Good morning and welcome to this week’s edition of Bulls and Bears. Bulls and Bears is a weekly thread i do on the US equity space. 

Today’s thread will be taking a somewhat different approach. Starting with the now.

Every single major stock market in the world is now in the read, a fallout from US President slamming tariffs on countries around the world

The Hang seng is down 10.7%

China composite is down 6.3%

Kospi Index down 4.93%

Nikkei Index is down 6.87%

US equity futures are deep in the red. Contiuing last week’s bloodbath 

Eurostoxx futures are sown 3.71%

MSCI Asia Pacific fturues are down 7.5% the biggest drop in almost 20 years. 

Saudi Arabia’s stock market which is one of the few that open on Sunday fell by 12.55%

Indexes measures the average performance of stocks on the exchange. 

In some cases circuit breakers have been applied. That means trading suspended due to the volatility.

Cryptocurrency markets are also under pressure. 

Bitcoin is trading below $77,000. A few days ago, it was above $80,000

Ethereum is trading at the $1550 range. A range last seen around 2 years ago

Solana is trading at $102. Less than a month ago, it was in the $150 range.

Even gold prices are slipping as it seems some investors are taking cash from the table and sitting on the sidelines. It has had a bull run this year. I think last quarter was the best it has had since 1986. 

Let’s take a step into economics. 

What are tariffs? 

They are simply taxes on goods imported from other countries.

You have a lot of uproar about these tariffs because they are being applied haphazardly and in some cases being extremely steep. The US imposed a 34% tariff on goods imported from China. 

So why did (and are currently) stock markets around the world tanking. 

The US plays a central role in the world: From a consumption perspective as well as from a stock market perspective.

Its one of the world’s largest consumer markets

Lots of major US companies have production taking place around the world. Nike and operations in Vietnam. 

Apple and operations in China.

Tariffs being slammed on goods from these countries means these goods will become more expensive. 

Thats why Apple and Nike dropped hard last week.

The US is also home to the biggest stock markets in the world. So you have a cascade effect. Everything is falling. 

For domestic stock markets in these countries, theyre also tanking because listed companies are coming under pressure. Economies are also coming under pressure.

Around the world, many companies have either decided to sit on the fence, or stop production. 

For the US itself, the tariff hikes mean goods will become more expensive. Thats going to put pressure on inflation.

Economic growth will also be hampered as the combination of more expensive goods, companies reducing or stopping production means unemployment numbers will increase. 

Coming over to Customs street and Mainstreet in Nigeria.

For Customs street (where the NGX is located) you may not have any direct effect. Foreign investors have been mostly away from the stock market here in the last decade. Due to the previously badly managed exchange rate system and a lacklustre economy. 

Upstream oil and gas companies are the first that come to mind in terms of feeling the pressure as oil prices decline. 

Here you have Seplat, Oando and Aradel.

Seplat is hedged at $55 for Q1 to Q3 2025 

Not sure about the other two firms

If you have a really crazy dip in oil prices, then the oil and gas loan portfolio of banks could face some pressure. 

For companies in the FMCG space, a dip in the price of commodities like sugar, wheat and barley may be beneficial to them as cost of raw materials decline. 

While costs may deep, if you have a recession or major slowdown in growth, consumer purchasing power takes a hit. 

Oil is Nigeria’s biggest export so if oil prices keep dipping, the government also comes under pressure. 

Oil revenue and price movements are closely tied to the exchange rate. Not just from a cash to defend the exchange rate both from a perception view.

The thing with crude oil and Nigeria isnt about its size in relation to the economy. Its the linkage to the exchange rate, banks via their loan portfolios, as well as state revenue. State being the government here as a whole. 

If oil prices decline, youre going to see pressure on the exchange rate. 

The indirect effect on financial markets in Nigeria is on the exchange rate. You have foreign investors holding nigerian treasury bills and OMO paper. As uncertainty in the world spikes, some of them will choose to take their gains and exit. 

What’s happening this week on the NGX

Fidelity bank has an earnings call on Thursday.

The vigil for Access Bank FY 24 numbers continues.

Markets will digest takeaways from the earnings calls held last week by UAC, Zenith, GTCO and ETI, as well as Total audited FY 2024 results