Friday, 10 May 2019


Godwin Emefiele, CBN Governor
Lukman Otunuga,
FXTM Research Analyst

Investors were caught completely off guard this week after Nigeria’s President Muhammadu Buhari reappointed the CBN governor, Godwin Emefiele, for a second term.

Although the market reaction has been somewhat mixed with the All-Share Index (ASI) edging -0.26% lower today, it is too early to come to any conclusions about how this will impact domestic markets moving forward. With the re-appointment of the CBN governor signaling continuity and removing an element of uncertainty over policy direction, this could be a welcome development for local shares and the Naira. However, more time will be needed to carefully assess what this means for inflation, interest rates and economic growth in the medium to longer term.

Stocks push higher as US tariffs kick in
Stock markets pushed higher on Friday, despite the United States hiking tariffs on Chinese goods. It seems investors are still cautiously optimistic over both sides finding a middle ground on trade. If a trade deal becomes reality, this is likely to boost global equities and emerging market assets. However, a situation where talks descend into disagreements is likely to rekindle risk aversion – ultimately boosting appetite for safe-haven assets.

Gold fights to defend $1280
Gold bulls fought incredibly hard to keep prices above the $1280 support level this week, as uncertainty over US-China trade talks supported the flight to safety. With escalating trade tensions and renewed concerns over slowing global growth fueling risk aversion, the precious metal punched above $1290 before later surrendering gains. We expect Gold to transform into a battleground for bulls and bears in the week ahead as conflicting market themes influence the precious metal. If the Dollar remains depressed and heightened trade tensions encourage investors to stay clear of riskier assets, Gold has the potential to shine towards $1300. However, a breakdown below $1280 is seen opening the gates towards $1265.

Commodity spotlight – WTI Oil
The story defining Oil’s valuation in recent weeks continues to revolve around supply and demand-side factors. On one side of the equation, Oil is supported by OPEC-led supply cuts, the US ending sanction waivers on Iranian Oil and supply disruptions in Venezuela and Libya. On the other side of the equation, Oil is pressured by robust production from US Shale, rising crude inventories and concerns over slowing growth impacting demand. Oil markets are likely to remain volatile and highly sensitive ahead of the OPEC meeting in June. In regards to the technical picture, WTI Oil is trading around $62.00 on the daily charts. A weekly close above this level is seen opening a path towards $63.00.

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