THE BEAR GROWLS ON: NSE ALSI CRASHES FURTHER BY 0.84%, YTD NOW -12.92%

The Nigerian stock market shed 0.84% to close at 30,180.27 points. Similarly, Market Capitalization shed N87.71 billion, representing 0.84% decline to close at N10.34 trillion.  

 

MARKET STATISTICS- July 31, 2015                                                       YTD: -12.92%
Cap (N)	10,344,415,492,778.10	One Day(ASI CHG)	-0.84%
Index	30,180.27	One Week(ASI CHG)	-2.93%
Volume	268,661,534	One Month(ASI CHG)	-9.79%
Value (N)	2,148,280,342.28	Six Months(ASI CHG)	+0.25%
Deals	3,621	52 Weeks(ASI CHG)	-28.31%
Gainers	14	Losers	34
Un-Changed	55	Total	103

 

 

 

 

 

Total volume of shares transacted increased by 74.08% to 268.66 million while value decreased by 48.98% to 2.14 billion in 3,621 deals.

Top in volume transacted was Continental Reinsurance with a total volume of46.68 million valued at N39.66 billion. Others are FBNH, GT Bank, Transcorp and Zenith Bank respectively.

Top on gainers' log was NAHCO with a gain of 7.82% to close at N5.10. Others include Unity Bank, Airline Services, Mansard Insurance and Ashaka Cement respectively.

Top on losers' log was UAC-Properties with a shed of 9.63% to close at N8.63. Others include UACN, Guinness, Julius Berger and NNFM respectively.

 

EXXON, CHEVRON BRACING FOR DARK TIMES AHEAD AS OIL SLUMP LINGERS

Exxon Mobil Corp. and Chevron Corp., the biggest U.S. energy producers, hunkered down for a prolonged stretch of weak prices after posting their worst quarterly performances in several years.

Exxon reported its lowest profit since 2009 as crude prices fell twice as fast as the world’s largest crude producer by market value could slash expenses. Chevron recorded its lowest profit in more than 12 years after the market rout forced $2.6 billion in asset writedowns and related charges.

Stung by the worst market collapse since the financial crisis of 2008, oil explorers are slashing jobs, scaling back drilling, canceling rig contracts and reducing or halting share buybacks to conserve cash. Chevron said the slump convinced it to lower its long-term outlook for crude prices.

“This is the beginning, not the end, of the write-down process,” Paul Sankey, an energy analyst at Wolfe Research LLC, said on Bloomberg TV on Friday. “The biggest concern is that we’ll see weaker demand over the second half of the year.”

Exxon cut share repurchases for the current quarter in half to $500 million after net income fell to $4.19 billion, or $1 a share, from $8.78 billion, or $2.05, a year earlier, the Irving, Texas-based company said in a statement on Friday. The per-share result was 11 cents lower than the average estimate of 20 analysts in a Bloomberg survey.

 

For Exxon, refinery profits fattened by lower costs for crude were more than offset by weaker results in the company’s primary business, oil and natural gas production, Exxon said. The company’s U.S. wells posted a $47 million loss.

Spending Cuts

Exxon reduced spending on major projects like floating crude platforms and gas-export terminals by 20 percent to $6.746 billion during the quarter, according to the statement. International crude prices fell 42 percent from the previous year to an average of $63.50 a barrel.

Chevron’s profit dropped to $571 million, or 30 cents a share, from $5.67 billion, or $2.98, a year earlier, the San Ramon, California-based company said in a statement. The per-share result was well below the $1.16 average estimate.

 

Chevron’s biggest business unit -- oil and gas production - - posted a loss as the second-largest U.S. energy company recorded a $1.96 billion writedown on assets and another $670 million charge for taxes and projects suspended because they no longer make economic sense.

“The write-downs will get worse into the end of the year as companies complete their end-of-the-year SEC filings,” Sankey said. “The market still looks very over-supplied with oil and we’re in peak demand season globally.”

Pessimistic Outlook

Exxon Chairman and Chief Executive Officer Rex Tillerson was among the first oil-industry bosses to shrink spending as the crude rout began taking shape more than a year ago. After cutting the budget by 9.3 percent in 2014, this year’s reduction may exceed the original 12 percent target, the company disclosed during an April 30 conference call with analysts.

 

Tillerson, an Exxon lifer whose 10th year as CEO began in January, has been pessimistic about the prospects for an imminent oil-market rebound. On April 21, he told a Houston energy conference that the supply glut and low prices will persist “for the next couple of years” at least.

Those remarks proved prophetic: international crude prices that rose 45 percent between Jan. 13 and May 6 have since tumbled 21 percent, inaugurating the second oil bear market in 14 months.

“Chevron was a disaster; Exxon was a disappointment,” Fadel Gheit, an analyst at Oppenheimer & Co. In New York who rates the shares of both the equivalent of a hold and owns each. “A rising tide lifts all ships, but when the tide goes down, all ships go down.”

 

source: Bloomberg

EMERGING MARKET CENTRAL BANKERS ARE GETTING NERVOUS ABOUT THEIR PLUNGING CURRENCIES

The biggest decline in emerging-market currencies since the global financial crisis is quickly turning from a welcome event for countries seeking to make their economies more competitive into something destructive.

The selloff has become so swift and so deep that officials are abandoning hands-off policies on concern the drop will fuel inflation, deter investment from foreigners and act as a drag on their economies at a time when global growth is already decelerating. To counter the declines, policy makers from Mexico to South Africa and Turkey have either stepped up intervention, increased interest rates or signaled an end to monetary easing.

Wall Street firms aren’t optimistic. Morgan Stanley says more policy makers will be forced to act, and Goldman Sachs Group Inc. warns there’s no end in sight to the weakness in developing-nation currencies.

Here’s the damage report: All of the 24 most-widely-traded emerging-market currencies tracked by Bloomberg have weakened over the past month except for the Hungarian forint. An index of their exchange rates has dropped 8 pe
rcent this year to the lowest on record in data going back to 1993. The current pace of declines would make this the worst year since 2008.
Russia’s ruble, the Colombian and Chilean pesos and Brazil’s real have led the losses since mid-May, with each falling more than 10 percent. The Hong Kong dollar -- which is pegged to the U.S. dollar -- suffered the least, dropping just 0.02 percent.

Commodity Gluts

The declines extended to Friday, when the ruble tumbled 1.6 percent as of 8:49 a.m. in New York after an interest-rate cut. Russia already suspended dollar purchases to build reserves following a rout in the currency that almost wiped out its advance this year.
The Thai baht fell to a six-year low Friday, while South Africa’s rand reached the weakest level in more than a decade.

The reasons behind the carnage are easy to find. Interest rates in the U.S. are on the rise, drawing investors from around the world. At the same time, the prices of commodities that have fueled many emerging-market economies in recent years are back on the decline.
Fed Chair Janet Yellen has said she expects to raise U.S. interest rates this year as the labor market strengthens, with economists forecasting a move in September. Higher yields in the U.S. would make riskier assets in emerging markets less attractive, just as commodity-supply gluts and slower growth in China crimp demand for raw-material exports.

Boom Times

“Central banks are trying to preempt a little bit of the currency volatility that could come from when the Fed decides to lift off,” James Lord, Morgan Stanley’s global emerging-market strategist, said in an interview from London.
It hasn’t helped that many nations failed to implement structural reforms during the boom times to insulate their economies from such downturns.
“Commodity-exporting countries are readjusting to the new reality on the fiscal side, but that takes time,” Christian DiClementi, a money manager at AllianceBernstein, said in an interview from New York. “Monetary policy has to compensate for the sort of fiscal reforms that weren’t taken when they should’ve been.”

With nations such as Indonesia and Colombia seeing near-record deficits in their current-accounts -- the broadest measure of trade since it includes investment -- the drop in currencies is a “necessary adjustment to address imbalances,” Goldman Sachs analyst Kamakshya Trivedi said in a report Thursday. He predicts the rout will continue as governments struggle to adapt to a worsening global environment.

Foreign Reserves

With a near-record $7.5 trillion in foreign reserves, developing nations have tools to keep the currency declines from becoming disorderly. And as long as exchange rates remain flexible, emerging markets will avoid any serious crisis, said Pablo Cisilino, a money manager at Stone Harbor Investment Partners.

“That’s a long-term fundamental change in emerging markets that should make investors more comfortable about what’s going on, regardless of what happens,” he said.
Mexico’s central bank expanded its intervention program Thursday, quadrupling daily dollar sales to $200 million. Separately, it reduced the minimum price decline needed to trigger an extraordinary dollar sale -- also for $200 million -- to 1 percent, from 1.5 percent now.

Real’s Collapse

While policy makers kept their benchmark interest rate at a record-low 3 percent, officials have changed the dates of their decisions so they can react quicker to any Fed increase. Mexico will probably begin to raise borrowing costs in the third quarter, according to economists surveyed by Bloomberg.

Brazil has suffered a 21 percent collapse in the real this year and is on the brink of losing its investment-grade status after giving up on its fiscal target. The country’s central bank raised its key rate Wednesday to 14.25 percent, the highest among major economies, as it tries to damp above-target inflation and boost investors’ confidence.
Central banks across Africa have also been aggressively boosting interest rates to help stem currency routs. South Africa, Uganda, Angola, Kenya and Ghana have all tightened monetary policy this year to help ward off inflation.

In Malaysia, policy makers have intervened in the currency market by selling foreign-exchange reserves to support the ringgit, which has fallen to a 16-year low.
Turkey’s central bank has left its main interest rates unchanged after ending its easing cycle earlier this year due to currency weakness and accelerating inflation. Standard & Poor’s expects the country will begin tightening monetary policy over the next 18 months.
While growth in emerging markets is slowing, central bankers are finding that currency stability outweighs the potential economic drag from higher borrowing costs, said Morgan Stanley’s Lord.
“Currencies are still very much under pressure, so it wouldn’t surprise me at all to see a little bit more of what we’ve been seeing from other central banks,” he said.

source: Bloomberg

EXXON PROFIT LOWEST SINCE 2009 AS COST CUT LAGS OIL'S DROP

Exxon Mobil Corp. posted its worst quarterly performance in six years as a worldwide glut of oil collapsed prices faster than explorers trimmed costs.

Net income fell to $4.19 billion, or $1 a share, from $8.78 billion, or $2.05, a year earlier, the Irving, Texas-based company said in a statement on Friday. The per-share result was 11 cents lower than the average estimate of 20 analysts in a Bloomberg survey. Exxon shares fell 1.9 percent to $81.40 in trading before regular U.S. equity markets opened.

 

Exxon cut share repurchases for the current quarter in half to $500 million compared with the April-to-June period, according to the statement. Refinery profits fattened by lower costs for crude were more than offset by weaker results in the company’s primary business, oil and natural gas production, Exxon said. The company’s U.S. wells posted a $47 million loss.

“The buyback program is a big shocker,” Robbert van Batenburg, market strategist at Societe Generale which rates the shares a buy and who doesn’t own any, said in a phone interview. “The energy space has been traditionally one of the biggest sectors buying back stock.”

 

Exxon reduced spending on major projects like floating crude platforms and gas-export terminals by 20 percent to $6.746 billion during the quarter, according to the statement. International crude prices fell 42 percent from the previous year to an average of $63.50 a barrel.

Shrinking Spending

Chairman and Chief Executive Officer Rex Tillerson was among the first oil-industry bosses to shrink spending as the crude rout began taking shape more than a year ago. After cutting the budget by 9.3 percent in 2014, this year’s reduction may exceed the original 12 percent target, the company disclosed during an April 30 conference call with analysts.

Tillerson, an Exxon lifer whose 10th year as CEO began in January, has been pessimistic about the prospects for an imminent oil-market rebound. On April 21, he told a Houston energy conference that the supply glut and low prices will persist “for the next couple of years” at least.

Those remarks proved prophetic: international crude prices that rose 45 percent between Jan. 13 and May 6 have since tumbled 21 percent, inaugurating the second oil bear market in 14 months.

Even as Tillerson cut spending and re-evaluated whether some multi-billion dollar projects make economic sense with oil around $50 a barrel, the company has discovered a field off the coast of Guyana that the government said may hold the equivalent of more than 700 million barrels of crude. Such a prize would be worth about $40 billion at current oil prices.

 

source: Bloomberg

CHINA MARKET MANIPULATION PROBE TARGETS SPOOFERS AFTER CRASH

An investor sits in front of a monitor displaying share prices at a securities brokerage. Photographer: Billy H.C. Kwok/Bloomberg

 

Spoofing has become the latest target in China’s campaign against stock-market manipulation after a $3.5 trillion selloff.

The practice, which involves placing then canceling orders to move prices, is suspected in 24 accounts on the Shanghai and Shenzhen stock exchanges, the China Securities Regulatory Commission said on its microblog. The bourses have restricted the accounts and regulators are investigating program traders, who have recently had an “obvious” impact on the stock market, the CSRC said.

 

China’s focus on spoofing follows a probe of “malicious” short selling, part of the government’s unprecedented effort to shore up investor confidence after a 29 percent tumble in the Shanghai Composite Index from its June high. Spoofing entered the popular lexicon this year after U.S. prosecutors said a London trader’s use of the strategy contributed to the flash crash in May 2010, when American equities briefly lost almost $1 trillion of value. The Shanghai Composite sank 8.5 percent on Monday, its biggest rout since 2007.

“The public isn’t happy about the market plunge so the regulator needs to take some actions as a response, and that’s part of the government’s plan to prop up the market,” said Zhang Haidong, the chief strategist at Jinkuang Investment Management in Shanghai. “Whether it’ll be effective remains to be seen.”

Loss Triggers

Spoofers make money by feigning interest in buying or selling at a certain price, creating the illusion of demand in an attempt to make other traders move the market. The spoofer cancels the original order and buys or sells at the new price to make a profit.

“You could see a huge amount of shares flashing at the bid or offer for one second -- and disappear the next,” said William Wong, the head of institutional sales trading at Shenwan Hongyuan Securities in Hong Kong.

 

While such trading may have contributed to recent declines in Chinese stocks, the main driver is probably a pullback by leveraged investors, said Zhang. Outstanding margin debt on mainland bourses has tumbled about 40 percent since mid-June, according to data compiled by Bloomberg.

The focus on market manipulation doesn’t alleviate concern that Chinese shares are too expensive, said Michael Every, the head of financial markets research at Rabobank Group in Hong Kong. The median stock on mainland bourses trades at 66 times reported earnings, higher than in any of the world’s 10 largest markets, according to data compiled by Bloomberg. That compares with a multiple of 13 in Hong Kong.

 

Spoofing “works on the way up and the way down, so it’s interesting it’s only a problem when it causes equity prices to fall,” Every said. “I don’t think this changes the fundamental dynamic that price-to-earnings ratios are unrealistically high in a slowing economy where there are concerns over profits.”

source Bloomberg

COMMODITIES EXTEND ROUT AS DOLLAR HOLDS GAINS, ASIAN SHARES RISE

Commodities extended their worst monthly slump since 2011, while the dollar headed for the biggest monthly advance since January. Asian shares increased, while European equities were little changed.

The Bloomberg Commodity Index fell 0.3 percent by 8:16 a.m. in London, set for a decline of 10 percent in July. The Bloomberg Dollar Spot Index was poised to gain 2.6 percent this month as the U.S. Federal Reserve moved closer to raising interest rates. The MSCI Asia Pacific Index rose 0.5 percent as the Stoxx Europe 600 Index was little changed. Crude sank 1.3 percent and gold fell 0.5 percent.

 

The dollar’s ascendence amid rising bets on a U.S. rate increase in September has cascaded through financial markets, hurting commodities already in retreat on supply gluts. Emerging markets have been a chief casualty, with wild gyrations in Chinese equities dealing another blow. Developing-nation stocks are heading for their worst month since 2012 and currencies have slumped 8 percent this year.

“The U.S. dollar remains supported by the looming Fed tightening cycle,” Imre Speizer, a senior market strategist at Westpac Banking Corp. in Auckland, said by phone. “As we get closer to that date and get possible clues from speeches by officials over the next few weeks, I expect the dollar to auto-resume its upward trend.”

European shares rose this week amid surging profit at companies including Deutsche Bank AG and PSA Peugeot Citroen. BNP Paribas SA, France’s largest bank, swung to the highest quarterly profit in more than three years. Lloyds Banking Group Plc will consider special dividends and share buybacks after first-half profit climbed 38 percent.

Oil, Gold

Commodity-linked currencies have borne the worst losses against the dollar in July, with Brazil’s real, the Australian dollar, Canada’s loonie and the South African rand among the five biggest decliners, down at least 4 percent. The euro emerged from the Greek crisis with a 1.9 percent drop, while the pound performed best among 16 peers, slipping 0.7 percent.

 

The Bloomberg Commodity Index dropped to a 13-year low this week. West Texas Intermediate oil slumped 19 percent this month, its worst performance since December, while gold fell 7.6 percent, set for its biggest drop since 2013 after declining to a five-year low. Copper slid 9 percent in July.

Emerging-market stocks are heading for their biggest drop in any month since 2012. The Shanghai Composite Index has tumbled 14 percent, the biggest loss among 93 global benchmark gauges tracked by Bloomberg, as margin traders cashed out and new equity-account openings tumbled amid a $3.5 trillion rout.

Consumer Prices

While China concerns contributed to losses in Asian equities in July, better-than-expected profits in the U.S. helped boost the Standard & Poor’s 500 Index by 2.2 percent. The MSCI All-Country World Index has gained 0.5 percent. An update on euro-area consumer prices is due Friday.

Japan’s Topix index capped an increase in July as investors watched quarterly results from more than 300 companies. Honda Motor Co. reported profit that beat analyst estimates as gains in China overshadowed a rise in recall-related expenses. Net income rose to 186 billion yen ($1.5 billion) in the quarter ended June, the company said.

 

Shares of Noble Group Ltd. slumped 15 percent in Singapore to the lowest level since 2008. The stock has lost more than 60 percent since the middle of February when a group calling itself Iceberg Research published criticism of its accounting, which the firm has rejected.

Yellen Guidance

U.S. gross domestic product rose at a 2.3 percent annualized rate in the second quarter, the Commerce Department said Thursday, after a previously reported contraction for the first three months was revised to a 0.6 percent gain. The median forecast of 80 economists called for a 2.5 percent advance.

Fed Chair Janet Yellen is guiding the central bank toward its first rate increase in almost a decade as the U.S. approaches full employment. The Fed said in a statement Wednesday that it will tighten monetary policy once it sees “some further improvement in the labor market.” Economists have put the chance of a rate increase at the Fed’s September meeting at 50 percent.

 

source: Bloomberg

AND THE BEARS HAVE IT: NSE ALSI FURTHER DEPRECIATES BY 0.25%

The Nigerian stock market shed 0.25% to close at 30,436.18 points. Similarly, Market Capitalization shed N25.62 billion, representing 0.25% decline to close at N10.43 trillion.  

 

MARKET STATISTICS- July 30, 2015                                                       YTD: -12.18%
Cap (N)	10,432,129,730,217.02	One Day(ASI CHG)	-0.25%
Index	30,436.18	OneWeek(ASI CHG)	-2.50%
Volume	154,335,236	OneMonth(ASI CHG)	-9.03%
Value (N)	4,210,366,740.41	SixMonths(ASI CHG)	+1.10%
Deals	3,154	52 Weeks(ASI CHG)	-28.16%
Gainers	14	Losers	68
Un-Changed	68	Total	114

 

Total volume of shares transacted decreased by 30.70% to 154.33 million while value decreased by 4.06% to 4.21 billion in 3,154 deals.

 

Top in volume transacted was Nigerian Breweries with a total volume of 21.64 million valued at N2.62 billion. Others are UBA, GT Bank, FCMB and Transcorp respectively.

 Top on gainers' log was Trans-Nationwide Express with a gain of 4.76% to close at N1.10. Others include 7-Up, CCNN, Lafarge Wapco and E-Tranzact respectively.

Top on losers' log was Pharma-Deko with a shed of 4.89% to close at N2.14. Others include Livestock Feeds, Portland Paint, Unity Bank and Airline Services respectively.

 

U.S. GDP RISES 2.3% IN SECOND QUARTER,FIRST QUARTER REVISED UPWARD

The world’s largest economy expanded at a faster pace in the second quarter and managed to eke out a gain at the start of the year, painting a picture of incremental progress consistent with the Federal Reserve’s view.

Gross domestic product rose at a 2.3 percent annualized rate, and a revised 0.6 percent advance in the first quarter wiped out a previously reported contraction, Commerce Department data showed Thursday in Washington. The median forecast of 80 economists surveyed by Bloomberg called for a 2.5 percent gain. Consumer spending grew more than projected, and price increases accelerated.

 

The economy has moved beyond some of the early 2015 constraints including weather and port delays, while cooling global markets, a strong dollar and insufficient wage gains may continue to limit growth. Fed officials, considering when to begin raising rates this year, concluded on Wednesday that the U.S. is making progress.

“We had better growth and better inflation in the first half,” said Eric Green, head of U.S. economic research at TD Securities in New York. “This should make the Fed feel more comfortable about raising rates this year.”

Economists’ estimates for GDP, or the value of all goods and services produced, ranged from 1.2 percent to 3.8 percent. The growth estimate is the first of three for the quarter, with the other releases scheduled for August and September when more information becomes available.

Annual Revisions

The Commerce Department also issued its annual revisions, updating the data back through 2012. The first-quarter’s reading was revised up from a previously reported 0.2 percent drop.

The economic expansion over the past three years was weaker than initially projected, with the biggest revision coming in 2013. From the end of 2011 to the end of 2014, the economy expanded at a 2.1 percent annualized rate, compared to the 2.4 percent pace reported before. GDP grew 1.5 percent in 2013, the weakest since the throes of recession in 2009, compared with a previously reported 2.2 percent gain.

A separate report from the Labor Department Thursday showed fewer Americans than forecast filed applications for unemployment benefits last week. Jobless claims rose by 12,000 to 267,000 in the period ended July 25.

Consumer Spending

An improving job market is among reasons American households are underpinning economic growth. Consumer spending climbed at a 2.9 percent annualized rate following a 1.8 percent advance at the start of the year, Thursday’s Commerce Department report showed. The Bloomberg survey median forecast was 2.7 percent. Purchases added 2 percentage points to growth.

 

Nonetheless, increasing employment has yet to significantly boost household earnings. After-tax income adjusted for inflation rose at a 1.5 percent annual rate in the first quarter, the smallest gain since the end of 2013, the Commerce Department’s report showed. That meant consumers had to dip into their bank accounts to boost spending, sending the saving rate down to 4.8 percent from 5.2 percent in the first quarter.

 

Business spending remained a sore spot, with investment excluding housing falling at a 0.6 percent rate, the worst performance since the third quarter of 2012.

Government outlays were another source of weakness, rising just 0.8 percent after dropping 0.1 percent in the first quarter. A 2 percent gain among state local agencies was almost wiped out by a 1.1 percent drop at the federal level.

Trade, Inventories

Two normally large swing factors, trade and inventories, were fairly stable last quarter and had little influence on growth.

For the first time, the Commerce Department also included a category aimed at providing a measure of private demand in the economy. The gauge reflects consumer and business spending and excludes that by governments as well as exports and inventories. So-called final sales to private domestic purchasers climbed at a 2.5 percent pace after a 2 percent gain.

The GDP report also showed price pressures picked up. A measure of inflation, which is tied to consumer spending and strips out food and energy costs, climbed at a 1.8 percent annualized pace compared with 1 percent gains in the prior two quarters.

Fed’s View

Fed policy makers on Wednesday said the labor market and housing have improved, moving closer to ending an unprecedented period of near-zero interest rates without providing a clear signal on the timing of liftoff.

 

“Economic activity has been expanding moderately in recent months,” the central bank said in a statement. At the same time, “business fixed investment and net exports stayed soft.”

Economists project second-half growth will benefit from purchases by American households, boosted by rising employment and an unemployment rate at a seven-year low.

Automobiles remain a steady source of strength for growth in consumer spending and for factory production. June sales of cars and light trucks capped the strongest quarter since 2005, according to figures from Ward’s Automotive Group.

 

The residential real-estate market is also in an upswing as low mortgage rates and easier lending requirements encourage prospective homebuyers. While the latest data on new home sales was weak, purchases of existing houses rose in June at the strongest pace since February 2007.

There are some signs business investment is set to recover from an early-year malaise, as American factories got more orders for capital goods such as machinery and fabricated metals in June.

Appliance maker Whirlpool Corp. posted second-quarter profit that topped analysts’ estimates, and reiterated its annual earnings forecast.

 

In contrast, some industrial companies such as Caterpillar Inc. and 3M Co. are hurting because of weak global markets and the lingering fallout from a stronger dollar, even as the woes of the oil sector dissipate.

 

source: Bloomberg

GOLD IS ONLY GOING TO GET WORSE

The problem for gold isn’t just that prices are dropping. For many, the metal also has lost its charisma.
Sentiment means a lot in the bullion market, where only about 60 percent of what gets mined or recycled each year is used in jewelry and industrial applications. The rest is sold as coins or bars, so when demand from investors dries up, there can be painful consequences for the bulls who remain.

The price of gold is sinking.

Prices will drop to $984 an ounce before January, according to the average estimate in a Bloomberg News survey of 16 analysts and traders. That would be the lowest since 2009 and a 10 percent retreat from Tuesday’s settlement. Speculators are shorting the metal for the first time since U.S. government data began in 2006, and holders of exchange-traded products are selling at the fastest pace in two years.

“Gold is out of fashion like flared trousers: no one wants it,” said Robin Bhar, an analyst at Societe Generale SA in London. “It’s not going to collapse, but we think it is going to be at a lower level in the not-too-distant future.”
After drifting lower for most of 2015, gold tumbled in July, heading for the biggest monthly decline in two years after slumping to the lowest since February 2010. The retreat shows how the metal has lost its appeal as a commodity and as an alternative to currencies, according to Macquarie Group Ltd. Futures in New York traded at $1,090.90 at 10 a.m. on Wednesday, down 0.5 percent from a day earlier.

Gold’s Cache

Prices are plunging amid mounting speculation that U.S. interest rates will climb this year, curbing the appeal of bullion because it doesn’t pay interest like competing assets. At the same time, China bought less of the precious metal than analysts were expecting, and the dollar is strengthening.
For much of the previous decade, prices were on the rise. Buying picked up after global central banks fought the 2008 financial crisis with unprecedented stimulus, stoking fear of accelerating inflation. Futures gained more than six-fold in 12 straight years of gains through 2012.
An improving U.S. economy spurred a shift in sentiment, driving bullion into a bear market in April 2013. About 60 percent of respondents in a separate Bloomberg News survey of 27 traders and analysts say that the metal will post a third straight annual loss this year. That would be the worst rout since 1998, when gold was last out of favor and languished near a 19-year low.

Greece Turmoil

Not everyone is heading for the exit. Bullion still has a place in portfolios as “insurance,” said Frank Holmes, a San Antonio-based money manager at U.S. Global Investors, which oversees $818 million. The International Monetary Fund said Monday developments in Greece remain a risk for the euro area and warned that authorities shouldn’t become complacent about the scale of the threat after the nation reached a deal with its creditors.
Physical demand can also help support prices. Sales of American Eagle gold coins at the U.S. Mint in July are heading for the biggest monthly total since April 2013. Buying has also increased at the Royal Canadian Mint, while Perth Mint Treasurer Nigel Moffatt told Bloomberg Television on Wednesday demand had surged since the price fell below $1,100.

“Gold is a weird relic of antiquity. It’s pretty, so people use it for jewelry. But it’s unlike iron ore or oil, or copper, or corn. There’s not specific end-use for it”

“As an investor, you should have gold,” Holmes said. “There are lots of systemic risks out there.”
Hedge funds aren’t convinced. Speculators held a net-short position, or wagers on declines, of 11,345 contracts in the week ended July 21, according to the most-recent data from the U.S. Commodity Futures Trading Commission. That’s the first net-bearish outlook since the data begins in 2006.

Goldman Outlook

Analysts who’ve been right in the past are forecasting more losses. Goldman Sachs Group Inc.’s Jeffrey Currie, who told investors to sell before the 2013 slump, has said the metal could fall below $1,000. Oversea-Chinese Banking Corp.’s Barnabas Gan, the most-accurate forecaster of precious metals over the past two years based on rankings compiled by Bloomberg, predicts $1,050 by December.
More than $5.7 billion has been wiped from the value of global gold ETPs in July. Investors cut holdings for a ninth day to about 1,539 metric tons, the smallest hoard since 2009. They have been selling for three straight months.
“Gold is a weird relic of antiquity,” said Brian Barish, who helps oversee about $12.5 billion at Denver-based Cambiar Investors LLC. “It’s not a commodity that has much fundamental demand. It’s pretty, so people use it for jewelry. But it’s unlike iron ore or oil, or copper, or corn. There’s not specific end-use for it. People just like it, so it becomes a discussion about fervor.”

source: Bloomberg

YET ANOTHER BLOODY DAY AT THE NSE: ALSI SHEDS 0.34%

The Nigerian stock market shed 0.34% to close at 30,510.95 points. Similarly, Market Capitalization shed N35.59 billion, representing 0.34% decline to close at N10.45 trillion.  

MARKET STATISTICS- July 29, 2015                                                       YTD: -11.96%
Cap (N)	10,457,757,464,707.26	One Day(ASI CHG)	-0.34%
Index	30,510.95	One Week(ASI CHG)	-2.42%
Volume	222,690,565	One Month(ASI CHG)	-8.24%
Value (N)	4,388,548,536.65	Six Months(ASI CHG)	+1.35%
Deals	3,601	52 Weeks(ASI CHG)	-27.85%
Gainers	16	Losers	29
Un-Changed	52	Total	97

 

 

 

 

 

 

 

 

 

 

 

Total volume of shares transacted decreased by 39.89% to 222.69 million while value increased by 4.38% to 4.38 billion in 3,601 deals.

Top in volume transacted was Zenith Bank with a total volume of 59.96 million valued at N994.04 million. Others are GT Bank, FBNH, Access Bank and Evans Medical respectively.

Top on gainers' log was Africa Prudential with a gain of 7.94% to close at N2.99. Others include Trans-Nationwide Express, Beta Glass, Champion and E-Tranzact respectively.

 

U.S. EQUITIES ADVANCE AMID EARNINGS REPORT BEFORE FED DECISION

U.S. stocks advanced, after equities’ biggest gain in two weeks, amid better-than-estimated results from Gilead Sciences Inc. to General Dynamics Corp. before the Federal Reserve’s decision on monetary policy.

 

Gilead gained 4.3 percent as quarterly results exceeded estimates and it raised its sales forecast. General Dynamics jumped 4.5 percent after boosting its earnings outlook. Energy shares rallied for a second day with oil. Twitter tumbled 14 percent as its top executives struck a critical tone on user growth. Akamai Technologies Inc. lost 7.5 percent after earnings missed expectations.

The Standard & Poor’s 500 Index gained 0.5 percent to 2,102.58 at 11:19 a.m. in New York, above its average price during the past 100 days. The Dow Jones Industrial Average added 91.49 points, or 0.5 percent, to 17,721.76. The Nasdaq Composite Index rose 0.2 percent.

“We’re going to see if there’s really been a shift in thinking for the Fed,” said Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates Inc. in Bethlehem, Pennsylvania. “With the softness we’ve seen recently, there’s been a little bit of skepticism building around whether a hike will take place as early as September. We need a catalyst to get us out of this malaise.”

 

Data today showed an index of pending home sales unexpectedly fell 1.8 percent, the first drop this year, after a revised 0.6 percent increase in May that was smaller than initially reported, according to the National Association of Realtors. The median forecast of economists surveyed by Bloomberg called for a 0.9 percent gain.

Investors are awaiting the Fed’s policy statement for signs on when it will move to raise borrowing costs. Economists forecast the central bank will hold rates steady in a decision at 2 p.m. in Washington. Fed Chair Janet Yellen has emphasized that the timing of rate liftoff is less important than the subsequent pace of increases, which she said would be gradual.

Global Drivers

Greece’s debt crisis and recent turmoil in China’s stock market had raised concerns about global growth and added to speculation that the Fed may further delay a rate increase.

Earlier this month, Yellen told lawmakers that raising rates prematurely could derail the recovery. Waiting too long, on the other hand, might force the Fed to tighten at a faster pace to keep the economy from overheating.

 

The S&P 500 is up 1.9 percent in July, heading for its biggest monthly advance since February. The index rose yesterday after declining for four of the last five weeks, and had lost 2.9 percent in the five sessions ending Monday as a Chinese equities rout spurred concern about the nation’s economic growth and some corporate earnings disappointed.

Facebook Inc. and Whole Foods Market Inc. are among S&P 500 companies reporting earnings on Wednesday. Of the gauge’s members that have reported results this season, about three-quarters beat profit estimates and half topped sales projections. Analysts expect a 4 percent drop in second-quarter earnings, shallower than July 10 calls for a 6.4 percent fall.

Sector Moves

The Chicago Board Options Exchange Volatility Index slipped 4.5 percent Wednesday to 12.83, after reaching a two-week high Monday. The gauge, know as the VIX, rose 15 percent last week, its fifth gain in six weeks.

 

Eight of the S&P 500’s 10 main groups advanced, led by industrial and energy companies amid a continued reprieve from a two-week commodities selloff. Crude oil extended its two-day increase to 2.1 percent, pushing Anadarko Petroleum Corp. and Diamond Offshore Drilling Inc. up more than 3.4 percent. Pioneer Natural Resources Co. and Transocean Ltd. added at least 3.2 percent.

C.H. Robinson Worldwide Inc. led industrial shares higher, climbing 5.3 percent after reporting second-quarter profit that exceeded analysts’ estimates. General Dynamics, the defense contractor that also makes luxury business jets, and drone-maker Northrop Grumman Corp. also boosted the sector, gaining more than 4.3 percent. They both boosted their 2015 earnings forecasts and beat quarterly analyst estimates.

Tech Earnings

Technology companies in the S&P 500 were little changed as an increase in Citrix Systems Inc. shares offset a decline in Akamai Technologies.

Citrix climbed 8.5 percent after reaching a settlement with investors Elliott Management Corp., agreeing to add the activist’s chief agitator Jesse Cohn to its board and begin a search for a new chief executive officer. Akamai fell the most since October 2013 after reporting quarterly earnings that missed analyst forecasts.

 

Twitter slipped 14 percent, the most since April. Interim Chief Executive Officer Jack Dorsey and Chief Financial Officer Anthony Noto said user growth won’t improve until the social-media company reaches a mass market -- something that will take a mixture of product improvements and marketing.

 

Yelp Inc. plunged by a record 28 percent after the customer-review website reduced its revenue forecast and at least five analysts downgraded the stock. In addition to cutting its third-quarter sales prediction, Yelp announced it would stop selling national brand advertising.

MasterCard Inc., the second-largest payments network, lost 0.6 percent amid falling profits that it attributed to rising expenses and a strengthening U.S. dollar that hurt earnings overseas.

 

source: Bloomberg