Wk2 (January ’25) – Weekly Market Report

Key events on the Global Scene:

Markets Down; S&P 500 and Nasdaq weakened by 1.3% and 2.3% respectively
Global equity markets showcased mixed performance as investors navigated the interplay of inflationary pressures, robust economic data, and evolving central bank policy expectations. In the developed region, the U.S equities market responded negatively to the persistent inflationary risks, as well as robust jobs report that reignited inflation fears and bolstered speculation that the Fed Reserve would tread on interest rate cuts this year. S&P 500 and Nasdaq declined by 1.3% and 2.3% w/w respectively.

Initial claims, meanwhile, ticked down to 219,000 in the week ended Dec. 21. Recurring filings have been gradually trending up this year, consistent with other data showing the unemployed are having a harder time finding work. Initial claims was 219,000, a decrease of 1,000 from the previous week’s unrevised level of 220,000.

Key events on the Domestic Scene:

GDP & CPI Rebasing..

Ahead of the release of new economic data based on enhanced methodologies, the Nigerian Economic Summit Group (NESG) and the National Bureau of Statistics (NBS) during the week unveiled new base years for Gross Domestic Product (GDP) and Consumer Price Index (CPI) computation in Nigeria. Also, key structural changes by the NBS were highlighted such as expansion in the number of economic activities tracked for income and price trend. 2019 has been selected as the base year for GDP, replacing 2010. For the CPI, the NBS revised the base year for the price to 2024 from 2009, with 2023 adopted for weighting, The selection was made to reflect the significant reforms introduced by the BAT administration, including Removal of PMS subsidy, the adoption of the unified exchange rate system, and the shifts in consumption patterns.

The Treasury Bills market began actively, driven by investor expectations of declining yields and surplus liquidity. Early in the week, attention centered on March, April, June, July, and December maturities. The CBN’s first OMO auction of the year, offering ₦500 billion, saw strong demand with ₦1.1 trillion in subscriptions. As the week progressed, activity shifted to the NTB primary market, where the DMO conducted an auction offering a total of ₦515 billion across the 91-day, 182-day, and 364-day maturities. The auction was oversubscribed by ₦1.0 trillion, while the DMO sold exactly what was on offer. Stop rates across the 91-day and 182-day remained unchanged at 18.00% and 18.50%, respectively, while the 364-day declined by 27.8bps to close at 22.622%. Post-auction was met with notable demand for the new 1-year bill maturing on January 8, 2026. By week’s end, mixed sentiments prevailed, with a 4bps decline in the average mid-rate for benchmark NTB papers, closing at 22.97%.

Bullish dominates as the ASI up 1.8% WoW…

• The Nigeria bourse market closed the week on a bullish note, as the All-Share index increased by 1.8% w/w to 105,451.06 points. This week, GTCO Plc announced the completion of the first tranche of its equity capital raise programme (₦209.4bn), reinforcing its capacity to meet regulatory requirements and pursue growth initiatives such as footprint expansion, product enhancement, and innovation. Consequently, YTD performance rose to 2.5%( previously 0.6%) , while market capitalization expanded by 1.8% to N64.3 trillion approximately.
  
• Sectoral performance was mostly bearish , as four indices lost while the other two gained. Leading the laggards, The Insurance and Consumer Goods indices declined by 6.9% and 0.3%, respectively, owing to price depreciation in SUNUASSURE (-36.5%) , MANSARD (-7.2%), GUINESS(-7.5%) and INTRBREW(-5.4%). Similarly, The Industrial Goods and Oil & Gas indices shed 0.3% apiece , pressured by sells-offs on WAPCI (-2.1%), CUTIX(-1.8%) , OANDO(-3.1%) and JAPAULGOLD(-2.6%) . On the upside, demand on FBNH (+8.1%), GTCO(+1.8%), MTNN(+21.0%) , and NCR(+20.7%) lifted the Banking and AFR-ICT indices by 1.9% and 1.3%, sequentially.

Capital Market Review/Outlook (FI and Equities):

• The Eurobond market began the week positively with increased buying interest in African sovereign bonds, particularly from oil-exporting nations like Nigeria and Angola. However, profit-taking and anticipation of key data releases led to a mid-week downturn, with selling pressure across Sub-Saharan and North African curves. Market sentiment was affected by strong U.S. jobs data (256,000 in December, up from 227,000 in November), which raised concerns about slower rate cuts. Despite a brief recovery driven by Nigerian, Angolan, and Egyptian bonds, the market closed the week bearish. The average mid-yield for Nigerian Eurobonds rose by 11bps to 9.43%.
  
• The FGN local bond market experienced a predominantly bearish tone this week, with offers focused on short-to-mid maturities, including March 2025, February 2031, and February 2034. Low transaction volumes characterized the market, partly due to wide bid/ask spreads. Notable interest was observed in May 2033 and April 2032 bonds, while offers at the long end, such as June 2053, persisted. As the week closed, the market remained subdued, with selective trading in April 2029, February 2031, May 2033, and June 2053 bonds. The average mid-yield increased by 9bps, ending at 19.70%.

Macro Economic Variables

Key Economic Variables

Securities Recommendations: