Trump’s victory: International markets rise, but Nigeria moves in the opposite direction

In contrast to the global financial markets’ recent surge, Nigeria’s stock market saw a negative day yesterday, undoing the gains from the previous trading sessions, following Donald Trump’s victory in the US presidential election.

GODFATHER ALUMINUUM LTD

https://www.instagram.com/godfatheraluminium1/profilecard/?igsh=dWw5YW05djR4MWNl

Reactions from major financial markets, such as assets linked to “Trump trades,” increased. Additionally, the value of Bitcoin increased by more than 8.1% to reach a new all-time high.

Additionally, the foreign exchange markets that are controlled by the US dollar saw its largest one-day increase since February 2023.

The Nigerian Exchange’s main index, the NGX All Index, ASI, however, dropped 57 basis points (bps) to settle at 96,567.24 points from 97,123.61 points on Tuesday.

Relapse of the market

Tier-1 banking stock selloffs were the main cause of the market relapse.

The market was in the negative as a result of these, including GTCO, which fell 1.91%, Zenith Bank, which fell 0.81%, and UBA, which fell 9.99%, outweighing gains in First Bank Nigeria Holding, FBNH, which increased 1.65%, ACCESS Corporation, which increased 2.12%, and WAPCO, which decreased 0.66%. As a result, the market capitalisation dropped N337.13 billion to close at N58.51 trillion, and the year-to-date (YTD) return dropped to 29.15%.

Professionals talk
Olatunde Amolegbe, the previous president of the Securities and Exchange Commission, or SEC, responded to the market’s performance by saying: “The market did not react today (yesterday) as expected in other markets.” Usually, there is a lag time. However, I am aware that Wall Street was very optimistic.

Investment banker and stockbroker Tajudeen Olayinka also commented, saying: “The Nigerian market has not yet properly responded to Trump’s election triumph, despite the fact that there were significant reactions when U.S. markets opened earlier in the day.

Given that his win might result in significant changes to geopolitics and the global economy, “Nigerian markets: fixed income, equity, and foreign exchange could react in the best way possible in the coming days.”

International markets
Following Trump’s early lead and victory that kept bulls in the game, assets associated with the “Trump Trade” surged during the Asian session. Treasury yields have increased, US futures are flashing green, and Bitcoin reached a record high.

The expectation of slower rate reduction by the Federal Reserve Bank of the USA caused the US dollar to soar 1.8%, its largest one-day increase since February 2023.

Bitcoin jumped over 10% to reach a new all-time high above $75,000 as supporters of a pro-crypto president applauded.

Futures for the S&P 500 index increased 1.4%, indicating that the index will start at new all-time highs.

Otunuga: It might put pressure on oil prices.
“Trump’s victory may put pressure on oil prices as he is seen pushing for a further increase in domestic oil and gas production, which will lead to increased supply in the long term,” said Mr. Lukman Otunuga, Senior Market Analyst at FXTM, in response to questions on what these mean for Nigeria.

Furthermore, his plans might accelerate US GDP, which would lead to inflationary pressures.

A stronger dollar could cause oil prices to decline if this leads the Fed to maintain higher interest rates for an extended period of time. Major oil-producing nations that rely heavily on oil sales for their revenue may find this to be terrible news.

“As Nigeria moves through a difficult time, the combination of declining global oil prices and a stronger dollar could make matters worse.”