Nigerian Stock Market Joins US, Others to Depreciate, as Investors Trade with Caution

Kayode Tokede with agency news

The Nigerian stock market yesterday joined the United States and others in depreciation, as investors around the world traded with caution after weak jobs data in America sparked concerns about the world’s largest economy.

Specifically, the major index in Nigerian stock market, Nigerian Exchange Limited All-Share Index (NGX ASI), was down by 0.17 per cent to close at 97,582.41 basis points, yesterday, and the technology-heavy Nasdaq index in US opened 6.3 per cent lower after a sharp decline at the end of last week, but pared its loses slightly.

After the trading yesterday, about 5.95 per cent or N11.30 per share drop in MTN Nigeria Communication Plc to N178.70 per share dragged the domestic stock market lower by N92 billion in market capitalisation.

The other main US indexes also dropped sharply before recovering, while stock markets in Europe and Asia plunged, with Japan’s Nikkei 225 down by some 12.4per cent.

At the same time, the US Federal Reserve held off cutting interest rates last week – something that typically boosts growth – in contrast to other central banks, such as the Bank of England.

And there had been concern that shares in big technology companies, particularly those investing in artificial intelligence (AI), had been overvalued and were now facing a correction.

Chipmaker Intel announced major layoffs last week as well as disappointing financial results, and there was speculation that its rival, Nvidia, which makes AI chips, will delay its latest product launch.

The Dow Jones index, which features America’s 30 biggest listed companies, was down 2.2per cent, having pared its losses, while the tech-heavy Nasdaq was 2.8per cent lower and the S&P 500 was down 2.4per cent.

Shares in big-hitting tech stocks had recovered a bit but remained in the red, with Nvidia down 5.4per cent, Amazon 3.8per cent lower and Apple down 4.5per cent.

In Europe, the CAC-40 in Paris trimmed earlier losses but was still trading 1.4per cent lower, while Frankfurt’s DAX and the UK’s FTSE 100 were down by about two per cent.

The market rout began on Friday after weaker-than-expected jobs data from the US fuelled speculation that its economy was slowing.

In July, US employers added 114,000 roles, far fewer than expected, while the unemployment rate ticked up from 4.1per cent to 4.3per cent.

The figures raised concerns that a long-running jobs boom in the US might be coming to an end. It also stoked speculation about when – and by how much – the Federal Reserve will cut interest rates.

The most recent data showed that the US economy grew at an annual rate of 2.8 per cent in the three months to the end of June, much stronger than most developed countries.

As the Nikkei plunged in Japan, stock markets in Taiwan, South Korea, India, Australia, Hong Kong and Shanghai all tumbled by between 1.4per cent and eight per cent on Monday.

Japan’s problems stemmed in part from its currency, the yen, which has been strengthening against the US dollar since the Bank of Japan raised interest rates last week.

It had made stocks in Tokyo – and Japanese goods in general – more expensive for foreign investors and buyers. At the same time inflation in Japan rose by more than expected in June while the economy shrank in the first three months of the year.