July 2025

Global Highlights – July 2025

U.S. Inflation Rises

In June 2025, U.S. annual inflation rose to 2.7%, the highest since February, up from 2.4% in May. This rise was largely driven by higher prices for food, transportation services, and used cars. While energy prices continued to decline, the pace was slower, with smaller drops in gasoline and fuel oil. Natural gas costs remained elevated. Inflation in shelter and new vehicles eased slightly.

The monthly Consumer Price Index (CPI) rose by 0.3%, the largest increase in five months. Core inflation also ticked up to 2.9% year-on-year, though it remained below expectations. Monthly core CPI rose just 0.2%, suggesting that underlying price pressures remain moderate.

Despite political pressure to ease monetary policy, the Federal Reserve held its policy rate steady at a 20-year high. Fed Chair, Jerome Powell reiterated the Fed’s commitment to its 2% inflation target, citing insufficient progress on disinflation, despite strong labour market data.

Crude Oil Market surged in July

Oil prices posted strong weekly gains in July, driven by renewed concerns over sanctions on Iranian and Russian oil exports and the seasonal rise in demand. Brent crude rose steadily, closing at $70.36 per barrel, while U.S. West Texas Intermediate (WTI) settled at $68.45.

A report from the International Energy Agency (IEA) highlighted tighter-than-expected market conditions, adding to bullish sentiment. However escalating trade tensions and fresh U.S. tariff announcements weighed on broader market sentiment. The next policy review is set for August where market fundamentals and geopolitical dynamics will likely influence further decisions.

Local Market Recap – July 2025

Equities Continue to Rally

The Nigerian equities market extended its bullish run for the third consecutive month, buoyed by strong investor sentiment and broad-based sectoral gains. The NGX All-Share Index surged by 17.97% month-on-month, closing at 141,263.05 points, while market capitalization hitting ₦89.4 trillion. This positive momentum was bolstered by the successful listing of GTCO on the London Stock Exchange (LSE) and robust Q2 corporate earnings releases.

Sectoral performance was led by the Banking sector (+26.59%), closely followed by Insurance (+17.15%), Consumer Goods (+12.30%), Industrial Goods (+5.60%), and Oil & Gas declined by -7% (the only laggard), signalling broad-based optimism among investors and renewed confidence in the market’s growth prospects.

Fixed Income Market: Yields dipped in July

The fixed income market saw a mildly bearish tone in July, with average yields closing at 16.4%, down 184bps month-on-month, largely due to profit-taking and subdued investor demand in the market.

At the July bond auction, the Debt Management Office (DMO) reopened the 19.30% FGN APR 2029 and 17.95% FGN JUN 2032, offering ₦80.00 billion to investors. Total subscription settled at ₦300.70 billion, significantly lower than the ₦602.86 billion at the previous auction. Eventually, the DMO allotted ₦185.93 billion across the two instruments, translating to a bid-to-cover ratio of 1.6x.

In the Nigerian Treasury Bills (NTB) space, ₦201.82 billion was allotted across tenors at lower stop rates declining to close at 15.74% (91-day), 16.20% (182-day), and 16.30% (364-day).

Our Position

We anticipate that the NGX will maintain a cautiously positive trajectory, supported by ongoing corporate earnings releases and potential upward revisions in earnings expectations. Nonetheless, global market volatility and domestic inflation pressures remain key risks that could temper investor sentiment.

In the Fixed income space, we expect yields to compress further, driven by a potential easing in inflation. However, real return preservation will likely remain crucial to sustain foreign portfolio interest, especially amid heightened global risk aversion.

Securities Recommendations: