Nigerian stocks kick-off 2022 with style

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Global investors have entered the new year in a cheerful mood.

 

U.S stocks were mixed and European shares inched higher on Wednesday, extending a solid start of 2022 as concerns over the Omicron variant eased. Equity bulls are clearly in the driving seat with stocks across the globe starting the new year with a bang.

 

In Nigeria, local stocks reopened the year on a positive note with the All-Share Index (ASI) up almost 2% year-to-date. The positive performance was sparked by a combination of domestic and external factors. Domestically, strong gains seen in medium and large stocks fuelled the upside while externally, optimism over the global economic recovery rekindled appetite for risk assets.

 

The next few days promise to be eventful with global markets thanks to the OPEC+ output decision later today, FOMC meeting minutes this evening, and key US jobs data on Friday. On top of this, major economies will be publishing key data throughout the week, complemented with speeches from Fed policymakers.

 

Will the dollar remain king in 2022?

 

As 2022 kicked off, a burning question remains whether the mighty dollar would rule the FX arena this year.

 

We highlighted in our 3 major themes for 2022 how the dollar could be a potential winner. Indeed, the Fed indicating that they could raise interest rates 3 times in 2022 is a welcome development for the dollar.

We are only three trading days into 2022 and the dollar is flexing its muscles in the FX space, appreciating against all G10 currencies with the Dollar Index (DXY) hovering around 96.00 as of writing. From a technical perspective, the DXY has the potential to push higher if a daily close above the 96.90 resistance level is achieved.

 

Nigeria introduces tax on drinks 

 

In a move to boost revenues and discourage excessive sugar consumption, Nigeria will charge a levy of 10 naira per litre on all non-alcoholic fizzy sugary drinks. For those who were looking for a reason to cut down their intake of sugar consumption, well the government has offered a reason to move ahead. It will be interesting to see whether this tax has the desired impacts economically and socially.

 

Commodity spotlight – Oil 

 

Oil bulls seem unfazed by the fact that U.S oil stockpiles fell by less than expected last week. They even turned a blind eye to the massive build in gasoline inventories, which rose by 10.1 million compared to the expectations for a build of 1.8 million.

 

The upside witnessed in oil could be based around OPEC’s optimistic global outlook and expectations of strong demand despite surging Coronavirus cases. WTI and Brent crude are both up over 1.5% today and could extend gains amid a softer dollar. Looking at the technical picture, Brent is approaching the $82 resistance level while WTI is eyeing $80.

 

For more information, please visit: FXTM

Written by Lukman Otunuga, Senior Research Analyst at FXTM


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