Wk1 (August ’24) – Weekly Market Report

Key events on the Global Scene:

• US weekly jobless claims jumps amid seasonal volaitility as unemployment claims increases; S&P 500 closed lower depreciating by 0.5%.
  
• US stocks surged and Treasuries bear flattened after Initial Jobless Claims fell by more than expected, helping ease some recent labour market concerns. The equity rally was broad-based as all sectors finished in the green and outperformance was seen in Tech, Communication and Industrials. S&P 500 closed the market, appreciating by 2.3% to close at 5,319 points. Initial jobless claims eased to 233k from 250k, and beneath the expected 240k, while the 4wk average ticked higher to 240.75k (prev. 238.25k).

Key events on the Domestic Scene:

Nigeria Treasury bill traded bullish as stop rate for New 1 year bill closed 69 bps below market expectations

Bullish sentiment dominated the treasury bills market following yesterday’s auction, where the stop rate for the new issued NTB 7 Aug 2025 1-year bill came in below market expectations at 21.889%, bill traded at a discount level of 21.20%, 69bps below . The auction experienced robust demand, reflected in a bid-to-cover ratio of 2.25x. The DMO allotted the total amount on offer, signalling a limited appetite given the range of bids submitted. As a result, few unmet demands spilled into the secondary market, driving buying interest in the 1-year bill with bids at 21.4%, nearly 40bps below the stop rate. Similar buying interest was observed in the mid-segment of the curve as investors sought higher yields. Consequently, the average benchmark yield shed 10bps to settle at 26.19%.

The NGX ASI index experienced a sustained bullish run in the market, expanding by 105bps to 98,116.27 points. As a result, investors gained N577.72 billion, with market capitalisation closing at N55.71 trillion. The outturn was buoyed by buy interest in MTNN (+10.00), a positive reaction to their disclosure of a successful renegotiation with its Tower companies. Additionally, ZENITHBANK (+2.70%), GTCO (+2.22%) and FBNH (+3.47%) added to the momentum.The Banking (+1.72%), Insurance (+1.38%), Consumer Gods (+0.54%) and Oil and Gas (+0.33%) closed positive on the back of appreciation in ZENITHBANK (+2.70%), CORNERST (+7.14%), NB (+9.85%) and OANDO (+9.97%), respectively. Industrial Goods (-0.03%) closed bearish, buoyed by sell-offs in WAPCO (-0.54%).

The Eurobonds market traded mixed bearish. Also, the US Initial Jobless Claims printed lower at 233k (Est. 240k) from 250k. Overall, the average mid-yield for the Nigerian papers fell by 3bp to 10.43%.

The FGN local bond market continued its bullish momentum today, mirroring the strong interest observed yesterday. Investor enthusiasm was evident across both short-term and long-term maturities, with yields declining by an average of 15 bps across the curve. This consistent downward movement in yields underscores the sustained bullish trend in the market. The DMO released a report notifying the public that the bond auction scheduled for 12 August, 2024 has been postponed to 19 August, 2024. We expect similar sentiment in the market tomorrow. The average benchmark yield increased by 16bps to settle at 19.52%

Capital Market Review/Outlook (FI and Equities):

• The Eurobonds market concluded the week with a downward price trend, as the average mid-yield across the Nigerian curve rose by 8 bps to 9.99%. In the US, GDP growth in Q2’24 climbed to 2.80%, exceeding the market forecast of 2.10% and the 1.40% recorded in Q1’24. Furthermore, the US Core PCE Price Index remained at 2.60%, aligning with prior data and the consensus estimate.
  
• The Nigerian bourse market traded bearish as the All-Share Index and market capitalization declined by 2.33% WoW to 98,201.49 and N55.51 trillion, respectively. The market’s performance stemmed from sell pressures in the heavyweight counter- DANGCEM (-9.99% WoW), alongside the tier-1 banking tickers: UBA (-7.88% WoW), FBNH (-4.76% WoW), ZENITHBANK (-3.11% WoW), ACCESSCORP (-4.64% WoW), and GTCO (-2.11% WoW). Consequently, YtD return moderated to 31.3%.
  
• The Industrial Goods (-5.89%), Oil & Gas (-0.54%), banking (-0.33%), and Consumer Goods (-0.14%) indices recorded negative returns on the back of selloffs in DANGCEM (-9.99%), ETERNA (-10.00%), ACCESSCORP (-2.63%), and DANGSUGAR (-1.32%), respectively. Conversely, the Insurance (+0.32%) index recorded positive returns following buying interest in WAPIC (+7.50%)
  
• The FGN local bonds market also closed the week on a bearish note due to an increase in stop rates across the on-the-run bonds. The DMO offered ₦300.00 billion but allotted a total of c.₦225.72 billion across the three tenors. The stop rates for the 2029, 2031, and 2033 papers closed higher compared to the previous auction at 19.89% (+0.25%), 21.00% (+0.81%), and 21.98% (+0.48%), respectively. As a result, the average mid-yield rose by 26 bps to 19.56% week-on-week.

Macro Economic Variables

Key Economic Variables

Securities Recommendations: