Contrary to the upswing recorded in the global financial markets, yesterday, in response to the victory of Donald Trump at the USA’s presidential election, Nigeria’s stock market went negative, reversing the gains from the previous days’ trading sessions.
Key financial markets reactions including assets tied to “Trump trades” went higher. Also, Bitcoin value surged over 8.1% to hit fresh all-time high.
And the US Dollar-dominated foreign exchange markets posted biggest 1-day gain since February 2023.
However, in Nigeria, the benchmark index of the Nigerian Exchange, NGX, All Index, ASI shed 57 bases points, bps, to close at 96,567.24 points from 97,123.61 points it closed on Tuesday.
Market relapse
The market relapse was primarily driven by selloffs in Tier-1 banking stocks.
These include GTCO, which declined by 1.91%, Zenith Bank 0.81%, and UBA 9.99% outweighing gains in First Bank Nigeria Holding, FBNH, which went up by 1.65%, ACCESS Corporation 2.12%, and WAPCO 0.66%, putting the market in the red. Consequently, the year-to-date (YTD) return fell to 29.15%, while the market capitalization lost N337.13 billion to close at N58.51 trillion.
Experts speak
Reacting to the performance of the market, Olatunde Amolegbe, former president, Securities and Exchange Commission, SEC, said: “The market did not react today (yesterday) as expected in other markets. There is typically a lag time. But I understand Wall Street was extremely bullish.”
Commenting also, Tajudeen Olayinka , Investment Banker & Stockbroker said: “Nigerian market is yet to react fully to Trump’s election victory, even though strong reactions were noticed when U.S. markets opened earlier in the day.
“Nigerian markets: fixed income, equity, and foreign exchange, could react in the best way possible in the coming days, especially as his victory could create major shifts in geopolitics and global economy.”
Assets tied to the “Trump Trade” rallied during the Asian session after Trump took an early lead with his victory keeping bulls in the game. US futures are flashing green, Treasury yields have jumped while Bitcoin hit an all-time high.
US dollar jumped 1.8% – its biggest 1-day gain since February 2023 on the prospects of slower rate cuts by the Federal Reserve Bank of USA.
Bitcoin rallied almost 10% to hit a fresh all-time high above $75,000 as crypto enthusiasts cheered a pro crypto president.
S&P500 index futures climbed 1.4% signalling that the S&P500 will open hitting fresh all-time highs.
It may pressure oil prices – Otunuga
On what these mean for Nigeria, Mr. Lukman Otunuga, Senior Market Analyst at FXTM, stated: ‘’Trump’s victory may pressure oil prices as he is seen pushing for a further increase in domestic oil and gas production, leading to increased supply in the long term.
“In addition, his policies could see a boost in US growth – triggering inflationary pressures.
“Should this prompt the Fed to keep interest rates higher for longer, a stronger dollar may drag oil prices lower as a result. This could be bad news for major oil producing countries who acquire most of their revenues from oil sales.
“For Nigeria, the combination of lower global oil prices and a stronger dollar could add to its woes as it navigates a rough period.”
