| INFLATION RATE (%) | MPR (%) | BOT (N’m) | CURRENCY (NAFEM) | EXTERNAL RESERVE (US $’b) | DEBT (N’tri) | UNEMPLOYMENT | ||||
| Current | 2.99% | 33.40% | 26.75% | (₦6,524.17) | ₦1,579.89 | $83.33 | 36.53 | 121.67 | 5.00% | 55.13 |
| Previous | 3.54% | 34.19% | 26.25% | (₦1,414.30) | ₦1,574.20 | $82.82 | 36.87 | 97.34 | 4.20% | 55.98 |
GLOBAL ECONOMY
The annual inflation rate in the US slowed for a fourth consecutive month to 2.90% in July 2024, the lowest since March 2021, compared to 3.00% in June and below forecasts of 3.00%. Core Producer Price Index (PPI) in the United States, excluding food and energy costs, remained unchanged in July of 2024, compared to the 0.30% increase in June and below expectations of a 0.20% increase, while the Consumer Price Index (CPI) increased to 314.54 points in July from 314.18 points in June of 2024.
The British pound strengthened past £1/$1.29, reaching a four-week high, as traders evaluated recent economic data and its impact on monetary policy. The annual inflation rate in the UK edged up to 2.20% in July 2024 from 2.00% in June, but below forecasts of 2.30%. The unemployment rate dropped to 4.20%, and wage growth eased to 5.40% from 5.80%, though still slightly above the Bank of England’s (BOE) forecast. However, traders are still expecting two more 25bps rate cuts from the BOE this year.
In Europe, data of trade levels for June was released this week, as trade balance estimates for the Euro Area suggest that the region had a €22.30billion surplus in trade in goods with the rest of the world in June 2024, compared with €18billion in June 2023. In the period from January to June, the Euro Area recorded a surplus of €107.50billion in trades, compared with a deficit of €3billion during the same period a year earlier. Exports fell less than imports, recording a 6.30% drop to €236.70billion in June, while Imports fell by 8.60% year-on-year to €214.30billion.
China is experiencing an unbalanced recovery with robust exports and weak domestic demand. Rising trade frictions, sanctions and a prolonged suppression of market sentiment among investors have increased concerns about economic growth momentum. China’s unemployment rate, at 5.20%, rose for the first time since February, its industrial output rose last month by 5.10%, compared with 5.30% growth in June and infrastructure-investment growth contracted to 4.90% in July, from 7.70% growth registered in the first six months.
We await the release of the minutes of the Federal Open Market Committee (FOMC) meeting by Federal Reserve Officials regarding expected interest rate cuts in September.
GLOBAL MARKETS
US stocks closed higher compared to last week after Thursday’s big rally, as traders took a break after the latest data on jobless claims, consumer and producer inflation increased optimism about the state of the economy.
The Nasdaq, S&P 500 and Dow Jones indices all closed positive, rising by 5.38%, 3.93% and 2.94% to 19,508.52, 5,554.25 and 40,659.00 respectively.
The Euro and stock markets across Europe climbed following the release of the US inflation data on Tuesday. The London’s Financial Times Stock Exchange (FTSE) 100, Germany’s Deutscher Aktien (DAX) and Cotation Assistée en Continu (CAC) 40 in Paris all closed higher by 1.75%, 3.38% and 2.48% to 8,311.4, 18,322.40 and 7,449.70 respectively.
The Hang Seng and Topix Indices rose by 1.99% and 7.86% to 17,430.16 and 2,678 respectively.
We expect cautious trading in the market, as Investors will be closely watching next week’s economic conference at Jackson Hole, Wyoming and Fed Chairman Jerome Powell expected remarks next week.
DOMESTIC ECONOMY
The National Bureau of Statistics (NBS) released the Consumer Price Index (CPI) report for July 2024 this week, indicating that the inflation rate had decreased by 0.79% points to 33.40% from 34.19% in June, 2024. On a year-on-year basis, the inflation rate rose by 9.32% points compared to 24.08% in July 2023.
President Bola Tinubu, on Wednesday, approved the implementation of zero percent import duty and exemption of value-added tax (VAT) on basic food items with effect from 15th July, 2024 until 31st December 2024. Only companies with filed annual returns and financial statements and paid taxes for the past five years are eligible to participate. This measure is geared towards reducing the high cost of food items in the Nigerian market and shall be limited to the national supply gap to be determined by a committee set up by the Minister of Agriculture.
According to the Purchasing Managers Index released by the CBN this week, economic activities in Nigeria fell for the thirteenth month in July as high costs reduced new orders and employment declined. The PMI index, which measures the performance of business activities, is based on the change in different aspects of the business activities. An index above 50 points indicates an expansion in business activities while below 50 points indicates a contraction in business activities. The PMI stood at 49.70 points indicating a contraction in economic activities but was higher by 1.80 points when compared to 48.80 points in June 2024.
The Federal Government, through the Debt Management Office (DMO), will be auctioning Series 1 of its first ever domestic dollar bond worth $500 million. It will be accessible to a broad range of investors, as it would be traded on the Nigerian Stock Exchange and Financial Market Dealers Quotation (FMDQ), with a minimum investment amount of $10,000, with additional investments allowed in increments of $1,000. This structure is intended to enable wider participation among investors both within Nigeria and the diaspora.
The National Bureau of Statistics is set to release data on Nigeria’s Capital Importation for Q2 2024 next week.
DOMESTIC MARKETS
MONEY MARKET AND FIXED INCOME
System liquidity opened positive for the week and improved as the week progressed resulting in a surplus balance increasing by ₦45.23billion to close at ₦32.99billion. Consequently, the Open Repo Rate (O/R) and Overnight Rate (O/N) decreased by 109bps and 99bps to 32.30% and 32.98%, respectively. The Nigerian Treasury Bills (NT-Bills) market average yield increased by 71bps to 25.98% against 25.27% the previous week.
In the Bonds market, the average benchmark yield for the Short-tenor, Medium-tenor and Long-tenor Bonds closed at 20.01%, 20.30% and 18.51%, a change of +23bps, +27bps and -2bps from 19.78%, 20.03% and 18.53% on a week-on-week basis.
The FGN is expected to raise ₦190billion in its upcoming Bond Auction on Monday, 19th August 2024. The Nigerian Treasury Bill auction is also scheduled to hold on Wednesday, 21st August, 2024.
We expect an increase in system liquidity, as the FGN Bond Auction offer size has been reduced, with expected inflow of Bond coupons worth approximately ₦365.01billion and incoming FAAC distribution.
THE EQUITIES MARKET
Market Capitalization and All-Share Index decreased by 1.51% to close at ₦55.13trillion from ₦55.98trillion and 97,100.31 from 98,592.12 the previous week.
On a sectoral basis, the Banking and Industrial Goods indices closed lower at -2.28% and -5.16% while the Insurance, Consumer Goods, and Oil and Gas Indices all closed higher at 0.79%, 0.37% and 5.25% on a week-on-week basis.
A total turnover of 2.03 billion shares worth ₦42.16billion in 45,157 deals was traded this week by investors on the floor of the Exchange, in contrast to a total of 2.68 billion shares valued at ₦49.02billion that exchanged hands last week in 47,451 deals.
Notable gainers this week were RT Briscoe Plc and Total Energies Marketing Nigeria Plc, while notable losers were Cutix Plc and Bua Cement Plc.
We expect reduced trading in the Stock market as investors await the upcoming Bond and Treasury Bill auction next week.
CURRENCY
| (N/$) | 16/8/2024 | 09/8/2024 | W-O-W% |
| NAFEM | 1,579.89 | 1,574.20 | 0.36% |
| Parallel | 1,595.00 | 1,600.00 | -0.31% |
TOP TRADES BY VOLUME
| TICKER | TRADES | VOLUME | VALUE(N’m) |
| GTCO | 284 | 90.886,847 | 4,176.77 |
| OANDO | 966 | 30,371,617 | 992.23 |
| JAPAULGOLD | 130 | 22,422,413 | 50.09 |
| VERITASKAP | 130 | 21,736,118 | 25.62 |
| ZENITHBANK | 432 | 16,710,068 | 633.25 |
TOP TRADES BY VALUE
| TICKER | TRADES | VOLUME | VALUE(N’m) |
| GTCO | 284 | 90.886,847 | 4,176.77 |
| OANDO | 966 | 30,371,617 | 992.23 |
| ZENITHBANK | 432 | 16,710,068 | 633.25 |
| ACCESSCORP | 366 | 9,562,053 | 183.30 |
| SEPLAT | 655 | 44,645 | 163.12 |
TOP GAINERS
| TICKER | OPEN | CLOSE | CHANGE | % |
| RTBRISCOE | 1.27 | 1.70 | 0.43 | 33.86% |
| TOTAL | 427.70 | 511.90 | 84.20 | 19.69% |
| JBERGER | 110.00 | 130.00 | 20.00 | 18.18% |
| GUINEAINS | 0.34 | 0.40 | 0.06 | 17.65% |
| UPL | 2.18 | 2.45 | 0.27 | 12.39% |
TOP LOSERS
| TICKER | OPEN | CLOSE | CHANGE | % |
| CUTIX | 6.00 | 4.95 | -1.05 | -17.50% |
| BUACEMENT | 128.90 | 109.80 | -19.10 | -14.82% |
| OANDO | 40.60 | 35.85 | -4.75 | -11.70% |
| LEARNAFRICA | 3.95 | 3.52 | -0.43 | -10.89% |
| CHAMS | 2.25 | 2.02 | -0.23 | -10.22% |
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Sources: Yahoo Finance, Trading Economics, EuroNews, South Morning China Post, Investing.com, CBN, NGX, FMDQ, Business Day, DMO, NBS, Alpha10 Research.