European shares steadied after two days of losses and the euro recovered from a 3-week low on Wednesday as markets await the outcome of the Greek debt restructuring deal, while worrying over the weaker outlook for the global economy.
U.S. stock futures pointed to a recovery on Wall St after steep declines in the previous session.
With stimulus measures from the world’s major central banks mostly on hold, growth is key to supporting the recent rally in riskier assets but recent data has disappointed.
Germany announced factory orders in January posted a surprise fall as demand slumped from outside the euro zone, adding to concerns about a slowdown in Brazil, Australia and China, though these regions are still experiencing growth.
“The reality of slower growth in the BRIC countries and the continuing threats from the situation in Europe with Greece and other fiscal problems are starting to weigh on the market,” Nic Brown, head of commodity research at Natixis said.
The weaker data puts the focus firmly on the strength of the U.S. economic recovery, with the release of key U.S. nonfarm payrolls due at the end of the week.
“Given the fact that we are all waiting for the Greek (debt) deal, risk appetite is unlikely to pick up much, especially given U.S. payrolls data on Friday is coming up,” said Melinda Burgess, currency strategist at RBS.
Equities and commodities and growth linked currencies all suffered a major sell-off on Tuesday on worries over the growth outlook and the prospects for a successful Greek debt deal, but prices have since either steadied or recovered slightly.
The euro, which plumbed a three-week low of $1.3103 late on Tuesday, was up 0.2 percent at around $1.3136 though it remains vulnerable to any news on the Greek debt deal.
Private holders of Greek debt have until late Thursday to accept the deal to restructure their holdings, which is key to enabling Greece to secure a 130 billion euro ($170.5 billion) bailout and meet a bond repayment due on March 20.
If fewer than 75 percent of creditors accept the offer, the deal could be off, potentially plunging the euro zone back into crisis.
The worries over Greece kept safe-haven German government bond futures near record highs with the March contract, which expires on Thursday, at 140.24, having hit a record high of 140.48 on Tuesday, and the June contract at 138.51.
Yields on riskier euro zone debt also rose initially, wiping out some of the gains which followed the European Central Bank’s massive injection of liquidity into the banking system last week, but as hopes rose that the deal might get done these yields reversed course.
Spain’s 10-year bond yield reached high of 5.25 percent before easing back to trade lower on the day at 5.12 percent. The equivalent Italian yield rose to 5.15 percent before recovering to under 5.0 percent.
The search for safe-havens also benefited the giant Japanese government bond market, where prices gained across the board, sending the 5-year yields to its lowest level since October 2010.
“Expectations for more aggressive Bank of Japan easing at next week’s policy meeting appear likely to be disappointed,” said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ, Ltd.
It is in the equity markets where fears over the growth outlook were having the biggest effect with fresh data also showing South America’s largest economy Brazil expanded just 2.7 percent in 2011 after surging 7.5 percent in 2010. Quarterly growth in final three months was a scant 0.3 percent.
The three main U.S. equity indexes recorded their biggest one-day percentage drop this year on Tuesday, while a key risk measure, the CBOE Volatility index jumped nearly 16 percent, reflecting a receding appetite for riskier assets.
The FTSE Eurofirst index of top European shares edged up 0.35 percent after dropping of 2.6 percent in the previous session-its biggest daily fall in nearly four months.
A weaker session in Asia saw the MSCI world equity index edge lower to 322.89, but it remains up about 7.75 percent for the year to date but a week ago the index was showing gains of over 11 percent for 2012.
In commodity markets oil prices gained after China said it would boost energy imports this year while concerns persist over supply risks and Iran’s nuclear program, despite the country’s offer for talks with major powers.
Front-month Brent gained 57 cents to $122.69 a barrel and U.S. oil increased by 62 cents to $105.14.
Gold regained some ground on Wednesday as jewellers in Asia snapped up the metal after prices dropped 2 percent in the previous session.
Silver followed gold higher, while platinum and palladium also rebounded from Tuesday’s lows.
“Basically gold and other risky assets are all being lumped together. Nobody is really looking at individual fundamentals. They are just buying the dollar and pretty much selling everything else,” said Nick Trevethan, a senior commodity strategist at ANZ in Singapore. ($1= 0.7625 euros).
Traders Protest FG’s Move To Restore Festac Town
The move by the Federal Government to restore Festac Town in Lagos to its original status has sparked up protest among traders occupying Agboju Amuwo Planks and Building Materials Market.
The traders on Wednesday, protested at the FHA office in Festac Town against the demolition of their market, following the demolition of illegal structures by the Federal Housing Authority (FHA) ahead of the restoration.
The Tide recalls that there was a petition to the Minister of Works and Housing, Mr Babatunde Fashola, in 2020 about illegal structures that had taken over Festac Town.
Speaking at a stakeholders’ meeting on the restoration of Festac town organised by FHA, last year, its South-West Zonal Manager, Mr Akintola Olagbemiro, said, “This year, we commenced the restoration of Festac town, following the consent judgement from the court against illegal occupants of Festac land.
“Our action is to save the residents from the insecurity that has taken over the entire Festac town as a result of illegal structures everywhere”.
The chairman of allottees of First Gate to Third Gate, Mr Kole Olatunji, in his remarks at the meeting said the land from First Gate to Third Gate was allocated between 1985 and 1999, noting that with the consent judgment, original owners of the land as allocated should take over their plots.
But the chairman of plank market, Muhammed Bello, protested the seven-day notice given to traders to vacate the place without alternative arrangements.
Bello said: “How do they expect us to remove our wares in seven days?
“What we want is that they should allow us to remain there and we will pay whatever amount they ask us to pay”.
Speaking in the same vein, the chairman of Cane Chair and Furniture Association, Emmanuel Okoye said: “We need freedom. Let them tell us where they want us to stay. That place was swampy. We filled the place with several millions of Naira which we got as loans.
“We also rely on loans to do our business. Whatever the government wants us to pay; we are ready to pay to remain there. We have been there for 27 years. What we lost to the demolition is over N300 million”.
Fuel Tanker Explosion Kills Five, Injures Two In Ogun
No fewer than five persons were on Wednesday burnt to death, while two others sustained first degree of injury in a fuel tanker explosion at Ajilete, along Owode-Idiroko road, in Yewa South local government area of Ogun State.
Eyewitness accounts revealed that a truck bearing 33,000 litres of petroleum product was descending the steep portion of the road when its tank suddenly detached from truck’s body and tumbled to the ground with a bang.
The explosion, the witnesses said, killed five persons on the spot, while two other persons were injured.
The Tide learnt that the seven victims were all residents of the area where the accident occurred.
Confirming the incident, the Federal Road Safety Corps (FRSC) Commander, Idiroko Unit, Akinwunmi Olaluwoye, said five deaths were recorded in the accident which occurred at about 8.15 am on Wednesday.
According to him, the remains of the dead had been claimed by their families.
He disclosed that a bus and a motorcycle were also caught in a web of the explosion and razed.
He said, “no vehicle rammed into the tanker. The tank dropped off from the back of the tanker and exploded. The number of persons involved are seven; five dead, two injured.
“The driver had taken away the head of the truck as at the time we got there. But we have allowed the police to take charge and handle that aspect”.
Travellers To Access $4,000 As CBN Boosts Forex Supplies
Nigerians travelling abroad can now access a maximum amount of $4,000 foreign exchange from banks following the Central Bank of Nigeria’s (CBN) announcement to increase forex supplies.
The CBN had said in a recent statement that it had concluded plans to increase the amount of foreign exchange allocated to banks to meet legitimate needs.
This followed the warning by the CBN Governor, Mr Godwin Emefiele, to Deposit Money Banks to desist from denying customers the opportunity to purchase foreign exchange.
The purposes to access forex included Personal Travel Allowance, Basic Travel Allowance, tuition fees, and medical payments as well as Small and Medium Enterprises transactions or for the repatriation of Foreign Direct Investment proceeds, the CBN had stated.
Sources from some of the banks said those travelling on business trips could also access a maximum amount of $5,000 for each trip.
At a virtual Bankers’ Committee meeting last week, the bankers discussed how the CBN intended to assist with forex to ensure availability for the upcoming summer period and the return of students to school in September.
The CBN also said the BDCs would continue to have their weekly allocations.
The committee observed that the rates were going up.
It stated, “The CBN has said that all the banks must make availability at all times and anyone who wants to buy BTA, PTA, medical fees, student school fees and all the eligible invisible purchases to ensure that Nigerians are not forced to go and queue in the parallel market.
“So what the Central Bank is doing is to encourage all banks to make sure that there is available forex at all times, and that his information should be communicated on all our platforms.
“We are asking our customers to come to the branches and for BTA, for example, present the required documents, which are basically your international passport, your visa, your valid ticket and fill up the form in the bank.
“And what we have been instructed to do is ensure that we don’t turn anybody back and that we should request from the Central Bank once we exhaust the forex that we have.
“The idea is to have a hitch-free summer period and the resumption for children to go back to school. The idea is to ensure there is less pressure on the forex and then the rates will come down”.
Speaking during the virtual meeting, the Group Managing Director, Access Bank, Herbert Wigwe, said, “I think again as part of the Central Bank’s role in terms of price stability and the need to support small and medium enterprises, there was highlight of the need for banks to go and support SMEs who import small raw materials for them to set up their businesses”.
The Managing Director, Ecobank, Patrick Akinwuntan, said, “All banks are available to ensure forex need is met.”
Managing Director, Sterling Bank, Abubakar Suleiman, said the CBN had provided sufficient foreign exchange to meet the needs of all legitimate Nigerian travellers and therefore, the idea of going to any other market should not arise at all.
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