• Friday, March 29, 2024
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BusinessDay

The Week Ahead

The Week Ahead

Naira crosses the N412/$1 threshold, first time in 6 months

For most of the trading session last week the Naira appreciated the I & E FX window, which continued at the end of the week. On a week-on-week basis, the Naira appreciated by +0.37% to N413.38/US$ at the close of trading on Friday.

The Naira for the first time in 6 months closed the week at $/N413.38 at the I&E FX window, at the NAFEX (spot market) it closed at $/N413.53.

However, the Naira is anticipated to hover around N410/$1-N415/$1 threshold in the NAFEX window in the week ahead.

OPEC oil output rose to its highest since April 2020

Brent had a weekly growth of 0.76%. A Reuters survey on Friday found that OPEC oil output rose in September to its highest since April 2020, as Nigerian output recovered from involuntary losses and OPEC’s top producers further eased supply curbs under a pact with its allies.

Oil prices rose for a fifth straight day on Monday with Brent heading for $80 amid supply concerns as parts of the world see demand pick up with the easing of pandemic conditions.

Goldman Sachs raised its year-end forecast for Brent crude oil prices to $90 per barrel from $80, as rapid fuel demand recovers from the Delta variant and Hurricane Ida’s disruption in productions led to tight global supplies.

Many gas stations on Monday ran dry of gasoline in Britain and vendors rationed sales due to shortages of truckers which led to a break in the supply chains. British Government on Tuesday said it has put military tanker drivers on standby to supply gas stations if needed.

Oil prices fell on Thursday, as higher U.S. crude oil inventories and a strong dollar outweighed bullishness from supply deficit forecasts.

In the coming week, oil prices are expected to grow marginally supported by global output disruptions and swelling inventories.

Money Market

Multiple SLF inflows supported system liquidity last week causing money market rates to trade lower, for the most part.

However, at the close of the session on Friday, money market rates closed in double digits, at 15.00% and 15.75% for open buy-back and overnight rates respectively. On a W-o-W basis, OBB fell by -6.25% while O/N also dropped by -8.70%.

Funding rates are expected to trade in double digits trend in the coming week in the absence of any inflow.

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Treasury Bills Market

The Nigerian Treasury Bills was active last week and had a bullish trend for most of the trading in the week

At the close of the market on Friday, average benchmark yields for T-bills closed at 5.29%, OMO bills at 6.32% while the average benchmark for CBN’s special bills closed at 6.03%. Which Indicates a W-o-W fall of -5.70% for the T-bills, -1.71%, and -0.17% for OMO bills and the special bills respectively.

The DMO sold N115.41 billion worth of notes against N111.87 billion offered at its NTB auction last week. The 91-day, 182-day & 364-day notes were allotted at 2.50%, 3.50%, and 7.50%, respectively. Compared to the previous auction, rates on the 91-day & 182-day were unchanged while the 364-day paper rose by 30bps.

We expect activity next week to be dictated by the market liquidity situation.

FGN BOND and EUROBOND market

Sentiment in the bond market was mixed last week, at the close of trading on Friday bulls dominated as we saw buying interest at the shot and mid-end of the curve.

The overall average benchmark yields closed at 8.13% at the close of trading at the end of the week, which rose W-o-W by +4.76%.

The Eurobond market was bullish on Thursday, as investors moved into the market to take advantage of the attractive yield level, we saw buying interest at the mid to long end of the curve. Average benchmark yields fell by 3bps to 6.18%

Market sentiment is expected to be mixed as inflation concerns dampen.

Nigerian Capital Market

The equity market saw a bullish dominance last week, as savvy investors and bargain hunters strategically picked up large-cap stocks across various sectors. Activity on the local bourse started the week on a weak note but the benchmark index experienced a reversal mid-week. The NGXASI closed the week with an uptick of +3.23%. The Nigerian Stock Exchange gained N655.89bn, year-to-date return moderated to -0.12%, while the market capitalization settled at N20.96trillion.

The volume and value of stocks traded on the exchange last week advanced by +69.46% and +16.25% respectively.

Sectoral performance across sectors tracked was positive last week as the NGX-IND was the highest gainer for the week with +6.65%. NGX Insurance recorded the highest weekly loss with -7.58%. NGX Consumer Goods, NGX Oil and Gas, and NGX Banking closed positive with +3.35%, +0.92% and +0.60% respectively.