Global Market Updates:
U.S. Labour Market Deteriorates, Fuels Rate-Cut Hopes
U.S. private sector hiring slowed sharply in August, with Automatic Data Processing Inc. (ADP) reporting just 54,000 jobs added, well below the 75,000 forecast and down from July’s revised gain of 106,000. Weakness was concentrated in trade, transportation, utilities, and education and health services.
The official August non-farm payrolls report confirmed the slowdown, with only 22,000 jobs created and the unemployment rate rising to 4.3%, against expectations of 75,000 new positions. These developments have strengthened expectations for a Federal Reserve interest rate cut later this month, with traders now pricing in a 97% probability of easing. Overall, the data points to persistent labour market softness, increasing the likelihood of policy support to sustain growth.
U.S. Equities Move Flat
The Dow dipped marginally, returning -0.3% last week. The S&P 500 edged higher with a 0.4%, while the NASDAQ outperformed both indexes to close with a 1.2% return week-on-week.
On a year-to-date, the S&P 500, Dow Jones and NASDAQ have gained +11.2%, + 8.0% and + 12.9%, respectively.
Nigerian Domestic Market Updates
The Nigerian Stock Market
The Nigerian equities market closed the week bearish, shedding 94bps week-on-week to end at 138,980.01 points. Selloffs in WAPCO, UBA, OANDO, DANGSUGAR, and ZENITHBANK weighed on performance. Despite the shortened week, mild recoveries in tier-1 banks and TRANSCORP on Thursday provided some support, though not enough to offset overall weakness.
Offshore investors were active in Nigerian Breweries (NB), ZENITHBANK, STERLINGNG, ACCESSCORP, and GTCO. On the corporate front, Unity Bank announced a court-ordered meeting for its planned merger with Providus Bank, while Fidson Healthcare Plc. signed an MOU with a Japanese firm, Ohara Pharmaceutical Co. Ltd. at the 9th Tokyo International Conference on African Development (TICAD9).
Fixed Income and Foreign Exchange (FX)
Treasury Bills
The Nigerian Treasury Bills (NTB) market was largely subdued early in the week as investors stayed cautious ahead of primary auctions. Activity was muted in the 20-Aug NTB and select Open Market Operations (OMO) papers, though the 4-Dec NTB attracted modest demand.
Midweek, momentum picked up with the Central Bank of Nigeria’s (CBN) OMO sale, where ₦600bn in 84-day paper was offered. The auction drew robust demand of ₦1.18trn, with ₦620.65bn allotted at a stop rate of 26.44%.
The NTB auction also saw strong participation, with ₦1.01trn in bids against an offer of ₦480bn. The CBN allotted ₦585.25bn, with stop rates closing at 15.32% (91-day), 15.50% (182-day) and 17.69% (364-day).
Driven by this demand, average NTB yields declined 50bps week-on-week to 17.16%, underscoring continued appetite for short-dated sovereign securities despite elevated yields.
Eurobonds
The African Eurobonds market traded mixed last week. Early in the week, Nigerian and Angolan papers got buying interest, benefitting from firmer oil prices. However, sentiment turned midweek amid concerns over U.S. tariffs, Fed independence, and weak U.S. manufacturing data.
Despite softer oil, momentum shifted bullish as weaker U.S. labour market indicators reinforced expectations for potential rate cuts. Buying pressure intensified into Thursday and Friday following a disappointing U.S. jobs report, which highlighted slowing labour conditions and bolstered demands across the African curve. Investors remained focused on U.S. macro-economic developments and the implications for global liquidity. Overall, Nigerian Eurobond yields fell 11bps week-on-week to 7.87%.
Federal Government of Nigeria (FGN) Bonds
The FGN bonds market remained subdued through the week with light turnover. Early in the week, modest demand was seen in the 2029, 2031, 2033, and 2053 maturities, though executed volumes were thin. By midweek, cautious bullish sentiment emerged, with strong interest in the 2031s and 2033s, driving yields down 25bps and 40bps, respectively, reflecting opportunistic positioning by investors seeking value in intermediate tenors.
Overall, average mid-yields eased 4bps week-on-week to 17.00%.
Foreign Exchange
This week, the naira appreciated slightly, closing the week at ₦1,514.8671 to $1 (+0.2% week-on-week).
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