Weekly Market Highlights

The Nigerian equities market closed the week on a bearish note, snapping a seven-week bullish streak. The NGX All-Share Index (NGXASI) declined by 0.98% week-on-week, settling at 154,126.46 points. Despite the index drop, market capitalization rose by 2.78% to ₦97.83 trillion, suggesting that gains in select high-cap stocks helped offset broader weakness.

Investor sentiment weakened significantly, as reflected in the market's breadth, which dropped to 0.48x from 0.87x the previous week. This indicates that decliners (73) far outpaced advancers (35), underscoring a risk-off tone among market participants. However, trading activity improved, with volume and value rising to 2.50 billion units and ₦117.67 billion, respectively — a sign that institutional investors remained active despite the pullback.

The week saw broad-based sectoral declines, with only the Oil & Gas sector managing to eke out gains. The Insurance sector led the laggards, shedding 3.47%, followed by Consumer Goods (-2.73%) and Banking (-2.11%). Industrial Goods also dipped, albeit modestly, by 1.02%. The Oil & Gas sector's resilience (+0.30%) was largely attributed to renewed interest in OANDO and ASOSAVINGS, which posted double-digit gains.

The week's top gainers were led by ASOSAVINGS, which surged over 56%, reflecting speculative interest and momentum buying. JBERGER and OANDO also posted strong gains, supported by sector-specific catalysts. On the flip side, OMATEK and JOHNHOLT were among the worst performers, weighed down by weak earnings and investor rotation out of small-cap names.

The currency market was dynamic this week, shaped by both domestic policy shifts and global monetary developments. The Naira appreciated significantly at the official window, gaining 3.67% to close at ₦1,421.73/USD. This was likely supported by improved FX liquidity and investor inflows following the U.S. Fed's rate cut. In the parallel market, the Naira also strengthened against the dollar and pound, reflecting reduced demand pressure and improved sentiment. However, the introduction of a 15% import duty on petrol and diesel by the Federal Inland Revenue Service (FIRS) could exert inflationary pressure and influence FX demand in the near term.

Liquidity conditions improved this week, with system liquidity rising to ₦2.13 trillion from ₦1.58 trillion. Overnight rates remained stable, with marginal upticks reflecting cautious interbank positioning ahead of month-end obligations.

The NTB secondary market traded with a mildly bullish tone, as average yields dipped slightly to 17.46%. Demand was concentrated in short- to mid-tenor bills, while longer-dated papers faced selling pressure. The reinstatement of a 10% withholding tax on interest from short-term government securities is expected to push T-bill rates higher in upcoming auctions, as investors seek to preserve real returns.

Bond yields were mixed across the curve. While short-term yields declined, longer tenors saw modest increases due to profit-taking and repositioning ahead of the next auction. The average bond yield closed at 15.87%, slightly lower than the previous week.

This week, global markets were shaped by a potent mix of central bank decisions, geopolitical developments, and earnings-driven momentum. Investors juggled optimism over a U.S.–China trade breakthrough with caution stemming from hawkish signals by the U.S. Federal Reserve. The result was a volatile but resilient performance across equities, currencies, and commodities.

U.S. Federal Reserve

The Fed delivered a widely expected 25bps rate cut, lowering its benchmark rate to a range of 3.75%–4.00%. However, the tone accompanying the decision was notably hawkish. Chair Jerome Powell emphasized that further cuts are not guaranteed, citing persistent inflation and a still-resilient labor market. This shift in tone sent Treasury yields higher and strengthened the U.S. Dollar, as markets recalibrated expectations for future easing.

Currency Market Realignments

The currency market saw sharp realignments:

• U.S. Dollar: Regained strength post-Fed, breaking key resistance levels. The Dollar Index surged toward 100.25, supported by rising yields and reduced expectations for further cuts.
• British Pound (GBP): Ended the week as the weakest major currency. Fiscal concerns deepened after reports revealed a larger-than-expected budget gap. Investors fear that the UK may need to tighten spending or raise taxes, which could dampen growth and force the Bank of England into a more dovish stance.
• Australian Dollar (AUD): Outperformed all peers, driven by the inflation surprise and repricing of RBA policy expectations. Traders now see no further cuts in 2025, with the next decision hinging on Q4 inflation data.
• Swiss Franc, Euro, Yen: Traded defensively, reflecting cautious central bank stances and subdued domestic growth.