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U.S. Stocks Gain Ahead of Fed Decision
NEW YORK — U.S. stocks opened higher as investors waited to see whether the Federal Reserve would decide to maintain the current pace of its bond-buying program at the conclusion of its policy meeting later today.
The Dow Jones Industrial Average gained 57 points, or 0.4%, to 15934. The S&P 500-stock index rose four points, or 0.2%, to 1785. The Nasdaq Composite Index tacked on two points, or 0.1%, to 4026.
The outcome of the Fed meeting is expected to remain in focus for most of the session Wednesday, with investors zeroed in on whether the central bank will start to taper its $85 billion in monthly bond purchases.
The purchases have been intended to spur economic growth; some analysts say recent data on the economic and unemployment front could cause the Fed to pull back on its bond buys. The Fed decision is due at 2 p.m. Eastern time, with a news conference with Fed Chairman Ben Bernanke to follow at 2:30 p.m.“Even overnight, you’re seeing people positioning ahead of the Fed meeting,” said Colin Cieszynski, senior market analyst with CMC Markets. “The bears don’t want to get too bearish in case they’re wrong, and the bulls don’t want to get too bullish.”
Markets have swung in recent weeks as traders and investors have tried to determine the outlook for Fed action this month. Stocks declined last week, with markets notching their largest single-day decline in a month in one session, on expectations that the Fed could decide pull back on its bond-buying program.
But last week’s losses followed a rally on a better-than-expected November government jobs report. The Fed has said it would watch the labor market closely to determine whether the economy was strong enough for it to take a step back. The S&P 500 is now up 0.4% so far this week.
It isn’t clear how markets will react to any move—or a signal of any future moves—from the Fed. Mr. Cieszynski said he doesn’t expect the central bank to start to pare its bond-buying efforts this month, but thinks officials could signal they want to start cutting back on easy-money policies in the early months of 2014. In that case, he said, markets could see a short-term boost but decline in 2014, in anticipation of the Fed’s step back.“As soon as we get back from the holidays, that’s on everyone’s horizon,” said Mr. Cieszynski.
Treasury prices fell ahead of the Fed decision, with the yield on the 10-year note rising to 2.879%. Rates have risen this year in anticipation of the central bank stepping back from bond-buying, with a sharp rise in early summer.
Wednesday brought signs that the housing industry is adjusting to rising interest rates, however, as new-home construction jumped by more than expected in November. The Commerce Department reported that U.S. housing starts rose to a seasonally adjusted annual rate of 1,091,000, its highest level in nearly six years. November building permits, an indicator of future construction, fell by 3.1%, a smaller drop than expected, to 1,007,000.
Gold futures rose 0.1% to $1,231.80 a troy ounce, while crude-oil futures were 0.6% higher at $98.04 a barrel. The dollar edged higher against the euro and the yen.
Meanwhile, the Stoxx Europe 600 index was 0.9% higher. Germany’s DAX added 1% amid further signs of strength for Europe’s largest economy. The Ifo institute’s business-confidence index climbed to 109.5 from 109.3 in November, hitting its highest level since April 2012 and matching economists’ forecasts.The U.K.’s FTSE 100 gained 0.2%, showing little reaction to a fall in U.K. unemployment to 7.4% in the three months to October–its lowest level in 4½ years. Economists had forecast a rate of 7.6%.
Asian markets provided a positive backdrop, as strong Japanese export data spurred a 2% gain for Tokyo’s Nikkei index. The yen’s decline against the dollar came amid speculation that Prime Minister Shinzo Abe might make a growth-strategy announcement in a speech Thursday.
Hong Kong’s Hang Seng Index rose 0.3%, while the Shanghai Composite dipped 0.1%.
In corporate news, FedEx edged up 0.5% even after it reported fiscal second-quarter profit that fell short of Wall Street forecasts. The shipping giant raised its full-year forecast for adjusted earnings, in part to account for recent share purchases.
VeriFone Systems fell 6.4% after the card-payment system maker reported earnings late Tuesday that missed analyst estimates.
Heico gained 4.1% after the aircraft-components maker beat analyst forecasts for its earnings and revenue, and gave an upbeat outlook for the new fiscal year.
– WALL STREET JOURNAL
The Central Bank of Nigeria (CBN) has issued a stern warning to Deposit Money Banks (DMBs) over the illegal sale of mint Naira notes to currency hawkers.
The apex bank, in a circular signed by the Acting Director of Currency Operations, Mr. Solaja Olayemi, on Friday, emphasized that erring banks would face stringent penalties.
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As part of its efforts to curb the abuse of the national currency, the CBN announced plans to conduct nationwide checks to seize mint notes sold by hawkers.
Banks found to have released such notes will be required to pay a fine of 10% of the value of the affected cash withdrawn from the CBN on the date in question.
Subsequent violations will attract an additional penalty incrementally increased by 5%.
The CBN also reiterated its commitment to enforcing the Clean Notes Policy, warning that banks involved in hoarding, diversion, or any actions that disrupt efficient cash distribution would face appropriate sanctions.
With the festive season fast approaching, the apex bank urged DMBs to enhance internal controls to ensure transparent cash distribution.
It highlighted the need for proper utilization of Automated Teller Machines (ATMs) to ensure easy access to new notes by the public.
Furthermore, the CBN disclosed plans to intensify its mystery shopping and spot checks, working closely with law enforcement agencies to clamp down on any practices that undermine the integrity of the Naira.
Nigeria’s inflation rate surged to 33.88% in October 2024, up from 32.7% in September, according to the latest Consumer Price Index (CPI) report released by the National Bureau of Statistics (NBS) on Friday.
The month-on-month increase of 1.18 percentage points marks yet another strain on the nation’s economy, with transportation and food costs cited as the main drivers of inflation.
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Steep Year-on-Year Increase
Compared to October 2023, when the inflation rate stood at 27.33%, the October 2024 figure reflects a significant rise of 6.55 percentage points. This sustained upward trend highlights the worsening cost-of-living crisis for Nigerians.
Month-on-Month Breakdown
Inflation on a month-on-month basis also showed an uptick, rising to 2.64% in October 2024 from 2.52% in September. The faster rate of price increases further underscores the growing economic pressure on households.
Food Inflation Soars to 39.16%
Food inflation, a major component of the headline rate, reached 39.16% in October 2024, up from 31.52% in the same month last year.
The increase was driven by higher prices of staple items, including: Cereals and Tubers: Guinea Corn, Rice, Maize Grains, Yam, Water Yam, and Coco Yam. Oils and Fats: Palm Oil and Vegetable Oil. Beverages: Milo, Lipton, and Bourvita.
On a month-on-month basis, food inflation rose by 0.30 percentage points to 2.94% in October, up from 2.64% in September.
Price hikes in Palm Oil, Vegetable Oil, Fish, Meat, and Bread categories were major contributors.
Annual Food Inflation Hits 38.12%
The average annual food inflation rate over the past 12 months climbed to 38.12%, a sharp increase of 11.79 percentage points from the 26.33% recorded in October 2023.
The consistent rise in inflation, particularly food and transportation costs, continues to erode the purchasing power of Nigerians.
The Manufacturers Association of Nigeria (MAN) has expressed the view that support of both Nigerians and the government for the Dangote Refinery, would enable the giant refinery to perform optimally.
It added that such support will also serve as an impetus for other investors to invest in the downstream sector of the petroleum industry in Nigeria.
The President of MAN, Otunba Francis Meshioye, who made the call after a tour of the Dangote Petroleum Refinery, Petrochemical Complex and Fertilizer Plant advocated that Nigerians and the government should do all they can to support the multi-billion-dollar company, which he described as a source of pride and a gift not only to Nigeria but also to the African continent and the whole world.
He described the Dangote Refinery as a game-changer in the Nigerian oil and gas industry, saying that it is not only creating jobs and driving economic growth but also contributing to our nation’s energy security and self-sufficiency.
According to him, the project is quite inspiring, and he admired the inspiration of the promoter of the project, Aliko Dangote.
He said, “To have been inspired to establish this facility is very magnificent, it is the first ever in Africa and the first ever of such refinery in the whole world. It has many first, first and first.”
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The company has the capacity to produce all our needs locally, petroleum, and other similar products: no one would come to the facility and he would not be inspired or encouraged to ensure that all the support that the company requires should be given to it.
The MAN President said the government should do all that is humanly possible to ensure that the facility works Optimally. “It is prudent and expedient that the necessary supports are given to the company for the economic benefits of Nigeria.
“If the facility can produce 650,000 barrels of crude per day and Nigeria is producing far above this volume per day, she should give the facility all crude it needed to produce”.
He noted that apart from the fact that the facility can give Nigerians what they need locally, the excess will be exported, and when they are exported, the country benefits because it will earn foreign exchange for the government.
“So, whichever way we look at it, the facility requires the government’s support to be able to operate optimally. We have seen the laboratory which is in a class of its own. It is first among equals around the world. It is functioning very well. It is a complex on its own.
“With this kind of facility that starts from quality control to quality assurance, just to ensure that the harmful effects of the products are at zero level, what can be greater than this? This is very unique and I will encourage all stakeholders to give maximum support, and not by the way support, but maximum support.
“I cannot see anything that is lacking in this company, we have been here since morning and went through all the units. The facility can deliver products between 1760 trucks to 1800 trucks per day. So if you have such several trucks going out of the facility a day to various destinations in Nigeria, so many people will benefit from it. There will be more jobs, many families will be comfortable because of the jobs this will create, many artisans will benefit and it will have a spillover effect on so many sectors of the economy.
“If they can produce AGO, gasoline and Jet A fuel, this is good and the government should have no reason not to ensure the facility gets its backing to carry out its activities, because it is going to benefit massively,” he added.
The MAN boss who stated that his organization is an advocacy group, said to a large extent it will support the Dangote Refinery by pushing its case with the government, and also solicit the support of necessary government agencies that can ensure that it operates fully.
The association, he said, always discusses with the government issues that affect its members and it has always listened to it , and always finds solutions to those issues, stating further that Dangote Refinery’s case will not be different.
“The sheer scale and ambition of this project is truly impressive, and we applaud the vision and determination of the Dangote Group in making this refinery a reality.
As manufacturers, we understand the importance of reliable and affordable energy in driving our businesses forward. The Dangote Refinery will undoubtedly have a positive impact on the entire manufacturing value chain, providing a reliable source of fuel and petrochemical products that are essential for capacity utilisation and value addition.
“I believe that the success of the Dangote Refinery serves as an inspiration to all of us in the manufacturing sector. It demonstrates what is possible when we combine innovation, technology, and investment to create world-class facilities that benefit the entire nation,” he asserted.
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