GLOBAL ECONOMY
US Unemployment claims dropped by 19,000 this week, marking the largest decrease in three months after hitting a 14-month high the previous week. The total number of claims fell to 241,000, from 260,000 the previous week and below market expectations of 260,000. Export prices in the US fell by 0.70% month-over-month in September 2024, exceeding market expectations of a 0.40% decline and following a revised 0.90% decrease in August.
The annual Inflation rate in the UK fell to 1.70% in September 2024, the lowest since April 2021, from 2.20% in August 2024 and below forecasts of 1.90%. The largest downward contribution came from transport price reduction, specifically air fares and motor fuels as fares usually reduce in price between August and September, with this year having the fifth largest fall since 2001.
The European Central Bank (ECB) lowered its key interest rates by 25bps in October 2024, as expected, following similar moves in September and June. The Deposit Facility, Main Refinancing Operations, and Marginal Lending Facility rates will now be 3.25%, 3.40%, and 3.65%, respectively. This decision stems from an updated assessment of inflation, which shows consistent disinflation.
The People’s Bank of China (PBoC) has started a specialized re-lending facility for listed firms and major shareholders to buy back shares, as part of a broad stimulus package to bolster recovery and revive the capital market. Also, the Chinese economy expanded 4.60% year-on-year in Q3 of 2024, compared with market forecasts of 4.50% and a 4.70% rise in Q2. It marked the slowest annual growth rate since Q1 2023, amid persistent property weakness, shaky domestic demand, deflation risks, and trade frictions with the West.
We await the release of the Jobless Claims information for the week, as well as Speeches from several Federal Reserve Officials.
GLOBAL MARKETS
US stocks closed higher on Friday, led by strong gains in the earning reports of Tech companies, following Netflix’s positive earnings report and positive Jobless Claims figure. The Nasdaq, S&P 500 and Dow Jones indices all closed positive for the second week in a row, increasing by 0.25%, 0.85% and 0.96% to 20,323.37, 5,864.67 and 43,275.91, respectively.
European stocks closed higher on Friday, supported by hopes that the ECB will continue to lower its main interest rates and favorable developments for equities with large exposure to China as the PBoC decided to formally start a new facility to add liquidity for buying stocks, leading to gains in the European luxury and auto sectors. The London’s Financial Times Stock Exchange (FTSE) 100, Germany’s Deutscher Aktien (DAX) and Cotation Assistée en Continu (CAC) 40 indices rose by 1.28%, 1.46% and 0.46% to 8,358.25, 19,657.37 and 7,613.05, respectively.
China reported disappointing trade data at the start of the week, as both exports and imports fell short of expectations. Traders turned their attention to key economic indicators, including GDP data released on Friday, which brought about a mild recovery amidst a week of falling stock prices. Hang Seng fell by -2.11, despite a slight recovery on Friday to close at 20,804.11. Japan’s Topix Index fell by -0.64% to close at 2,688.98 from last week.
We expect the US market to trade at the same levels next week, as Investors react positively to the Q3 earnings report of Tech Companies and positive Jobless Claims data.
DOMESTIC ECONOMY
The National Bureau of Statistics (NBS) released the Consumer Price Index (CPI) report for September. Nigeria’s headline inflation rate rose to 32.70%, up from 32.15% recorded in August 2024, reflecting an increase of 0.55% points after two consecutive months of decrease in the inflation rate.
The Federal Government (FG) is considering a significant change to its tax policy, proposing a 25.00% tax rate for individuals earning ₦100million or more monthly. This information was shared by Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, during a session at the Nigeria Economic Summit organized by the Nigerian Economic Summit Group (NESG). He explained that this new tax rate for high-income earners is part of a broader strategy to balance the tax burden across different income levels. The plan aims to reduce taxes for lower-income earners while ensuring that those with higher incomes contribute more to Government revenue.
The African Development Bank (AfDB) has approved $100million for the establishment of the Youth Entrepreneurship Investment Bank in Nigeria, Akinwunmi Adesina, AfDB president, announced on Friday in Abuja. He said the initiative highlights AfDB’s commitment to supporting youths who he believes are critical to the development of the country.
The National Bureau of Statistics (NBS) says the average retail price of a liter of Premium Motor Spirit (PMS) (petrol), increased to ₦1,030.46 in September. In its report, tagged, ‘Premium Motor Spirit (Petrol) Price Watch (September 2024)’, released on October 17, the NBS said the pump price rose by 64.50% from ₦626.21 recorded in the corresponding month last year. The average price value with the previous month (August 2024), increased by 24.08% from ₦830.46.
The NBS is set to release information on the Federation Account Allocation Committee (FAAC) September 2024 Disbursement on Thursday, 24th October.
DOMESTIC MARKETS
MONEY MARKET AND FIXED INCOME
System liquidity remained negative this week, despite Bond coupon and significant remitta inflows, closing higher at -₦837.29billion from -₦702.83billion last week. The Open Repo Rate (ORR) and the Overnight Rate (O/N) decreased by -3bps and -44bps to close at 32.33% and 32.56%. The Nigerian Treasury Bills (NT-Bills) market average yield increased by 104bps to 24.11% against 23.07% last week.
In the Bonds market, the average benchmark yield for the Short-tenor, Medium-tenor and Long-tenor Bonds increased by 1bps, 13bps and 20bps to close at 19.08%, 19.69% and 17.85% on a week-on-week basis.
The Federal Government is expected to raise ₦180billion and ₦374.67billion at its upcoming Bond and Treasury Bills Auctions scheduled to hold on 21st October and 23rd October, 2024.
We expect the interbank rates to trade mixed, given likely improvements in System Liquidity due to the FGN bond auction and the upcoming FAAC inflow next week.
THE EQUITIES MARKET
Market Capitalization and All-Share Index increased by 5.95% and 0.48% to close at ₦59.43trillion from ₦56.09trillion and 98,070.28 from 97,606.63 the previous week.
On a sectoral basis, the Consumer Goods, Industrial Goods and Oil & Gas indices closed higher at 1.42%, 0.04% and 1.08%, while the Insurance and Banking Indices closed lower at -1.23% and -0.51%, respectively.
A total turnover of 1.45 billion shares worth ₦73.89billion in 39,546 deals was traded this week by investors on the floor of the Exchange, in contrast to a total of 2.97 billion shares valued at ₦31.51billion that exchanged hands last week in 42,482 deals.
Notable gainers this week were Transcorp Power Plc and Mecure Industries Plc, while notable losers were Regency Assurance Plc and Tripple Gee and Company Plc.
We expect cautious trading in the Equities market next week, as Investors turn their attention to the Fixed Income markets ahead of the upcoming auctions.
CURRENCY
TOP TRADES BY VOLUME
TOP TRADES BY VALUE
TOP GAINERS
TOP LOSER
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