Key events on the Global Scene:
US Jobless Claims comes in higher than Expected…
In the US, initial jobless claims hit 219,000 the previous week (February 15). The filings compare unfavourably against revised previous reading of 214,000, and market expectation of 215,000. The higher-than-expected reading likely reflects higher uncertainty amid ongoing reforms in the US and less-dovish interest rate outlook. Against this backdrop, the Nasdaq index declined by 0.4% WoW while the S&P 500 closed flat.
Key events on the Domestic Scene:
Nigeria’s Inflation Decreases…
Inflation rate fell to 24.48% year-on-year (YoY), a notable decrease from the 34.80% recorded in December 2024. This drop marks the first significant decline in inflation after several months of rising rates. The primary reason for this reduction is the rebasing of the Consumer Price Index (CPI) by the National Bureau of Statistics (NBS), which updated the reference year and revised the basket of goods and services to better align with current consumer spending and economic conditions. The base year for the CPI was shifted from 2009 to 2024, allowing for a more accurate representation of the present economic landscape. The updated CPI incorporates new weights for goods and services, reflecting changing market trends and consumer behaviours.
Additionally, decreases in both Food and Core Inflation contributed to the overall reduction. Food inflation, crucial for household budgets, dropped to 26.08% YoY in January, down from 39.84% in December, while Core Inflation, which excludes fluctuating agricultural and energy prices, fell to 22.59% YoY from the previous month’s 29.28%.
The Treasury Bills market opened the week on a quiet note, with investors staying on the sidelines ahead of the NTB auction and January 2025 inflation data. The release of rebased CPI figures showing a sharp drop in inflation to 24.48% (from 34.80%) triggered a bullish rally, driving rates lower. At the Primary Market Auction this week, the CBN offered T-bills worth ₦700.0bn across all tenors – 91-day (Offer: ₦80.0bn; Subscription: ₦62.0bn; Sale: ₦37.8bn), 182-day (Offer: ₦120.0bn; Subscription: ₦49.9bn; Sale: ₦35.0bn) and 364-day (Offer: ₦500.0bn; Subscription; ₦2.3tn; Sale: ₦704.4bn).
Demand was healthy at the tail end of the curve with bid-to-offer ratio of 4.6x, while the mid- and short-term instruments recorded weak buy interest evidenced by the bid-to-offer ratios at 0.4x and 0.8x respectively. Notwithstanding the mixed sentiment, stop rates across tenors eased to 17.0%, 18.0% and 18.4% respectively from 18.0%, 18.5% and 20.0% previously – implying broad-based downward repricing of yield on softer inflation reading.
Bullish dominates as the ASI up 41bps WoW
- The Nigeria bourse market experienced a mixed performance, dominated by profit-taking in OANDO, ARADEL, ZENITHBANK, FBNH, and ACCESSCORP. The bourse recorded gains only on Wednesday, while other sessions saw declines following inflation data and the MPR decision. Despite this, the All-Share Index rose by 41bps WoW , driven by buying interest in BUAFOODS and DANGSUGAR. Offshore investors focused on GUINNESS, RR24STANBIC, ACCESSCORP, and UBA.
- Across the sectors, performance was positively skewed as three indices gained, two indices lost while the AFR-ICT index closed flat. Gains in DANGSUGAR (+15.0%), BUAFOODS (+11.9%), SUNUASSURE (+3.0%), and AIICO (+1.2%) pushed the Consumer Goods and Insurance indices higher by 6.5% and 1.5% WoW respectively. Also, the Industrial Goods index rose 0.1% due to price appreciation in NASCON (+6.3%) and BETAGLAS (+4.9%). On the flip side, the Banking and Oil & Gas indices fell 3.6% and 2.3% WoW respectively due to sell pressure on FIDELITY (-6.2%), ACCESSCORP (-5.9%), ETERNA (-9.8%) and OANDO (- 8.7%).
Fixed Income Market Review/(Bonds and Eurobonds):
- The Eurobond market started the week quietly due to a US holiday, limiting activity across SSA and North African securities. Midweek, bullish sentiment emerged, particularly in Nigerian sovereign papers, supported by rebased CPI figures. However, risk sentiment weakened following former U.S. President Donald Trump’s comments on potential 25% tariffs, increasing market uncertainty. The MPC’s decision to maintain the benchmark interest rate amid falling inflation later drove renewed demand for Nigerian Eurobonds. By week’s end, bullish momentum prevailed, pushing the average mid-yield for Nigerian Eurobonds down 12bps WoW to close at 8.89%, while Angola and Egypt saw mild bearish sentiment.
- The FGN local bond market bond market started the week on a muted note, with limited activity focused on mid-tenor papers like the February 2031 and January 2035 maturities. However, bullish sentiment emerged following the release of rebased CPI figures, prompting strong demand for high-yielding securities. Investors targeted on-the-run papers, including the April 2029, February 2031, and January 2035 bonds, alongside mid-tenor options like the May 2033 and June 2038 maturities. By week’s end, the market saw a significant rally following the FGN bond offer circular, which removed the January 2035s from the upcoming auction. As a result, huge demand was notable on the Jan 2035s. Consequently, the average mid-yield dropped 106bps WoW, closing at 18.69%.
Macro Economic Variables
| Equities | This week | Prior week |
| S&P 500 | 3.96% | 3.96% |
| NGX ASI | 5.0% | 5.0% |
| Fixed Income | ||
| Overnight | 32.83% | 32.8% |
| Open Buy Back | 32.33% | 32.45% |
| 1 year T-bill | 18.24% | 18.93% |
| 5-year bond | 20.08% | 20.90% |
| 10-year bond | 19.44% | 21.63% |
| Currency | ||
| FX Reserves ($’bn) | 38.74 | 39.10 |
| USD/NGN | 1,500.73 | 1,507.88 |
| Crude Oil (N/$) | ||
| Brent | 74.68 | 75.39 |
Key Economic Variables
| CPI (%) YoY | JAN-25 | DEC-24 |
| Headline Inflation | 24.48% | 34.80% |
| GDP (%) YoY | Q3 24 | Q2 24 |
| Real GDP | 3.46% | 3.19% |
| Monetary Policy Rate (%) | 27.50% |
Securities Recommendations:
| Security | Rationale |
| AXA Mansard Money Market Fund | The fund is currently at c.21.28% as at 23th February, 2024. |
| Dollar Denominated Fixed Deposit | Protects the investor from devaluation of the Naira and exchange rate risk with a return of c.4% – 6%p.a |
| Fixed Income Opportunities | Take advantage of our Naira fixed deposits with fixed rates from 20.65% to 23.80%p.a |
