FIXED INCOME MARKETS
Money Market
The NTB auction debit caused a significant decline in opening system liquidity, plunging to a deficit of ₦390.63 billion today, down from the positive opening balance of ₦126.66 billion yesterday. Thus, the Open Repo Rate increased by 542bps to 24.50%, and the Overnight Rate soared by 596bps to 25.79%.
Outlook: We expect rates to stay elevated tomorrow.
Treasury Bills
The Treasury bills market initially showed a modestly bearish trend during the early trading hours. However, as the day unfolded, there was a resurgence of bids, particularly for the newly issued 1-year paper, initially at 17.00% levels before eventually settling below 17.00%. Investors sought to capitalize on the appealingly priced papers. Overall, the average mid-rate experienced a decrease of c.112 bps, closing at 14.18%.
Outlook: We expect the market to trade sideways tomorrow.
FGN Bonds
The local bonds market endured a mixed posture with wide bid-ask spreads. Although there was some interest noted in the 2038 and 2053 papers, executed volumes remained limited. Thus, the average mid-yield nudged by c.36bps to close at 16.63%.
Outlook: We expect a similar occurrence in tomorrow’s session.
Eurobonds
In today’s session, the Eurobonds market continued its bullish trend, with buying interest evident across the yield curve. However, Kenya’s bonds experienced a bearish tone following yesterday’s surge in demand due to a repurchase tender offer. Conversely, North African bonds maintained a bullish sentiment, while South Africa saw minor selling activity. Overall, Nigeria’s average mid-yield declined by 6 basis points, closing at 9.67%.
Outlook: We expect the bullish sentiment to linger tomorrow at similar pace.
Equities
The Nigerian equity market exhibited a bearish sentiment today, as ASI lost 0.86% to settle at 101, 227.66 points while the year-to-date return contracted to c.35.86% and total market capitalization was valued at ₦55.39 trillion. To buttress, STERLINGNG, NASCON, TRANSCORP, and DANGCEM significantly impacted the pull-back.
Overall, trading activity was positive, with a 39.91% increase in total volume and a 11.97% increase in total value. UNIVINSURE led the volume chart with 42.77 million units while ZENITHBANK led the value charts with ₦1.12 billion. The Banking, and Industrial Indices declined by 2.33% and 0.30%, respectively, while the Consumer Goods and Oil & Gas Indices shed 1.90% and 0.49%, respectively.
Outlook: We expect a similar momentum tomorrow.
Foreign Exchange
FMDQ’s Nigeria’s Autonomous Foreign Exchange (NAFEM) depreciated by 5.55% (or ₦78.69) to $/₦1,497.47 from $/₦1,418.78 recorded yesterday.
Outlook: We expect the volatility to persist.
Commodities
Crude oil futures prices rose for the fourth day in a row after the U.S. killed a militant commander in Iraq and Israel rejected a ceasefire proposal by Hamas. Brent crude reached $80.72 per barrel, while West Texas Intermediate (WTI) stood at $75.27 per barrel at the time of reporting. Additionally, the price of gold surged to $2,045.60 per ounce at the same time.
Outlook: We expect geopolitical tensions to continue to weigh on crude oil prices.
