Key events on the Global Scene:
Mixed Outing on Deeper Dovish Tilt and Trump’s victory as the 47th President…
The global equities market experienced mixed outcomes, influenced by central banks’ interest rate policies, corporate earnings reports, and political shifts in the United States.
Investor sentiment fluctuated as markets worldwide reacted cautiously to economic uncertainties and changing interest rate expectations. U.S. equities responded positively to the Federal Reserve’s 25bps rate cut to 4.50% – 4.75%, aimed at supporting economic growth. The rate cut boosted interest-sensitive sectors like real estate and utilities, as lower borrowing costs are expected to spur investment. However, financials saw mixed reactions, with banks dipping slightly on concerns about profit margins in a lower rate environment. Adding further dynamics, Donald J. Trump’s re-election as the 47th U.S. President raised market optimism with expectations of pro-business policies (e.g corporate tax cuts). Against this backdrop, the S&P 500 and NASDAQ indices rose 4.3% and 5.6% w/w respectively.
Key events on the Domestic Scene:
The Treasury bill market started the week quietly with a bearish sentiment. At the PMA this week, the CBN offered T-Bills worth ₦513.4bn, outpacing lagging behind maturities during the week by ₦143.8bn (total maturities: ₦8.4tn). Stop rates across the 91-day (Offer: ₦20.7bn; Subscription: ₦16.0bn; Sale: ₦14.0bn), 182-day (Offer: ₦5.4bn; Subscription: ₦4.9bn; Sale: ₦3.4bn) and 364-day (Offer: ₦487.2bn; Subscription; ₦649.0bn; Sale: ₦608.8bn) instruments closed at 18.0%, 18.5% and 23.0% respectively. The secondary T-Bills recorded a bearish performance as average yield advanced 57bps w/w to 24.7% reflecting strong reaction to the yield pricing dynamic in the primary market. Noteworthy, the short and long-dated instruments recorded selloffs as average yield increased 151bps and 56bps sequentially, while the mid-dated instrument enjoyed buy interest as average yield declined 24bps.
Bullish Outing on the Local Bourse as NGX ASI up 0.09% w/w…
- As the banking sector rounds up its capital raise exercise, the bourse saw the listing of FBNH ₦150.0bn right issue this week. Also, the suspension of trading in OANDO was lifted following the filing of its financials while other corporates released quarterly financials which was a mix of boom and gloom. Overall, buy interest dominated the market in three of the five trading sessions. Nevertheless, the NGX ASI returned negative, down 0.2% w/w to 97,236.19 points while market capitalisation declined 0.2% (₦118.4bn) to ₦58.9tn and YTD return settled at 30.0%.
- Sectoral performance was largely bullish, weekly performance was positively skewed as four of the six indices advanced w/w. The Oil & Gas index led the gainers, up 5.4% following price uptick in CONOIL (+37.3%). Trailing, the Banking and Insurance indices gained 2.8% 0.1% respectively due to price appreciation in UBA (+6.9%), ZENITH (+1.8%), SOVRENIN (+21.1%) and WAPIC (+7.6%). Similarly, buy interest in PZ (+13.4%) pushed the Consumer Goods index higher by 2bps w/w. On the flip side, the AFR-ICT and Industrial Goods indices waned 2.4% and 2bps respectively, due to sell-offs in AIRTELAF (-2.0%) and MEYER (-10.0%).
Capital Market Review/Outlook (FI and Equities):
- The SSA Eurobonds market saw a broad-based rally during the week, supported by the recent 25bps rate cut by the FOMC in its last meeting. The positive news spurred bullish sentiment amongst investors, leading to yield declines across all papers in this market. The average yield for the SSA Eurobonds space fell 42bps w/ w, closing at 8.4%.
- The FGN local bond market commenced the week with an FGN bond auction that leaned toward bearish sentiment. In the secondary market for FGN bonds, yields trended downward, as buy triggers dominated in three of the five trading sessions. Consequently, average yield across tenors declined 2bps w/w to 19.2%. The medium-term instruments attracted the most buying interest, with average yield decreasing 13bps, offsetting the slight yield uptick in the head (+6bps) and tail (+1bp) end of the curve.
Macro Economic Variables
| Equities | This week | Prior week |
| S&P 500 | 21.77% | 22.95% |
| NGX ASI | +33.00% | +31.16% |
| Fixed Income | ||
| Overnight | 32.48% | 19.68% |
| Open Buy Back | 31.95% | 19.25% |
| 1 year T-bill | 20.31% | 19.47% |
| 5-year bond | 19.75% | 20.41% |
| 10-year bond | 20.05% | 19.98% |
| Currency | ||
| FX Reserves ($’bn) | 40.03 | 39.77 |
| USD/NGN | 1,678.82 | 1,666.72 |
| Crude Oil (N/$) | ||
| Brent | 73.90 | 73.36 |
Key Economic Variables
| CPI (%) YoY | SEP-24 | AUG-24 |
| Headline Inflation | 32.70% | 32.15% |
| GDP (%) YoY | Q2 24 | Q1 24 |
| Real GDP | 3.19% | 2.9% |
| Monetary Policy Rate (%) | 27.25% |
Securities Recommendations:
| Security | Rationale |
| AXA Mansard Money Market Fund | The fund is currently at c.18.69% as at 8th Nov, 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 |
