| GDP (%) | INFLATION RATE (%) | MPR (%) | BOT (N’m) | BRENT CRUDE ($) | DEBT (N’tri) | UNEMPLOYMENT | ||||
| Current | 2.99% | 33.40% | 26.75% | (₦6,524.17) | ₦1,570.14 | $82.64 | 36.44 | 121.67 | 5.00% | 55.129 |
| Previous | 3.54% | 34.19% | 26.25% | (₦1,414.30) | ₦1,579.89 | $83.33 | 36.53 | 97.34 | 55.130 |
GLOBAL ECONOMY
In the US, Federal Reserve Chairman Jerome Powell gave clear signals that the Central Bank will cut its interest rate in the September meeting during his speech at the Jackson Hole Economic Symposium. The Chairman noted that the US labor market is cooling quickly following the softer jobs report from July and the downward revision to payrolls this week. Powell also noted that the Federal Open Market Committee (FOMC) has gained further confidence that inflation is slowing to the central bank’s 2.00% target, warranting a clear view that it is time to adjust monetary policy to less restrictive conditions. In addition, the minutes of the FOMC meetings were released.
Public sector net borrowing, excluding public sector banks, in the UK climbed to £3.10billion in July 2024 from £1.30billion in the same month the previous year and significantly exceeding market expectations of £1.50billion. Total public sector spending increased by £3.80billion to £102.60billion, driven by higher central government spending on public services and benefits, which continued to grow with inflation. However, these increases were partially offset by a reduction in debt interest payments compared to July last year.
In July 2024, the annual inflation rate in the Euro Area increased to 2.60%, up from 2.50% in the previous month, surpassing initial market expectations of a slowdown to 2.40%. Inflation for food, alcohol, and tobacco slightly decreased to 2.30% from 2.40%, driven by a reduction in the price growth of unprocessed food (1.00% from 1.30%), while the inflation rate for processed food, alcohol, and tobacco remained steady at 2.70%. The core inflation rate, which excludes energy, food, alcohol, and tobacco, remained unchanged from the previous month at 2.90%, higher than initial market expectations of 2.80%.
China’s 10-year government bond yield dropped to 2.15% after the People’s Bank of China (PBOC) decided to maintain its key lending rates at historically low levels during the August meeting. The one-year Loan Prime Rate (LPR), which serves as the benchmark for most corporate and household loans, remained at 3.45%, while the five-year LPR, a key reference for property mortgages, stayed at 3.85%. This decision reflects a cautious approach by Chinese authorities. Governor Pan Gongsheng emphasized the Central Bank’s commitment to avoiding drastic economic measures and highlighted plans to accelerate the implementation of existing financial policies, explore new policy measures, and support proactive fiscal actions.
We await the release of data on Initial Jobless Claims for the week and other Federal Reserve Officials’ speeches regarding confirmed interest rate cuts in September.
GLOBAL MARKETS
Stocks closed higher as Federal Reserve Chair Jerome Powell stated that rate cuts were close, leading to a rally in Investors interest after a week of mounting anticipation for what Powell would reveal during his speech on Friday at Jackson Hole. The Nasdaq, S&P 500 and Dow Jones indices all closed positive, rising by 1.07%, 1.45% and 1.27% to 19,718.17, 5,634.61 and 41,175.08, respectively.
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 0.20%, 1.71% and 1.70% to 8,327.78, 7,577.04 and 18,322.40, respectively.
The Hang Seng and Topix Indices rose by 1.04% and 0.25% to 17,612.10 and 2,684.72, respectively.
We expect the market to keep its bullish momentum next week, due to the Federal Reserve’s dovish stance on Interest rates cuts.
DOMESTIC ECONOMY
The Central Bank of Nigeria (CBN) says it recorded remittance inflows of $553million in July. This is a 130% increase from the corresponding period in 2023, the CBN said in a statement on Tuesday, signed by Hakama Sidi Ali, its Acting Director of Corporate Communications. The surge in diaspora remittance comes a month after the CBN granted eligible International Money Transfer Operators (IMTOs) access to trade on the official foreign exchange (FX) window. The move allowed the IMTOs to access naira liquidity in the official market.
The Federation Account Allocation Committee (FAAC) shared ₦1.36trillion among the three tiers of government in July. Out of the distributable revenue, FAAC said the federal government received ₦431billion, the states received ₦473billion, and the local government councils got ₦343billion. Also, oil-producing states received ₦109billion as derivation fund (13.00% of mineral revenue).
Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, during a meeting with the Implementation Committee in Abuja on Monday, announced that the Nigerian government will commence selling crude oil to the Dangote Refinery in naira starting from October 1, 2024.
The FGN opened its Domestic FGN US Dollar Bond Series 1 offer under the US$2billion Domestic FGN US Dollar Bond Programme on Monday, 19th August 2024 for subscription by Nigerian citizens (both home and diaspora) and Qualified Institutional Investors.
The National Bureau of Statistics is set to release data on Nigeria’s GDP by output for Q2 2024, FAAC distribution and Nigeria Labour force details next week.
DOMESTIC MARKETS
MONEY MARKET AND FIXED INCOME
System liquidity was positive for the week as a result of the FAAC inflow and bond coupons, resulting in a surplus balance to close at ₦1.20trillion. Consequently, the Open Repo Rate (O/R) and Overnight Rate (O/N) decreased by 652bps and 681bps to 25.78% and 26,17%, respectively. The Nigerian Treasury Bills (NT-Bills) market average yield decreased by -330bps to 22.16% against 25.46% the previous week.
In the Bonds market, the average benchmark yield for the Short-tenor, Medium-tenor and Long-tenor Bonds closed at 20.06%, 19.92% and 18.40%, a change of +3bps, -7bps and -2bps from 20.03%, 19.99% and 18.38% on a week-on-week basis.
The FGN allotted ₦374.75billion at its Bond Auction held on Monday, 19th August 2024, despite a reduction in its offer size from ₦300billion to ₦190billion. The Nigerian Treasury Bill auction also held on Wednesday, 21st August, 2024, with the DMO allotting ₦291.03billion against ₦409.98billion offered.
We expect the system liquidity to remain at the same levels next week, and subsequently, bullish sentiments in the Secondary market for treasury bills, as Investors await the release of the 4th Quarter Issuance Calendar.
THE EQUITIES MARKET
Market Capitalization and All-Share Index decreased by 0.004% and 1.162% to close at ₦55.129trillion from ₦55.130trillion and 95,973.45 from 97,100.31 the previous week.
On a sectoral basis, the Banking, Insurance and Oil & Gas indices closed higher at 3.10%. 1.90% and 3.54% while the Consumer Goods and Industrial Goods Indices all closed lower at -1.42% and -4.94% on a week-on-week basis.
A total turnover of 5.64 billion shares worth ₦33.05billion in 42,006 deals was traded this week by investors on the floor of the Exchange, in contrast to a total of 2.03 billion shares valued at ₦42.16billion that exchanged hands last week in 45,157 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 the bearish sentiments in the equities markets to persist next week as Investors shift their attention to Fixed Income securities.
CURRENCY
| ‘(N/$) | 23/8/2024 | 16/8/2024 | W-O-W% |
| NAFEM | 1,570.14 | 1,579.89 | -0.62% |
| Parallel | 1,605.00 | 1,595.00 | 0.63% |
TOP TRADES BY VOLUME
| TICKER | TRADES | VOLUME | VALUE(N’m) |
| ACCESSCORP | 520 | 36,853,218 | 716.33 |
| VERITASKAP | 123 | 27,678,802 | 34.08 |
| FCMB | 126 | 24,681,322 | 187.38 |
| DAARCOMM | 38 | 18,797,386 | 8.09 |
| UCAP | 585 | 16,765,308 | 329.81 |
TOP TRADES BY VALUE
| TICKER | TRADES | VOLUME | VALUE(N’m) |
| ACCESSCORP | 520 | 36,853,218 | 716.33 |
| OANDO | 371 | 12,810,257 | 612.97 |
| GTCO | 225 | 11,260,395 | 513.21 |
| UCAP | 585 | 16,765,308 | 329.81 |
| SEPLAT | 54 | 84,523 | 312.25 |
TOP GAINERS
| TOP GAINERS TICKER | OPEN | CLOSE | CHANGE | % |
| RTBRISCOE | 1.70 | 2.71 | 1.01 | 59.41% |
| TANTALIZER | 0.44 | 0.68 | 0.24 | 54.55% |
| OANDO | 35.85 | 47.85 | 12.00 | 33.47% |
| DEAPCAP | 0.43 | 0.56 | 0.13 | 30.23% |
| UNITEDCAP | 15.60 | 19.75 | 4.15 | 26.60% |
TOP LOSERS
| TICKER | OPEN | CLOSE | CHANGE | % |
| CUTIX | 4.95 | 3.10 | -1.85 | -37.37% |
| DANGOTE | 591.10 | 532.00 | -59.10 | -10.00% |
| TIP | 2.25 | 2.03 | -0.22 | -9.78% |
| THOMASWY | 1.75 | 1.58 | -0.17 | -9.71% |
| BETAGLASS | 53.00 | 48.00 | -5.00 | -9.43% |
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Sources: Yahoo Finance, Trading Economics, Investing.com, CBN, NGX, FMDQ, Business Day, The Cable Ng, DMO, NBS, Alpha10 Research.