The Nigerian equities market could not consolidate the prior week’s gains following pressure from profit-taking activities during the week.
Particularly, sell pressures on AIRTELAFR (-10.3%), FBNH (-7.4%) and TRANSCORP (-10.6%) drove the benchmark index lower amid buying interests in MTNN (+2.3%), GTCO (+8.8%) and TRANSCOHOT (+5.6%).
Thus, the All-Share Index declined by 1.4 percent week- on- week to 98,233.76 points.
Accordingly, the Month-to-Date and Year-to-Date returns settled at -1.4 percent and +31.4 percent. Trading activity was healthy, as the total trading volume increased by 12.7 percent w/w, while the total trading value grew by 55.2 percent w/w.
Sectoral performances were mostly negative, as the Consumer Goods (-1.2%), Insurance (-1.0%), Oil and Gas (-0.3%) and Banking (-0.1%) indices declined, while only the Industrial Goods (+0.1%) index gained.
Commenting on the performance of the equities market in the review period, stock market analysts at Cordros Research noted, “Given the recent trading pattern in the local stock market, we expect the overall market sentiment to remain bearish in the coming week especially with no significant drivers to buoy investors’ interest. Nevertheless, we do not rule out the potential for bargain-hunting activities to emerge quietly, particularly for the banks, owing to the opportunities presented by the recent bearish trend.”
In the money market, the overnight rate expanded by 154bps w/w to 28.6 percent, due to debits for this week’s OMO auction (N260.65 billion) and net NTB issuances (N95.31 billion) amid no significant inflows. As a result, the average system liquidity this week closed lower at a net long position of N401.26 billion (vs. a net long position of N706.61 billion in the prior week).
It is expected that the OVN rate will rise further this week, as funding for the May 2024 FGN bond auction (N450.00 billion) pressures the system liquidity amid no expected inflows to support the system.
Meanwhile, activities in the T-bills secondary market ended the week on a bearish note following huge sell-offs of the 17DTM bill in the beginning of the week.
Consequently, the average yield across all instruments advanced by 42bps to 21.7 percent.
Across the market segments, the average yield at the T-bills segment expanded by 19bps to 22.5 percent and increased by 128bps to 20.0 percent in the OMO segment.
At the NTB primary auction, the CBN offered instruments worth N179.36 billion – N39.90 billion for the 91-day, N5.44 billion for the 182-day, and N134.02 billion for the 364-day bills.
The auction was massively contested as the total subscription settled at N914.05 billion (bid-to-offer: 5.1x).
Eventually, the CBN allotted bills worth N274.67 billion – N16.59 billion for the 91D, N5.44 billion for the 182D and N252.64 billion for the 365D – at respective stop rates of 16.24 percent (unchanged), 17.00 percent (unchanged) and 20.70 percent (unchanged). Likewise, the CBN offered participants instruments worth N500.00 billion at its OMO auction this week.
The total subscription at the auction settled at N286.65 billion (bid-to-offer: 0.6x), with the eventual allotment amounting to NGN260.65 billion – N20.50 billion for the 99-day, N1.00 billion for the 183-day and N239.15 billion for the 365-day – at respective stop rates of 18.99 percent (previous: 19.00%), 19.48 percent (previously: 19.50%), and 21.50 percent (previously: 21.13%).
Global equities markets posted broadly positive performances this week fueled by strong corporate earnings, optimism surrounding potential interest rate cuts by central banks, and positive developments in geopolitical tensions.
Accordingly, US equities (DJIA: +1.8%; S&P 500: +1.7%) were on pace for a third consecutive weekly gain driven by solid corporate earnings from AAPL (Apple Inc.) and speculation about potential interest rate cuts from the Federal Reserve, especially given the weaker-than-expected April jobs report.
European equities (STOXX Europe: +2.6%; FTSE 100: +2.7%) traded with positive sentiments buoyed by (1) strong corporate earnings from banking names like Swiss bank and Unicredit, (2) growing confidence from the European Central Bank regarding the possibility of interest rate cuts in June, and (3) a gradual easing of tensions in the Middle East.
In Asia (SSE: +1.6%; Nikkei 225: 0.0%), the Chinese market rallied on the country’s upbeat trade data and fresh signs of support for the property market, while the Japanese market ended the week mixed amid concerns about the business outlook during the ongoing earnings season.
The Emerging (MSCI EM: +0.2%) and Frontier (MSCI FM: +0.8%) Markets indices mirrored the broader positive trend across global markets and were driven by bullish sentiments in China (+1.6%) and Vietnam (+1.7%), respectively.
