Economy & Market

Pre-MPC Outlook: Further Tightening on the Cards

Domestic Macroeconomy: Pre-MPC Outlook … Further Tightening on the Cards

This week, we share our outlook for the upcoming Monetary Policy Committee (MPC) meeting slated for next week Monday and Tuesday. Recall that the first MPC meeting for the year concluded with votes to raise the benchmark Monetary Policy Rate (MPR) by 400bps to 22.75%, recalibrate the asymmetric corridor around the MPR to +100/-700bps from +100/-300bps, and move Cash Reserve Ratio (CRR) up 12.5ppts to 45.0%. Given that the hike was implemented in late February, its impact was not noticeable in the latest CPI update which was published in March for price changes in the preceding month…

Global Equities Market: Bulls Reign Extends Despite Delay in Hawkish Cycle

This week, the market reacted positively to a pause in hawkish cycle by the US Federal Reserve and Bank of England, prompting the MSCI World Index to rise 2.0% w/w. In the US, the Federal Reserve kept rates unchanged at 5.5% despite February’s hotter than expected inflation data (Actual: 3.2% vs Forecast: 3.1%). This decision saw both the S&P 500 and NASDAQ indices rise 2.4% and 2.5% w/w respectively…

Domestic Equities Market: Profit-taking Weighs on Performance… ASI down 0.4% w/w

The domestic equities market closed the week on a bearish note as the NGX-ASI recorded a w/w loss of 0.4% to close at 104,647.37 points. Consequently, market capitalisation shed 42bps (₦247.6bn) to ₦59.2tn, while YTD return declined to 40.0% (previously 40.5%). Activity level dipped as average volume and value traded fell 2.1% and 7.8% w/w to 347.0m units and ₦9.8bn respectively…

Foreign Exchange Market: A Glimmer of Hope for the Naira or a Stopgap?

The waning hopes of a ceasefire in the ongoing Israel-Hamas war resulted in a w/w uptick of 0.3% in the benchmark crude oil price to $85.63/bbl. Relatedly, news of Ukrainian drone attacks on Russia oil plants have stoked concerns about potential disruptions to oil supplies, given OPEC’s subsisting output cuts…

Money Market: Bullish Performance in the Secondary Market

This week, system liquidity closed at ₦575.9bn, 57.6% lower than the previous week. This was supported by standing lending facility worth ₦266.8bn and opening balance of banks at ₦314.3bn. Nonetheless, OPR and OVN rates declined 4.1ppts and 3.8ppts w/w to close at 26.2% and 27.3%, respectively…

Bonds Market: DMO Issues a New Benchmark Bond

On Monday, the Debt Management Office (DMO) conducted its March 2024 Bond auction with a total offer of ₦450.0bn for three instruments – 19.94% FGN MAR 2027 (new issue) and reopening of 18.50% FEB 2031 and 19.00% FEB 2034. The FEB 2031 bond was undersubscribed with bid-to-offer ratio clearing at 0.3x (offer: ₦150.0bn, subscription: ₦51.8bn, allotment: ₦47.9bn, stop rate: 20.0%). On the other hand, the new 3Y benchmark bond was 1.8x oversubscribed (offer: ₦150.0bn, subscription:  ₦264.6bn, allotment: ₦151.9bn, stop rate: 19.9%) while the FEB 2034 bond was 2.0x oversubscribed (offer: ₦150.0bn, subscription:  ₦298.6bn, allotment: ₦275.9bn, stop rate: 20.5%).


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