Commodity Market: All Share Index, Naira and Oil in focus  

All Share Index, Naira and Oil in focus  

It has been a quiet start to the trading week for Nigerian markets, with the All-Share Index (ASI) barely moving from where it closed last Friday!

Over the past few days, local stocks have found support from encouraging financial results released by companies for the second quarter of 2020. Although the coronavirus pandemic remains a significant risk to Nigeria’s economy, sentiment has certainly been lifted by a handful of companies displaying resilience against the health crises.

Looking at the technical picture, the ASI is bullish on the daily timeframe as there have been consistently higher highs and higher lows. The daily close above 25000 could inspire a move towards 25200.

All Share Index, Naira and Oil in focus  

More Naira weakness on the cards?

The story defining the Naira’s weakness continues to revolve around Dollar shortages, shaky Oil prices and gloomy economic fundamentals. Nigeria continues to nurse wounds inflicted from lockdown measures while shaky Oil prices have complicated the Central Bank of Nigeria’s efforts to defend the Naira against external and domestic risks.

On the official exchange, the Naira is trading around N386 per dollar while the black market N475.

A quiet week for Oil?

This could be another quiet week for Oil markets are the commodity struggles to break free from the $40-$43 regions (WTI Crude).

Oil prices have jumped to their highest levels last week thanks to a massive drop in U.S crude inventories and a broadly weaker Dollar. Buying sentiment towards Oil was also stimulated by geopolitical risk after an explosion at Beirut’s port triggered fears over instability in the region. However, Oil remains capped by fears over a new wave of coronavirus infections hitting fuel demand.

Commodity spotlight – Gold

Everybody has been talking about Gold over the past two weeks after the precious metal made history by hitting all-time highs.

All Share Index, Naira and Oil in focus  

After surging towards $2074 last Friday, prices tumbled almost $60 as investors engaged in a bout of profit-taking. Fundamentally, the precious metal remains bullish thanks to a weaker Dollar, negative U.S. yields, pre-election jitters and rising coronavirus cases in the United States. However, Gold may experience a pullback towards $2000 before prices rebound higher.

Looking at the technical picture, sustained weakness below $2040 could open the doors back towards $2000. A breakout above $2040 should inspire bulls to challenge $2074 and possibly $2100.

By Lukman Otunuga, Senior Research Analyst at FXTM

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