
They argued that as global markets struggle, oil prices may become increasingly volatile. Given Nigeria’s heavy reliance on oil exports for revenue, a drop in oil prices could lead to reduced earnings, potentially resulting in budget deficits.
Analysts also caution that the Nigerian Stock Exchange (NSE) may face declines, particularly if global investors pull out or reduce their exposure to emerging markets. Stocks of Nigerian companies with significant foreign exposure, such as oil-related firms and multinationals may be the most affected.
Meanwhile, the Nigerian equities kicked off the week on a positive note, as market capitalisation rose by N83 billion amid investors positioning in blue-chip stocks ahead of earnings releases.
At the close of trading yesterday, the All Share Index (ASI) gained by 134.18 points, representing a growth of 0.13 per cent to close at 104,630.3 points. Also, market capitalisation gained N83 billion to close at N64.792 trillion.
The upturn was impacted by gains recorded in medium and large capitalised stocks, amongst which are; Presco, Okomu Oil, Beta Glass, Northern Nigeria Flour Mills (NNFM) and MTN Nigeria Communications (MTNN).
Analysts at United Capital Plc said: “The equities market is expected to maintain its positive momentum as investors continue to position themselves ahead of the full year 2024 earnings season and possible corporate action declarations.
“Nevertheless, given the elevated interest rate environment in the fixed-income market, we still expect bearish sentiments to linger in the background.”
Also, investor sentiment, as measured by market breadth was negative as 21 stocks advanced, while 35 declined Beta Glass and Presco recorded the highest price gain of 10 per cent each to close at N78.65 kobo and N643.50 kobo respectively, while Okomu Oil followed with a gain of 9.99 per cent to close at N537.20 kobo.
NNFM up by 9.98 per cent to close at N66.65, while Chellaram gained 9.95 per cent to close N7.18 kobo.
On the other hand, University Press led the losers’ chart by 10 per cent to close at N5.04 kobo. Omatek Ventures followed with a decline of 9.88 per cent to close at 73 kobo, while SCOA Nigeria declined by 9.83 per cent to close at N3.67 kobo. Lasaco Assurance depreciated by 8.33 per cent to close at N2.75, while Nigerian Exchange Group declined by 8.14 per cent to close at N27.10 kobo.
The total volume traded fell by 59.6 per cent to 510.569 million units, valued at N13.253 billion, and exchanged in 14,611 deals. Transactions in the shares of FBN Holdings (FBNH) topped the activity chart with 83.990 million shares valued at N2.480 million. Zenith Bank followed with 54.533 million shares worth N2.725 billion, while Universal Insurance traded 32.587 million shares valued at N21.011 million.
