Markets Mixed as Tech Rebounds, Dollar Strengthens; Crypto Sees Outflows

Global markets closed out the week with a mixed performance, reflecting diverging investor sentiment across asset classes. Technology stocks in the US demonstrated resilience, pushing the Nasdaq Composite higher, even as broader indices like the Dow Jones Industrial Average and the UK's FTSE 100 registered declines. A strengthening US dollar exerted pressure on other currencies and commodities, while the cryptocurrency market grappled with significant outflows from Bitcoin exchange-traded funds.

Stocks and bonds

US equities presented a varied picture on Friday. The S&P 500 edged up by 0.31% to 7,376.86, while the technology-heavy Nasdaq Composite led the gains, climbing 1.09% to 24,579.42. This tech rally occurred even as some analysts warned of the S&P 500's potential overexposure to artificial intelligence stocks, suggesting investors explore alternatives.

Conversely, the Dow Jones Industrial Average fell by 0.46% to 51,285.73, and the UK's FTSE 100 experienced a more significant drop of 1.01% to 10,673.94. The yield on the US 10-year Treasury bond rose by 0.45% to 4.86%, indicating a decrease in bond prices and potentially reflecting investor expectations of tighter monetary policy or persistent inflation. The IRS recently released the 2027 capital-gains tax rates and new tax brackets, which will see steeper adjustments next year, highlighting inflation's continued influence on household finances.

Currencies and commodities

The US dollar asserted its strength across the board, with the Dollar Index advancing by 0.72% to 102.28. This robust dollar performance saw the euro weaken against the greenback, with EUR/USD falling 0.82% to 1.1143, and the British pound also depreciated, with GBP/USD down 0.90% to 1.3356. A stronger dollar typically makes dollar-denominated assets more expensive for international buyers.

In commodities, gold prices retreated, falling 0.94% to $4,074.90, often moving inversely to the dollar. Crude oil, however, saw a slight increase of 0.34% to $90.83 per barrel. The stronger dollar and potential election uncertainty in Nigeria are also expected to pressure the naira and increase the country's borrowing costs, particularly for its dollar-denominated debt.

Crypto

The cryptocurrency market saw a largely flat to negative performance over the past 24 hours, with Bitcoin holding steady at $75,765.52, up a modest 0.02%. However, the broader sentiment was impacted by significant outflows from Bitcoin Exchange-Traded Funds (ETFs), which recorded their worst week since June with a $1.28 billion outflow. BlackRock's IBIT alone accounted for 98% of Friday's outflows, shedding $403 million.

Other major cryptocurrencies experienced slight declines, with Ether down 0.10% to $2,232.81, Solana falling 1.02% to $89.14, and XRP dropping 1.42% to $1.161. BNB was an outlier, gaining 0.31% to $695.25. Regulatory scrutiny intensified as the US Treasury moved to cut off crypto exchange MEXC over alleged illicit flows tied to Iran and Russia, while Binance faced further challenges with its CFO stepping down nine days after a record hack, and users in some European countries being told to pull crypto before year-end account closures. Read more about the Binance CFO Departs Amid Aftermath of Record Hack and Ex-FBI Agent Pleads Guilty to Stealing $2.47 Million in Crypto Investigations.

Africa and emerging markets

Nigeria's economy remained a focal point, with the 32nd Nigerian Economic Summit concluding with urgent calls for tangible growth and effective policy execution. The Central Bank of Nigeria reported substantial banking system liquidity, with N8.31 trillion parked at its Standing Deposit Facility despite a N724 billion OMO mop-up. The naira continued its depreciation, closing at N1,350.45 per dollar on November 5, weakening further from N1,346.01 on November 2, with CBN research pointing to Nigeria’s deficit problem despite bigger reserves.

In corporate news, Dangote Cement reported a fifth increase in revenue to N3.77 trillion for its nine-month numbers, with pre-tax profit rising 41%, underscoring its market dominance. Zenith Bank awarded N190 million to 13 African innovators at its sixth tech fair, reinforcing its commitment to digital advancement. Meanwhile, Enugu Air announced the launch of four weekly direct flights to London Gatwick from December 10, enhancing international connectivity. The Federal Government also secured the release of 98 containers of transmission equipment, stranded at Nigerian ports for nearly 20 years, a move expected to strengthen the national electricity grid. For more on local market dynamics, see our recent article, Nigerian Gold Price Dips to N172K/g as Global Investors Seek US Yields.

What to watch

• Central Bank Commentary: Any further signals from major central banks regarding inflation outlooks or monetary policy shifts could influence bond yields and currency movements.
• Tax Policy Developments: The recently released 2027 tax brackets and capital-gains tax rates will continue to be a topic of discussion, impacting financial planning for individuals and corporations.
• AI Sector Performance: Investors will closely monitor the performance of AI-related stocks, given concerns about potential overexposure and the sector's recent volatility.
• Nigerian Economic Reforms: The implementation of macroeconomic reforms and efforts to address the deficit problem will be crucial for the naira's stability and overall economic growth.