A senior market analyst at FXTM, Lukman Otunuga, yesterday said the victory of Donald Trump in the United States presidential election may pressure oil prices and trigger inflation in a concomitant effect on the local economy in Nigeria.
Otunuga, in his forecast, said, “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,” he said.
The senior analyst also listed assets that could be burned following Trump’s return to the White House.
He noted that gold dropped as much as 1.5% due to a stronger dollar and rising Treasury yields.
“Trump’s return to the White House will most likely set the market tone for the next few years with the USD, bitcoin and other assets tied to the “Trump trade” the biggest winners.
“Investors with some skin in the game have already experienced how markets reacted under Trump between 2017 and 2021,” he said.
According to him, Trump’s unpredictability, policy uncertainty and tariff wars with China left investors on edge.
“This and other major themes triggered sharp moves on the Vix index during his term.
“Market volatility jumped over 60% during Trump’s previous administration, from 2017 until 2020. Since then, volatility fell about 10% under President Biden,” he said.
The analyst also said Trump’s return to the White House is likely to trigger fresh levels of volatility across the globe, adding “Trump’s proposed tariff increases in Europe and China could spark a global trade war.”
Meanwhile, the US dollar has surged following Trump’s victory.
Investors are betting that Trump’s plan to cut taxes and raise tariffs will push up inflation and reduce the pace of interest rate cuts.
Higher rates for longer mean investors will get better returns on savings and investments they hold in dollars.
Bitcoin has also hit a record high, following Trump’s election promise to make the US the “bitcoin and cryptocurrency capital of the world”.
Markets and currencies around the world have shifted sharply following the US election news.
The FTSE 100 index, comprising the largest companies listed in the UK, was up 1% on Wednesday afternoon/
The pound sank 1.41% against the US dollar, its lowest level since August.
The euro dived 2.24% against the US dollar to its lowest level since June
The dollar rose by about 1.4% against a host of different currencies, including the pound, euro and the Japanese yen.
In Japan, the benchmark Nikkei 225 stock index ended the session up by 2.6%, while Australia’s ASX 200 closed 0.8% higher.
In Mainland China, the Shanghai Composite Index ended 0.1% lower, while Hong Kong’s Hang Seng was down by around 2.23%
The major US stock indexes are expected to jump when trading opens.
…Nigeria’s equity shreds N338bn
Meanwhile, the Nigerian equities market lost N338 billion at the close of trading on Wednesday.
The market capitalisation crashed to N58.5 trillion from N58.8 trillion recorded by the bourse on Tuesday.
The benchmark All-Share Index (ASI) equally dropped to N96,567.24 from N97,123.61 recorded the previous day.
The market breadth was flat as 20 stocks advanced and 20 stocks declined, while 79 stocks remained unchanged in 9,021 deals.
EUNISELL, REGALINS, and VERITASKAP led other gainers with 9.87%, 9.30% and 9.17% growth each in share prices to close at N7.46, N0.47, and N1.31 from the previous N6.79, N0.43 and N1.20 per share.
UBA, OANDO, and THOMASWYN led other price decliners with 9.99%, 9.98%, and 9.79% decline each in share prices to close at N31.55, N65.40, and N1.75 from the previous N35.05, N72.65 and N1.95 per share.
On the volume index, STERLING BANK led trading with 79 million shares in 124 deals followed by UBA which traded 77 million shares in 1, 272 deals.
ACCESS CORP traded 44 million shares in 759 deals.
On the value index, UBA traded stocks worth N2.5 billion in 1,272 deals followed by SEPLAT which traded equities worth N1.3 billion in 88 deals.
ARADEL traded shares valued at N1.2 billion in 634 deals.