Nigeria allows naira to float against US dollar

Nigeria will allow the embattled naira to trade freely in a move to control the currency crisis in Africa's most populous nation.

The new system will come into effect on 20 June and is expected to lead to a significant devaluation of the naira.

Being a major oil exporter, Africa's biggest economy has taken a hit from the fall in commodity prices.

The fixed currency rate had created a vast black market for US dollars and squeezed the country's economy.

Nigeria's central bank had long been expected to to allow the naira to be more flexible and trade at a market-driven rate.

The naira is fixed at 197 to the US dollar, but the black market rate has soared to 370 in recent months.

The currency fix was introduced in February 2015 to stop the naira from falling when lower oil prices sparked trouble for Nigeria's economy.

But a prolonged period of holding a currency at an artificial level often has a disruptive effect as foreign companies become reluctant to import goods when they are paid at distorted levels.

Source: www.bbc.com

7 Social Media Marketing Secrets No Marketer Wants to Admit

Talk to professional online marketers, and they’ll likely tell you about the raw power of social media marketing. Talk to business owners from an older generation, and they’re likely to tell you how social media marketing is a useless fad.

Obviously, the former group has an incentive to tell you how great social media marketing is, and the latter group has a negative bias toward communications technologies. Does the truth lie somewhere in the middle? Kind of. 

With proper planning and successful execution, social media marketing can be effective for practically any business. In fact, in a survey of 357 marketers that I recently conducted, social media marketing had the highest percentage of respondents (96 percent) who claimed they planned to increase or keep their social media marketing budgets the same over the next year. Social media marketing also had the third-highest average ROI rating, out of 10 strategies surveyed.

Still, there are a handful of dark secrets about social media that no marketer -- including myself -- likes to admit.

1. Social media marketing isn’t free.

One of the greatest advantages of social media marketing that marketers like to play up is the fact that it’s free. And, yes, it won’t cost you anything to claim your business’ social media profiles, flesh them out or post on a regular basis -- at least not monetarily. The problem is that, even though you won’t necessarily have to spend money to fund your strategy, you will spend lots of time.

It takes hours of work to build out your profiles, and several hours a week to even maintain the most basically active presence. Add up those hours, and suddenly the amount of time that social media marketing does "cost" will become clear. After all, time is money, right?

2. There’s no predictable pattern of success.

No matter how sure people seem when telling you they hold the “secret” for a business' social media success, know that there’s no verifiable or consistent way to guarantee success for this task. For starters, every business is unique, with a unique target demographic, history and competitive landscape.

There’s no way any single strategy could possibly apply to everyone. Add in the fact that social media is always evolving and other random variables that could interfere with your results, and the predictability of success sinks even more.

3. You need a lot of followers before social media marketing starts to pay off.

The bottom line for social media, like any online marketing strategy, is your total ROI, or return on investment. Over an extended period of time, it will be very good if you execute your social media strategy correctly, but your initial ROI will probably be terrible.

Imagine that it takes you 15 minutes to write a good post, and you submit it to your 15 followers. Now, imagine you create the same post, but for 15,000 followers. Which one do you think will have a higher return for your investment (assuming those followers are all genuinely interested in your brand)? It takes a long time for social media to start paying off.

4. Social platforms restrict your reach.

Social media companies have a vested interest in getting you to pay for their advertising. As a result, they often restrict the amount of reach you’re able to get through organic (unpaid) posts. Even though you have 500 followers, that doesn’t mean that every post you make is going to reach 500 people. Keep this principle in mind when considering the sheer potential of social media -- it’s probably far, far less than you think it is.

5. Data won’t tell you everything.

Another advantage social media has is its access to sheer volumes of data -- you’ll be able to probe deeply into user behavior, patterns of interaction and demographic information. But unfortunately, data can’t tell you everything. It can’t give you qualitative insights about how individuals feel toward your brand, or about specific interactions.

Nor can data help you generate new ideas you haven’t tried before. It can’t even give you actionable insights unless you’re asking the right questions of that data in the first place.

6. Adapting is important but exhausting.

Social media changes often, with new platforms cropping up seemingly constantly and new trends coming and going at an ever-increasing pace. If you want to be successful, you have to try to keep up, but keeping up is exhausting even for the most passionate, dedicated marketer.

It’s comforting to settle into a routine, but with social media, you'll never get that opportunity -- at least, you'll never get to stay comfortable for long if you’re doing things right.

7. You’ll end up kicking yourself -- a lot.

There’s a lot of regret in the social media world, especially on a minor level. You’ll end up making typos or mistakes occasionally, but more often you’ll kick yourself for what you didn't do. You might miss a good opportunity for a post, a hashtag or an engagement. You might see a competitor’s post and wish you’d thought of it first. In any case, your strategy won’t be perfect, and you’ll be all too aware of that fact.

Despite these ugly truths and seldom-mentioned secrets about the true nature of social media marketing, it remains one of the most cost-efficient and approachable online marketing strategies you can adopt. No matter what stage of growth your company’s in, who your target market is and what your long-term goals are, social media can help you in your journey -- as long as you recognize its advantages and limitations.

Source: www.entrepreneur.com

Facebook loses first round in suit over storing biometric data

Facebook Inc (FB.O) lost the first round in a court fight against some of its users who sued the social networking company, alleging it "unlawfully" collected and stored users' biometric data derived from their faces in photographs.

The judge presiding over the case in a California federal court on Thursday turned down Facebook's motion seeking dismissal of the suit.

Facebook filed the motion arguing that the users could not file a complaint under Illinois Biometric Information Privacy Act (BIPA) as they had agreed in their user agreement that California law would govern their disputes with the company, and that BIPA does not apply to "tag suggestions."

The court found that Illinois law applies and that the plaintiffs have stated a claim under BIPA.

The complainants had alleged that Facebook's face recognition feature that suggests "tags" on photos unlawfully collected and stored biometric data, in violation of the Illinois BIPA.

The case was filed by some Illinois residents under Illinois law, but the parties agreed to transfer the case to the California court, the court order showed.

Facebook was also hit with a lawsuit over its plan to issue new stock last month.

The company said in April it will create a new class of non-voting shares in a move aimed at letting Chief Executive Mark Zuckerberg give away his wealth without relinquishing control of the social media juggernaut he founded.

Facebook was not immediately available for comment.

Source: www.reuters.com

Wall St. ends up after jobs report; S&P down for second week

U.S. stocks rebounded from early losses to close higher on Friday as investors viewed the day's jobs data as less disappointing than first thought.

Materials, industrials and discretionary shares were among the day's biggest gainers, with the S&P materials index up 0.8 percent and gold gaining for the day.

In the Labor Department report, nonfarm payrolls increased less than economists expected, and April's job gains were the smallest since September.

But the report also had some upbeat news, with both average hourly earnings and the average work week rising, and analysts said the overall slowdown in hiring may temper expectations for U.S. interest rate hikes.

"I know there was a knee-jerk reaction where the equity market went down, but it didn't take long for cooler heads to prevail and recognize this is still a reasonably good number," said Eric Kuby, chief investment officer, North Star Investment Management Corp in Chicago.

"The economy is still OK, but there are no pressures (that) maybe a rate increase is on the table earlier."

A Reuters survey following the jobs report showed Wall Street's top banks have all but abandoned any expectation that the Federal Reserve will raise rates in June. Most now see the U.S. central bank's next rate hike coming in September.

The Dow Jones industrial average ended up 79.92 points, or 0.45 percent, to 17,740.63, the S&P 500 gained 6.51 points, or 0.32 percent, to 2,057.14 and the Nasdaq Composite added 19.06 points, or 0.4 percent, to 4,736.16.

Mixed economic data and slowing global growth have weakened investors' appetite for risk this week.

The Dow and S&P 500 posted a second straight week of losses, their first two weeks of declines since February, while the Nasdaq registered a third straight week of losses. For the week, the Dow ended down 0.2 percent, the S&P 500 fell 0.4 percent and the Nasdaq declined 0.8 percent. The S&P 500 is up 0.6 percent for the year so far.

The healthcare sector had among the day's biggest declines, with Endo International slumping 39.2 percent to $16.17 after the drugmaker slashed its 2016 revenue and profit forecasts.

The Nasdaq biotech index dropped 1.3 percent, while the S&P health sector was down 0.6 percent.

Also, shares of Square Inc (SQ.N), the mobile payments company, fell 21.7 percent to $10.22, a day after it reported a bigger-than-expected quarterly loss.

The stock market could get a boost from consumer names reporting next week. With first-quarter earnings near an end, consumer discretionary components are the only sector showing double-digit earnings growth from a year ago.

About 7.1 billion shares changed hands on U.S. exchanges, compared with the 7.2 billion daily average for the past 20 trading days, according to Thomson Reuters data.

Advancing issues outnumbered declining ones on the NYSE by 1,922 to 1,051; on the Nasdaq, 1,538 issues rose and 1,248 fell.

The S&P 500 posted 16 new 52-week highs and 12 new lows; the Nasdaq recorded 32 new highs and 82 new lows.

Source: www.reuters.com

Liquidity mop up in a challenged economy

The four-month old monetary policy easing (expansionary) programme of the Central Bank of Nigeria (CBN) was unexpectedly cut short in March as the benchmark interest rate, also known as the Monetary Policy Rate (MPR) was reversed to 12 per cent after the November 2015 reduction to 11 per cent from 13 per cent.

The Monetary Policy Committee of CBN also raised the cash reserve ratio (CRR) for commercial banks to 22.5 per cent from 20 per cent, after reducing it by five per cent the same period from 25 per cent, and held bank’s liquidity ratio at 30 per cent.

The decisions simply meant that the quantity of money in circulation is effectively reduced, together with liquidity in banks’ possession and consequently, credit expansion ability of banks reduced. It also signaled the beginning of a period of focused attention on the quantity of money in circulation and how it affects the entire economy.

On the other hand, the upward adjustments of the MPR by one per cent would serve as compensation to investors for lowered real returns occasioned by inflation, as well as attract foreign private capital into the country. But financial market operators responded almost immediately, saying the adjustment was not enough to attract the anticipated investments.

For emphasis, the committee had in November 2015, lowered the MPR to 11 per cent from 13 per cent; reduced CRR from 25 per cent to 20 per cent; cut its Standing Deposit Rate for banks to four per cent (now seven per cent); and pegged its Standing Lending Rate for banks at 13 per cent (now 14 per cent), all in efforts to make more naira available for lending then.

Of course, just as before the last MPC meeting in March, the monetary authority has not let down the guard in wielding and tweaking its instruments towards impacting on liquidity level for desired direction and control level.

This is where the term “mop-up”, which upsets some analysts, comes in. The word mop-up is a term used to describe CBN’s deliberate action to regulate the quantity of money in circulation, using monetary policy instruments like treasury bill, bond auction, interest rate, among others, to achieve it.

Since the last decision of the policy makers, the monetary authority has been at it with regular exercise of treasury bills auction, redemption of matured ones, as well as rollover of matured instruments, together with bond.

For one thing, it brings about price stability, while checkmating inflation trend and curtails the excessive naira balance in the system that aids arbitrage in the foreign exchange market.

In fact, the CBN Governor, Godwin Emefiele, said part of the MPC’s considerations in the far-reaching rate decisions was the persistent fall in the naira exchange rate, which partly was attributed to excess liquidity and the latest report on inflation that hit 11.4 per cent (now 12.8 per cent).

CBN had earlier this year, said it would from January to March 3, auction its 364-day paper bills, worth N735.54 billion, which is part of its regular liquidity mop-up exercise.

Still, a new schedule of planned debt deals by the Federal Government in the second quarter of the year, showed that it may raise between N274b and N365b to tackle the current fiscal challenges.

Meanwhile, the Debt Management Office has kicked off its second quarter borrowing, as it raised N170b in bonds, made up of N40b paper maturing in 2036; N40b maturing in 2026; and N20b maturing in 2020 using the Dutch Auction System, but added N70b to the 2026 bonds in a non-competitive tender.

Again, CBN raised N167.51b through treasury bills last week, with varying maturities ranging from three months one year- N36.78b in the three-month category; N35b in the six-month paper; and N95.73b from the one year debt instrument.

These debt plans are also part of strategies to mop-up excess liquidity in circulation to curb rising inflation and finance the 2016 budget deficit, as well as help commercial lenders manage their liquidity.

Emefiele noted that the average inter-bank call and Open Buy-Back rates between January 25th and end of February 2016, stood at 1.43 per cent and 2.68 per cent, an indication of liquidity surfeit in the banking system.

Again, he said the new rate regime forms part of strategies to address the supply constraint in the foreign exchange market, as yields on domestic instruments have to be competitive to attract the much-needed foreign exchange inflows.

In less than a week after the rate decision, no less than N409.7b were withdrawn from circulation, with the inter-bank lending rates rising to 20 per cent, as banks, in an effort to meet the obligation for the new CRR requirement, scrambled for available cash in the money market, thereby causing a spike in the Open Buy-Back (OBB) and Overnight rates to 20 per cent against the then subsisting 6.75 per cent and 7.33 per cent.

However, analysts said that the decision to move up CRR by 2.5 per cent to 22.5 per cent, after it was earlier reduced from 25 per cent to 20 per cent four months ago, showed that the operating environment has remained unattractive for loan growth.

The Head of Investment Research at Afrinvest Securities Limited, Ayodeji Eboh, said the increased rate has worsened matters relating to structural factors, pushing costs up as price of funds rise.

He also faulted the suggestion that increase in banking system liquidity is fundamentally driving the pressure on exchange rate, as high subscription at CBN interbank auctions continued, despite intermittent treasury bills issuance conducted.

The Associate Research at Eczellon Capital Limited, Mustapha Suberu, had earlier predicted that with the action of the MPC, there is going to be an increase in money market rates on the back of the squeeze in banking system liquidity, which would translate to a higher cost of funds for financial institutions, as well as their customers, and further pressure their net interest margin.

The succor the economy is likely to witness in the short term, he said, would be stability in the value of the naira, especially at the parallel market, as reduced naira liquidity would likely cushion demand for the dollar.

“It is obvious that money market rates have risen sharply post-MPC meeting. The moderation that was witnessed at the end of March and so far in April could be tied to increased liquidity in the market through maturing treasury instruments, coupled with a slowdown in Open Market Operation auctions by the Central Bank of Nigeria. In all, the average money market rate is higher post-MPC, compared to periods before March 22.

“The Naira has also remained relatively stable post-MPC compared to earlier trading days in March. The value of the currency has oscillated between N322/$ and N324/$ (currently N310 with the mix of Nigeria-China currency deal), compared to the N385/$ earlier in March.

The President and Chief Executive Officer of Time Economics Limited, Dr. Ogho Okiti, on the other hand, said the decision expectedly, had positive implications for portfolio flows and re-pricing of yields in the bonds market through the weeks.

“The committee’s decision to narrow the asymmetric MPR corridor is geared towards encouraging banks to deposit excess funds with the CBN. Following the MPC decisions to reign on excess liquidity in the banking system by increasing the asymmetric corridor to +200/-500 basis points from +200/-700 basis points, CBN’s net Standing Deposit Facility effectively witnessed an upsurge of funds from N84.2b recorded four days before the decision to N106b two days after the decision,” he said.

The N21.8b increase in deposits at CBN by banks, representing 25.8 per cent sharp response to the seven per cent interest rate offered to banks to reduce their liquidity position also showed financial institutions’ preference for risk free investment to private sector lendings, which has been long labelled “risky.”

Also, on the decision to increase the benchmark interest rate, he noted that bond yields towards the end of March spiked across the curve, as yields on benchmark 20-year bonds increased by 55 basis points (bps), to 12.7 per cent; while yields on 10-year bonds increased by 45 bps, to 12.65 per cent.

“The 5-year paper bond yield –with the most liquid maturity– rose by 41 bps, to 11.7 per cent. Bond yields on 1-year treasury bills and 91-days treasury bills increased to 9.56 per cent and 6.10 per cent March 2015

“So effectively, the MPC decisions of last month has so far relatively produced desired outcome in terms of repricing of yields in the bonds markets and increasing commercial banks’ deposit with the CBN”, he said, as well as reducing the quantity of money in circulation.

Emefiele, though acceded to the fact that the quantity of the naira in circulation needed “trimming”, given the inflationary trend then, but also affirmed that “the rising inflationary pressure was traced to the lingering scarcity of refined petroleum products, exchange rate pass through from imported goods, seasonal factors and increase in electricity tariff.”

But true to his word, the latest report of the National Bureau of Statistics (NBS), barely three weeks after the decision, noted that the trickling effects of the lingering foreign exchange crisis and scarcity of the Premium Motor Spirit, as well as the adjustment in the electricity tariffs nationwide drove food prices up, resulting to a new record of inflation near four-year high of 12.8 per cent.

Besides, the inflation’s trend has been marked by over 100 basis points increase for two consecutive months of February and March, but has notably defied the liquidity mop ups of the apex bank, an indication that the inflation is not demand driven, but cost push.

“The higher price level was reflected in faster increases across all divisions. Transportation costs, the planting season, and foreign exchange movements created significant upward pressures on the Food index in March.

“The Food index increased by 12.7 per cent, up by 1.4 per cent points from rates recorded in February as all major food groups, which contribute to the food sub-index increased at a faster pace.

“Imported items, as well as, other domestic shocks continued to have ripple effects across many divisions that contribute to the Core Index. The index increased by 12.2 per cent in March, roughly 1.1 per cent points from rates recorded in February.

“The Food sub-index continues to record upward pressure from both imported foods, as well as, cereals. In March, the Food index increased by 12.7 per cent year-on-year), 1.4 per cent points higher from rates recorded in February and reaching a year-on-year high last recorded in May 2012.

“The highest price increases were recorded in the fish, vegetables, and bread and cereals groups for the third consecutive month. On a month-on- month basis, the Food sub-index increased by 2.3 per cent in March, 0.9 per cent points higher from rates recorded in February,” NBS said.

Source: Guardian Newspaper.

Wall Street falls as earnings weigh; Dow, S&P up for month

U.S. stocks posted their largest weekly drop in more than two months on Friday as earnings reports continued to weigh, but the S&P 500 and Dow managed to close up for April after strong showings mid-month.

Company results once more gave the market direction as a 9 percent decline in Gilead Sciences shares weighed the most on both the S&P and the Nasdaq Composite.

Apple shares were down for the tenth session in the last 11 and closed the week down 11.3 percent, the largest such decline since January 2013. Its April fall was of 14 percent.

Apple and Gilead, alongside Corning, Goodyear and Xerox are among the companies that reported earnings this week and are closing them with double-digit declines in their stock.

"Every sort of case-by-case blowup was handled in a company-specific fashion and lo and behold this week we have stumbled into some household names that kind of rolled the market over with them," said Art Hogan, chief market strategist at Wunderlich Securities in New York.

The Dow Jones industrial average fell 57.12 points, or 0.32 percent, to 17,773.64, the S&P 500 lost 10.51 points, or 0.51 percent, to 2,065.3 and the Nasdaq Composite dropped 29.93 points, or 0.62 percent, to 4,775.36.

The weekly declines were of 1.3 percent for both the Dow and S&P and the Nasdaq fell 2.7 percent. It was the largest weekly drop for the Dow since the week to Feb. 12, and for the S&P and Nasdaq the declines were the largest going back to Feb. 5.

For the month, only the Nasdaq ended in negative territory.

"Today's fall is just noise after the massive movement we've seen in the past few weeks," said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute in St. Louis.

Materials stocks on the S&P 500 fell 0.6 percent Friday, taking the index down 0.3 percent for the week. However its April gain of 4.9 percent adds to advances in February and March that make the three-month increase of more than 20 percent the largest for the sector in any three consecutive months going back to September 2009.

On Friday Amazon jumped 9.6 percent to $659.59 after the company's quarterly results blew past analysts' expectations.

First-quarter earnings from S&P 500 components are expected to have fallen 5.7 percent from a year earlier, according to Thomson Reuters I/B/E/S. Of the 311 companies that have reported, 57 percent reported revenue above analyst expectations, compared with the long-term average of 60 percent.

Declining issues outnumbered advancing ones on the NYSE by a ratio of 1.36-to-1 and on the Nasdaq a 1.81-to-1 ratio favored decliners.

The S&P 500 posted four new 52-week highs and three new lows; the Nasdaq recorded 42 new highs and 32 new lows.

Volume on U.S. exchanges totaled just above 9 billion shares, compared with the 7.0 billion average over the past 20 sessions.

Source: www.reuters.com

Oil prices reach 2016 highs

World oil prices struck 2016 high points this week as a weaker dollar attracted buyers to a market struggling to overcome a global supply glut.

Dollar-denominated oil has become more attractive for buyers of rival currencies despite lingering concerns about excess output, thanks to the US unit falling heavily, particularly against the yen.

The dollar’s fall comes as the US Federal Reserve held interest rates unchanged at its policy meeting on Wednesday, signalling it was in no hurry to raise borrowing costs.

The dollar has since fallen sharply against the yen after the Bank of Japan decided against additional stimulus measures for the struggling Japanese economy.

On Friday, the Brent oil contract reached $48.50 a barrel — the highest level since early November.

US benchmark West Texas Intermediate (WTI) hit a near six-month peak at $46.63.

Brent is meanwhile on course for its best monthly gain since May 2009, noted David Cheetham, analyst at trading firm XTB, on the final trading day of April.

“The 22 percent rise so far in April has seen the market move back above the $48 handle for the first time since early November,” he added.

Around 1300 GMT, Brent North Sea crude for delivery in June was slightly off Friday’s high, though still up nine cents compared with Thursday’s close, at $48.23 a barrel.

WTI for June stood at $46.49, up 46 cents.

“Nothing appears capable of stopping the surge in oil prices at the moment,” Commerzbank analyst Carsten Fritsch said this week.

“Attention is paid to any news that fits in with the general picture of rising prices, whereas any news that does not is largely ignored,” he added.

Oil prices has won support in recent days also from speculation that Saudi Arabia is planning to cut back drilling as the market worries about excessive global supplies.

The market “seems to have got an extra boost from a report out of Nabor Industries’ earnings call”, said Bob Yawger of Mizuho Securities.

Yawger said the drilling company claimed that the Saudis have plans to reduce their rig counts by 10 percent.

Earlier this month, major crude producers, including OPEC kingpin Saudi Arabia, failed to agree in Doha to curbing crude output.

Oil prices meanwhile endured brief pressure midweek after the US Energy Department reported that commercial crude stockpiles in the United States jumped by two million barrels last week, slightly more than analysts had expected.

The oil market is recovering after nosediving to 13-year lows of around $27 in February, in the wake of a sustained drop from above around $100 seen two years ago.

Source: Guardian Newspaper.

U.S. banks' dismal first quarter may spell trouble for 2016

It is only April, but some on Wall Street are already predicting a rotten 2016 for U.S. banks.

Analysts say it has been the worst start to the year since the financial crisis in 2007-2008 and expect poor first-quarter results when reporting begins this week.

Concerns about economic growth in China, the impact of persistently low oil prices on the energy sector, and near-zero interest rates are weighing on capital markets activity as well as loan growth.

Analysts forecast a 20 percent decline on average in earnings from the six biggest U.S. banks, according to Thomson Reuters I/B/E/S data. Some banks, including Goldman Sachs Group Inc (GS.N), are expected to report the worst results in over ten years.

This spells trouble for the financial sector more broadly, since banks typically generate at least a third of their annual revenue during the first three months of the year.

"What's concerning people is they're saying, 'Is this going to spill over into other quarters?'" Goldman's lead banking analyst Richard Ramsden said in an interview. "If you do have a significant decline in revenues, there is a limit to how much you can cut costs to keep things in equilibrium."

Investors will get some insight on Wednesday, when earnings season kicks off with JPMorgan Chase & Co (JPM.N), the country's largest bank. That will be followed by Bank of America Corp (BAC.N) and Wells Fargo & Co (WFC.N) on Thursday, Citigroup Inc (C.N) on Friday, and Morgan Stanley (MS.N) and Goldman Sachs Group Inc (GS.N) on Monday and Tuesday, respectively, in the following week.

Banks have been struggling to generate more revenue for years, while adapting to a panoply of new regulations that have raised the cost of doing business substantially.

The biggest challenge has been fixed-income trading, where heavy capital requirements, new derivatives rules, and restrictions on proprietary trading have made it less profitable, leading most banks to simply shrink the business.

Bank executives have already warned investors to expect major declines across other areas as well.

Citigroup Inc (C.N) CFO John Gerspach said to expect trading revenue more broadly to drop 15 percent versus the first quarter of last year. JPMorgan Chase & Co's (JPM.N) Daniel Pinto said to expect a 25 percent decline in investment banking. Several bank executives have warned about declining quality of energy sector loans.

Global investment banking fees for completed merger and acquisitions, and stock and bond underwriting, totaled $15.6 billion in the first quarter, a 28 percent decline for the year-ago period, according to Thomson Reuters data.

Volatility in stock prices and plunging commodities prices caused trading volume to dry up during most of the quarter. Trading activity picked up slightly in March but was not strong enough to offset declines during the first two months of the year.

Analysts have been lowering first-quarter estimates over the last month in light of business pressures. They now expect JPMorgan to report adjusted earnings of $1.30 per share, Bank of America to report 24 cents per share, Wells Fargo to report 99 cents per share, Citigroup to report $1.11 per share, and Morgan Stanley to report 63 cents per share. Goldman is expected to report $3.00 per share, the lowest first-quarter earnings since before the financial crisis.

Matt Burnell, a Wells Fargo banking analyst, said in a research note Friday that capital markets weakness may extend at least into the second quarter.

Analysts said there may be some loan growth outside of the energy sector, and a small uptick in net interest margins, a measure of loan profitability, but overall, the tone was less-than-optimistic.

"The first quarter is going to be ugly and we don't think that necessarily gets recovered in the back half of the year," said Jerry Braakman, chief investment officer of First American Trust, which owns shares of Citigroup, JPMorgan, Wells Fargo and Goldman. "There are a lot of challenges ahead."

Source: www.reuters.com

Asia shares, dollar start week on the back foot

Asian stocks wobbled on Monday and Japan's Nikkei index slid as the dollar notched a fresh 17-month low against the yen.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS erased earlier losses and edged up about 0.1 percent, after Wall Street ended with modest gains on Friday even as the S&P 500 .SPX still suffered its biggest weekly decline in two months.

Japan's Nikkei stock index .N225 tumbled 1.3 percent. In addition to a stronger currency, data released early on Monday showed Japan's core machinery orders fell 9.2 percent in February from the previous month, in a sign that business investment remains subdued.

"While February's machinery orders fell less than anticipated, Japan markets remain weighed down by a strengthening yen and uncertainty surrounding when, or if, the Bank of Japan will intervene," said Andrew Meredith, co-managing director at Tyton Capital Advisors.

Data out on Monday showed China's consumer price inflation was less than expected in March, while wholesale prices declined less than anticipated, in a sign that deflationary pressure in the industrial sector may be easing.

While the figures pointed to stabilizing prices, they also underscored that the central bank's prolonged easing campaign begun in late 2014 has yet to result in substantial price increases.

Chinese shares were higher in early trading, with the blue-chip CSI300 index .CSI300 up 1.8 percent, while the Shanghai Composite Index .SSEC added 1.9 percent.

The greenback's recent slide against the yen prompted a chorus of warnings from officials in Tokyo and put investors on alert for direct yen-selling intervention, though many believed Japan would stay its invention hand.

Japan's top government spokesman, Chief Cabinet Secretary Yoshihide Suga, said on Monday that recent currency moves were one-sided and speculative and that the government would take steps as needed.

The dollar wallowed close to lows notched last week, as investors mulled the outlook for U.S. monetary policy, with the Federal Reserve seen as being more cautious on hiking interest rates than some investors had believed.

The dollar index, which tracks the U.S. unit against a basket of six major currencies, fell 0.2 percent to 94.094 .DXY, within sight of last week's low of 94.015, which was its lowest since October.

The euro EUR= was up about 0.1 percent at $1.1412, not far from last week's high of $1.1454, its highest since October.

The dollar slipped 0.2 percent to 107.91 yen JPY= after earlier nudging down to 107.63, which was its weakest since October 2014.

Crude oil prices pared earlier gains but were still higher after soaring more than 6 percent on Friday. They also marked gains of about 8 percent for the week, as drawdowns in U.S. crude stockpiles fed hopes that the end was in sight for the global supply glut that has plagued the industry for nearly two years.

U.S. crude futures added 0.4 percent to $39.87 a barrel after jumping 6.6 percent on Friday, while Brent crude LCOc1 was also up about 0.4 percent at $42.12, after settling up 6.4 percent.

The weaker dollar and stock market losses helped lift spot gold to its highest in nearly three weeks. Gold XAU= rose to $1,251.70 an ounce, its highest since March 22. It was last up about 0.9 percent at $1,251.00

Source: www.reuters.com

Interbank rates fall amid N519b NDIC premium, CRR debits, forex provisions

For the second week in a row, the interbank lending rates failed to rise even as the liquidity level in the financial system was depleted significantly towards the end of the week’s activities, from about N518.8 billion to N405 billion.

The cash withdrawals effected through premium payments to the Nigerian Deposit Insurance Corporation (NDIC); Cash Reserve Requirements (CRR) debits and foreign exchange auction provisions by bank left the Open Buy-Back and Overnight rates lower than previous week at 3.1 per cent and 3.6 per cent respectively.

A trader said that the level of liquidity now is sufficient to support transactions at the money market, leading to moderation of borrowing costs among banks, defying rate influencing factors.

Already, there are projections that the mood in the market will subsist this week, as treasury bills worth N91 billion will be due for redemption, while unfulfilled cash deposits made for forex auction by banks will return to the system.

The OBB and Overnight rates had opened last week at 3.8 per cent and 4.3 per cent due to robust system liquidity and later rose by 2.5 per cent and 2.3 per cent to settle at 6.3 per cent and 6.6 per cent respectively as the CBN mopped up about N40.3 billion from the system.

The rates however moderated to 3.8 per cent and 4.4 per cent in the middle of the week as inflows from unfulfilled foreign exchange provisioning refunds by CBN to banks for the previous week hit the system.

Consequently, market liquidity stood at N923.8 mid-week, but reduced to about N405 billion as market opened on Thursday and subsequently, closed the week down at 0.7 per cent week-on-week respectively.

Meanwhile the foreign exchange market continues to remain relatively stable week-on-week, although the spread between the official/interbank and the BDC/parallel market rates remains staggering.

While the Naira/Dollar exchange rate at the CBN and interbank remained at N197/$ and N199.50/$, at the BDC segment, it traded at N320/$ on all trading days of the week, with the parallel market rate pegged at N322/$ on all trading days, except Tuesday when it declined marginally to N323/$.

Relatedly, the treasury bills market was broadly bullish last week as average rate declined on most trading days.

Specifically, average bill eased 0.6 per cent from the previous trading session to close at eight per cent at the beginning of the week, declined further by 0.1 per cent to 7.9 per cent on Tuesday, as activities on short termed instruments increased.

In the middle of the week, CBN auctioned treasury bill worth N218.9 billion, allotting N19 billion for 91-day; N33.5 billion, 182-day; and N166.4 billion for 364-day, at stop rates of 6.1 per cent, 8.7 per cent and 9.5 per cent respectively.

With interests focused majorly in the 364-day bills, it was oversubscribed by about 175.4 per cent, compared with the 91-day bill that was undersubscribed by 54.5 per cent.

Source: Guardian Newspaper.