FIXED INCOME MARKETS
Money Market
System liquidity opened significantly lower than yesterday’s balance, and from ₦46.67 billion long to ₦709.36 billion short. Accordingly, the Open Repo Rate (OPR) and Overnight Rate (O/N) expanded by 770bps to 21.85% and 720bps to 22.60%, respectively.
Outlook: We expect the interbank rates to stay elevated in the short-term.
Treasury Bills
After yesterday’s auction, the secondary market has continued to witness buying interests, largely concentrated on the long-dated paper. On that note, the average mid-rate fell by 29bps to settle at 4.35%.
Outlook: We expect a similar bullish momentum in tomorrow’s session.
FGN Bonds
The FGN local bonds market was modestly mixed, with bullish theme on the short end of the curve, while selling interests was dominant on the long end of the curve. Overall, activity settled on a bullish note, as the average mid-yield shed c. 8bps to 13.88%.
Outlook: We expect the mixed sentiment to resurface, pending any surprises.
Eurobonds
The Eurobonds market maintain its bullish momentum across African papers with interests stirring all sides of the curve. Market stayed bullish amid higher-than-expected inflation print in the US, with CPI growing at 3.40% y/y in December (Est. 3.2% y/y) from 3.10% y/y in November. In addition, the monthly core CPI at 0.30% m/m also printed stronger than market estimate (0.20% m/m) and the preceding month (0.10% m/m). In Africa, Ghana received a draft term sheet on debt relief from its official creditors that is sufficient for the International Monetary Fund (IMF) to disburse $600 million. Consequently, the Nigerian Eurobonds paper closed bullish as average mid-yield declined by 12bps to settle at 9.85%.
Outlook: We expect market to remain bullish, while keeping tabs on fresh insight from any officials of the Federal Reserve.
Equities
Nigerian Equity market reversed its course in today’s session, from 1.40% decline in yesterday’s session, to 0.70% uptick in today’s session, as some investors dialled back buying interests on tier 1 banks. Hence, ASI to gained by 0.70%, to settle at 82,597.08 points, while YTD return settled at +10.46% with a total market capitalization of ₦45.20 trillion. Activity was negative with 46.55% increase decrease in total volume and a 43.20% decline in total value traded.
TRANSCORP topped the volume chart with 74.54 million units, while UBA led in value at ₦1.57 billion. The Banking and Oil & Gas Indices appreciated by 2.73%, and 0.37%, respectively, while the Industrial and Consumer Goods gained 0.22% and 0.39%, respectively.
Outlook: We expect the bullish bias to persist.
Foreign Exchange
FMDQ’s Nigeria’s Autonomous Foreign Exchange (NAFEM) appreciated by 19.17% (or ₦207.53) to $/₦874.79 from $/₦1, 082.32 recorded yesterday.
Outlook: The volatility is expected to persist in the interim.
Commodities
Oil prices rose today after an oil tanker was boarded by an armed group in Oman, raising the prospect of escalating conflict in the Middle East. Brent crude was reported at $78.79 per barrel, and West Texas Intermediate (WTI) at $73.46 per barrel, as at printing time. Gold prices increased to $2,035.70 per ounce from the previous day, as of printing time.
Outlook: We expect oil prices to hover around $70 pb levels in the interim.
