Lukman Otunuga,
FXTM Research Analyst
It will be a relatively quiet trading
week for Nigeria as the economic calendar is void of Tier 1 data releases. Nevertheless, local stocks could still be
influenced by external forces in the form of US-China trade developments and
global risk sentiment.
Outside of Nigeria, much attention will
be directed towards economic data from the United Kingdom, United States and
Australia. Caution is likely to remain a major theme in the week ahead as
investors closely monitor the US-China trade saga. A scenario where China
retaliates against US tariffs hikes will be seen as fueling risk aversion. This
will be bad news for emerging market assets but good news for safe havens like
the Japanese Yen, Dollar and Gold.
Bitcoin shines through market uncertainty
Bitcoin bulls shifted into higher gear
over the weekend, as prices surged to above $7550, levels not seen since August
2018.
With no major news factors behind the
aggressive appreciation, the sharp $1000 jump over the weekend remains a
mystery to investors. Although such explosive moves are nothing new in the volatile
world of cryptocurrency, there is the coincidental view that the rally in
Bitcoin has come around the same time as heightened US-China trade tensions
have eroded risk sentiment. While it’s far too premature to suggest that
Bitcoin has restored itself as a potential safe-haven asset for investors, the
idea will attempt to pick up further momentum if the cryptocurrency continues
to explode higher amid the risk-off conditions.
There is a likelihood that Bitcoin
bulls are finding inspiration to jump into the market on the headlines of a
rally in Bitcoin. The bullish ‘golden cross’ is already in play on the daily
charts. This occurs when the 50-day simple moving average
has crossed above the 200-day moving average. With prices punching above $7400
and currently trading around the $7000 region, bulls remain in the driving
seat. A solid weekly close above $7400 may open the gates towards $8000 in the
short to medium-term.
Uber shares tumble on debut
Uber shares have stumbled into the
trading week, struggling to shake off the hangover from the company’s rough and
rocky debut on the New York Stock Exchange last Friday.
Its shares closed down nearly 8% last
week thanks to investor skepticism over the company’s unprofitability and
general lack of risk appetite amid escalating US-China trade tensions.
The launch of Uber on the stock market
was one of the most highly anticipated additions since Facebook shares many
years ago, but it is a surprise to see how unsuccessful the launch has been
given the widespread popularity of the Uber brand globally.
Overall, it does appear that risk
aversion will remain the name of the game for financial markets further into
the trading week as trade tensions, geopolitical risk factors and repeated
concerns over global growth diminish risk appetite. Uber shares, like many
other financial asset classes, are set to stay under a negative spotlight as
investors instead favor safe-haven assets.
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