Gold gains but oil, cocoa and coffee lose

The price of Brent crude went down last week despite the successful extension of the production cut deadline by OPEC. The decline in the price of the commodity was due to OPEC’s inability of incorporating more aggressive approaches to curb the oversupply.

This caused a sharp overnight drop of the commodity in the US as investors took profit on gains in the run-up to the decision. Brent crude lost US$1.91 to sell at US$51.70 per barrel last Friday.

The US dollar, which witnessed some weakness on account of the dovish minutes by the Fed, helped the precious metal to record a gain of US$12.40 on the commodities market. The rise was, however, hampered by upbeat employment data as it aided in the recovery of the dollar. Gold, thus, traded up at US$1,266.00 per ounce.

Cocoa witnessed a weekly loss of 5.70 per cent to sell at US$1,912.50 per metric tonne against the previous selling price of US$2,028.00 per metric tonne. The dip was due to quality concerns raised by buyers as beans from Ivory Coast were noted to contain more acidity than accepted.

Coffee, traded lower by 0.34 per cent lower when compared with figures recorded in the previous week. The decline recorded in the trading week was due to the weakened Brazilian real. The soft crop closed trading at US$1.32 per pound.

GoG Treasury Securities
Following the decision of the Monetary Policy Committee to slash the policy rate by 100bps, it was imperative that interest rates ease further so as to drive lending rates downward. At the close of the auction, the yield on the 91-Day T-Bill, thus, declined by 51 bps to settle at 12.70 per cent. The 182-Day T-Bill was also reduced by 88 bps to 14.14 per cent.

At the closing bell, out of the GH¢1,103.60 million bids presented by investors, a total of GH¢959.59 million worth of bids were accepted by government. The week’s target of GH¢1,166.00 million was unrealised. As a result of this outturn government has trimmed its expected purchase of the 91-Day and 182-Day T-Bills to GH¢764.00 million in the next auction. An amount of GH¢300.00 million is also anticipated to be raised from the sale of the 1-year fixed note.

Trading on GSE
The Accra Bourse sustained its bullish outlook despite recording lower trading volumes. At the close of trading, the benchmark-GSE Composite Index rose by 0.40 per cent to 1,923.53 points, reflecting a year-to-date return of 13.88 per cent. The GSE Financial Stock Index also increased by 0.32 per cent to 1,802.88 points, corresponding to a year-to-date return of 16.66 per cent. In the near coming weeks, we expect the market to sustain its gains as investors fully digest the implication of the policy cut on market activities.

At the end of trading, a total volume of 1.21 million shares valued at GH¢0.60 million were traded. This represents 86.11 per cent declines in volume terms. At the close of market activities, liquidity on the bourse were mainly driven by UT Bank Ltd and Cal Bank Ltd, accounting for 73.46 per cent of the total traded volume. Market capitalisation, however, witnessed a marginal increment of 0.09 per cent to settle at GH¢58,997.23 million.

Producer Price Inflation drops
The PPI reversed its increasing trend since the beginning of the year as it moved from 6.0 per cent to settle at 4.8 per cent in April. This represents a 1.2 percentage point decline from March’s value.

The relative stability of the local currency in the month of April helped the producer price inflation (PPI) to decline as it eased forex volatility on importation of raw and intermediary materials needed to feed local industries.

At the sub-sector levels, disinflation was recorded as the mining and quarry sub-sector decreased by 2.6 per cent to 18.2 per cent. The manufacturing sub-sector eased by 1.2 percentage point to 2.9 per cent and the utilities sub-sector also softened by 0.3 percentage point to 1.2 per cent. Presented below is the one-year trend movement in PPI.