FIXED INCOME MARKETS
Money Market
Opening System liquidity declined by 77.33% to c.₦51.04 billion from ₦225.13 billion recorded yesterday. Thus, the Open Repo Rate (OPR) and the Overnight Rate (O/N) expanded by 416ps and 347bps to 20.08% and 20.60%, respectively.
Outlook: We expect the interbank rates to close at similar levels tomorrow.
Treasury Bills
Activity in the treasury bills market exhibited a mixed to bearish tone, influenced by cautious sentiments arising from the results of yesterday’s OMO auction, where the 342-Day paper closed at 17.98%. Therefore, offers across the long end of the NTB rate curve adjusted upwards to reach approximately 14.00%, while bids were primarily skewed toward the c.15.00% range. Consequently, the average mid-rate closed higher, increasing by c.54bps to settle at 12.40%.
Outlook: We expect the mixed theme to persist tomorrow.
FGN Bonds
The local FGN bonds market had a subdued trading day characterized by a bearish sentiment. While activity was relatively quiet, the focus of interest was primarily directed towards selected bonds, notably the 2032, 2050, and 2053 papers. Overall, the market observed an expansion in the average mid-yield, increasing by c.39bps to settle at 15.55%.
Outlook: We expect similar performance tomorrow.
Eurobonds
Today’s Eurobonds trading session sustained a bullish bias as buying interests flourished in the SSA and MENA papers. This surge in demand followed the US Federal Reserve’s decision to maintain the benchmark interest rate at 5.50% for the second consecutive time. Consequently, the Nigerian curve concluded the session on a bullish note, with the average mid-yield decreasing by 38 basis points, settling at 10.92%.
In other significant developments, the Bank of England chose to retain its benchmark interest rate at 5.25%, maintaining this 15-year high for the second consecutive time. This decision aligns with policymakers’ evaluation of indications pointing to a potential economic slowdown in the UK, all while grappling with the ongoing challenge of stubbornly high inflation.
Outlook: The next hurdle for the market is tomorrow’s NFP report. However, we expect market to maintain its bullish course.
Equities
The Nigerian equity market experienced a bearish session, primarily influenced by profit-taking, notably within the banking sector. Despite this, the market managed to maintain its position around the 70,000-point mark. To buttress, the All-Share Index (ASI) incurred a 0.76% decline, settling at 70,042.28 points, with a year-to-date return of 36.67%. Market activity exhibited a negative trend, marked by a 12.68% drop in total volume traded and a 44.73% decrease in total value traded.
The Banking, Industrial, and Consumer Goods Indices depreciated by 0.85%, 0.65%, and 0.19%, respectively. The Oil & Gas Index closed flat. JAPAULGOLD led the volume charts with 92.02 million units while UBA led the value chart with ₦971.34 billion.
Foreign Exchange
FMDQ’s Nigeria’s Autonomous Foreign Exchange (NAFEM) depreciated by 0.92% to $/₦793.28 from $/₦786.02 recorded yesterday.
Outlook: We expect rates volatility to persist.
Commodities
Oil gained today, as risk appetite returned to financial markets after the U.S. Federal Reserve kept benchmark interest rates on hold. Brent crude oil prices increased by 1.00% to $85.48 per barrel, while West Texas Intermediate (WTI) gained 0.99% to US$81.24 per barrel as of writing time. Similarly, Spot Gold gained by 0.18% to US$1,991.10 per ounce at the time of this report.
Outlook: We expect oil prices to increase in the interim.
