Markets rise following unchanged key monetary policy rates

Nigerian fixed income (FI) and equities markets were further upbeat Wednesday, after Tuesday’s decision by the Monetary Policy Committee (MPC) to hold key monetary policy rates, Business Day investigations reveal.

While the equity market resumed upward movement, the bond market extended its bullish line as yields on the benchmark bonds declined.
Trading in the Treasury Bills (T-Bills) space was mixed, though with a slightly bullish bias.
At the equities market, increased buy tendencies seen at the local bourse on Wednesday drove the value of listed Nigerian equities higher by about N2billion, from a trade-open level of N9.690 trillion to N9.62trillion.
At the interbank money market, dealers said further improvement in system liquidity of about N55billion was responsible for the Interbank Call rate which declined by 700 basis points (bps) to 10.33percent.
Demand was particularly strong on the 12.50% FGN JAN 2026 and 12.40% FGN MAR 2036 bonds as their yields moderated 21bps and 19bps to close at 14.87%, fixed income dealers said yesterday.
“Notwithstanding the intraday volatility, we believe overall market sentiment remains quite upbeat, even as market breadth remains positive”, said market analysts at Lagos-based investment firm, Vetiva Capital.
On the fixed income market, the analysts said that while they expect improved liquidity to support bullish sentiment, overall market direction will be guided by results of Wednesday’s T-Bills Primary Market Auction (PMA) which are yet to be released.
Equities market performance indicator –the All Share Index (ASI) increased by 0.02%, while the Year-to-Date (ytd) return stood at -1.49%. The All Share Index closed at 28,214.57 points against the preceding day close of 28,209.93 points.
In their near-term outlook for naira assets following the outcome of the MPC meeting, market analysts at Lagos-based United Capital plc said they do not expect significant changes to current dynamics at the equities and fixed income markets.
The analysts believe that the equities market will likely continue to oscillate between the bulls and the bears in the near-term, “with investors likely to continue to lean more towards short term tactical play, pending further clarity on the domestic macro and policy fronts.
“Also, yield in the Fixed Income (FI) market is set to remain elevated, with trajectory to be shaped by system liquidity gyrations, pace of OMO issuance by the CBN and inflation expectations,” United Capital analysts added.
Analysts expect bond investors to continue pricing-in higher inflation expectations.
The FX interbank market recorded improved volumes of $114.430million in 76 deals as the local currency averaged at N298.23/USD after a high of N345.79/USD, figures at the FMDQ OTC Securities Exchange showed.
Crude oil prices were up as much as 2 percent on Wednesday, after a third surprise weekly drop in U.S. crude stockpiles helped assuage fears over a global oil glut. Brent crude futures were up 84 cents, or 1.8 percent, at $46.72 per barrel. U.S. West Texas Intermediate (WTI) crude futures were up $1.05, or 2.4 percent, at $45.10.

 

Iheanyi Nwachukwu