Market Rout Spreads Globally; Nigerian Stocks Dip
Wall Street faced deepening losses on Monday, while Tokyo experienced its most severe drop in 13 years, as global panic set in over potential U.S. recession fears. The Nigerian stock market also fell by 0.2%, reflecting the broader market turmoil.
The Nigerian Exchange Limited’s benchmark NGX All Share Index (ASI) decreased to 97,582.41 points from last week’s 97,745.73 points. Similarly, the NGX market capitalization fell by over N97 billion, ending at N55.404 trillion compared to N55.497 trillion previously.
Trading activity surged on the NGX, with volume and value increasing by 53.63% and 57.36%, respectively. Zenith Bank led the trading charts, with notable activity likely due to a significant cross transaction.
Sector Performances
The sectoral performance showed mixed results. The Consumer Goods Index rose by 0.89%, the Banking Index by 0.19%, and the Industrial Goods Index by 0.03%, driven by gains in stocks like Dangote Sugar and UBA. Conversely, the Insurance Index and Oil & Gas Index saw slight declines due to selling pressures in specific stocks.
Global Market Overview
In global markets, New York’s Nasdaq Composite Index fell over six percent initially but later recovered slightly to a 2.8% decline. The S&P 500 and Dow also experienced more than two percent drops. Major European indices ended the day down around 1.5-2.0 percent.
Tokyo’s Nikkei Index plummeted more than 12%, marking its worst day since the Fukushima crisis and its largest ever points loss.
Weak US Jobs Report Sparks Concern
The market turmoil was triggered by a disappointing U.S. jobs report released on Friday, showing a significant rise in unemployment and fewer jobs added than expected. This data followed a Federal Reserve decision to maintain high interest rates, leading to fears that the Fed might have acted too late to prevent a recession.
Some analysts are pointing to the “Sahm Rule,” which indicates the early stages of a recession based on recent unemployment data. However, Chicago Federal Reserve President Austan Goolsbee suggested that current conditions do not yet signal a recession and that the Fed is prepared to respond if needed.
Currency and Commodity Reactions
The dollar fell below 142 yen for the first time since January, influenced by both the unwinding of yen carry trades and geopolitical tensions. Brent crude oil prices dropped to their lowest in over six months, and Bitcoin slumped more than 10% to under $50,000.
Political and Economic Implications
Former President Donald Trump has used the market downturn to criticize Vice-President Kamala Harris and the Democrats, framing it as a choice between “Trump prosperity” and a potential “Kamala crash.” This may become a significant electoral issue if the economic situation continues to deteriorate.
Fed’s Potential Response
Economist Steven Blitz suggests that an emergency rate cut by the Federal Reserve is unlikely but that a larger cut in September could be possible if economic conditions worsen. The Fed’s decision to hold interest rates steady last week has led to speculation about whether it has acted too slowly to address the economic downturn.
As the situation evolves, further market movements and central bank decisions will likely continue to influence global financial stability.