- As Crude Oil price falls below $50
Transactions ended positively on the Nigerian Stock Exchange (NSE) on Thursday with the All-Share Index growing by 0.74 per cent, following huge gains posted by some highly capitalised equities.
The News Agency of Nigeria (NAN) reports that the index rose by 184.54 points or 0.74 per cent to close at 25,170.37 against 24,986.02 recorded on Wednesday.
Also, the market capitalisation increased by N63 billion to close at N8.710 trillion compared with N8.647 trillion achieved on Wednesday.
Nestle led the gainers’ table for the day, increasing by N34.55 to close at N725.55 per share.
Malam Garba Kurfi, the Managing Director, APT Securities and Funds Ltd., attributed Nestlé gain in spite of poor 2016 audited result to shareholding structure.
Kurfi stated that the stock was a defensive stock in the hands of few investors.
He said that the company’s stock performance was not based on laws of demand and supply like other stocks.
NAN reports that Dangote Cement followed with a gain of N7.60 to close at N159.75 and Guinness appreciated by N1.06 to close at N68 per share.
Stanbic IBTC added 55k to close at N18.29, while Flour Mills grew by 25k to close at N17.45 per share.
Conversely, Nigerian Breweries recorded the highest loss for the day, dropping by N6.86 to close at N130.36 per share.
Forte Oil trailed with a loss of N1.66 to close at N50.50 and Guaranty Trust Bank was down by N1.26 to close at N24.61 per share.
NAHCO shed 11k to close at N2.19 and United Capital declined by 4k to close at N2.41 per share.
Zenith Bank maintained its leadership as the most traded , exchanging 45 million shares worth N659.01 million.
Fidelity Bank followed with account of 24.68 million shares valued at N30.37 million, while GTBank sold a total of 33.90 million shares worth N828.86 million.
United Capital exchanged 14.77 million shares worth N34.53 million and United Bank for Africa traded 12.67 million shares valued at N63.49 million.
In all, a total of 215.91 million shares worth N2.19 billion exchanged in 3,279 deals against 218.72 million shares valued at N3.89 billion in 3,191 deals on Wednesday.
In the meantime, oil prices took a battering on Thursday, with US prices falling below $50 for the first time this year, on signs a global supply glut is not going away.
The euro meanwhile rallied briefly against the dollar as the ECB said it no longer saw a deflation threat and would end some of its massive support for the eurozone economy.
Equities were under pressure during Asian and much of European trading after as a closely-watched report showed a shock surge in US oil inventories, rekindling worries about the oversupply that has hammered the crude market since mid-2014.
The Energy Department on Wednesday revealed a whopping eight-million barrel increase in supplies over the past week — four times more than expected — owing to higher domestic production and increased stockpiling.
Both main oil futures contracts slumped to lows not seen since the end of last year and sending New York prices sliding below $50 a barrel.
Jeffrey Halley, senior market analyst at Oanda trading group, said the inventories report was the “straw that broke the camel’s back”, with concerns already abounding that Russia was not pulling its weight on much-vaunted production cuts agreed between OPEC and non-OPEC countries in November.
In Thursday trading, shares in oil giant Royal Dutch Shell shed 2.0 percent and rival BP lost 1.5 percent on the London stock market. The FTSE 100 index was weighed down also by falling mining shares.
Asian energy firms had already taken a hit, with Japan’s Inpex shedding 1.2 percent, Hong Kong-listed PetroChina diving 2.2 percent and CNOOC losing 1.8 percent.
Woodside Petroleum fell 1.1 percent in Sydney and later in European activity, French energy group Total slid 0.8 percent.
“The data catalysed a new wave of glut concerns as the higher oil price might spur North American’s production, especially of shale oil, which may ultimately counterbalance OPEC’s effort to support oil prices,” said CMC Markets analyst Margaret Yang.
Meanwhile US stocks drifted upwards on Thursday after data on new US jobless claims last week indicated a healthy labour market, beefing up expectations for a positive key government jobs report on Friday and the likelihood the Federal Reserve will hike interest rates next week.
The European Central Bank, as widely expected, kept interest rates at historically low levels and its massive bond-buying quantitative easing (QE) programme to support for the eurozone economy intact, despite growing evidence the health of the bloc is improving.
That helped eurozone equities perk up in afternoon trading.
The ECB increased its forecast for growth in the eurozone this year to 1.8 percent and now expects inflation of 1.7 percent — close to its target of just under 2.0 percent.
The euro spiked higher, gaining more than 50 cents to briefly break above $1.06, after ECB chief Mario Draghi signalled that the central bank no longer sees an urgent need to undertake any additional measures to support the economy.
“Deflation is no longer the concern for the ECB –- prices are not rising fast enough to warrant tapering or higher rates, but the imminent risk of deflation has passed,” said Neil Wilson, senior market analyst at ETX Capital.
“That’s something of a watershed moment –- the end of the beginning in terms of unconventional monetary policy tools perhaps,” he added.
Moreover the ECB signalled it would not renew one of its programmes to support increased bank lending.
NAN with additional report from Upshot