Nigeria’s inflation rate was reported at 24.48% year-on-year for January 2025, following a rebasing exercise by the National Bureau of Statistics (NBS) to reflect updated consumption patterns. This adjustment provides a more accurate depiction of current inflationary pressures. Food inflation, a significant contributor, stood at 26.08% year-on-year in January. In response to these developments, the Central Bank of Nigeria (CBN) maintained its benchmark interest rate at 27.50% during its February meeting, after six hikes the previous year totaling 875 basis points. CBN Governor Olayemi Cardoso expressed confidence in the recent macroeconomic trends, anticipating a gradual decline in inflation, with a target of reaching single-digit figures. However, he cautioned that food prices remain a potential risk to this outlook.
Money Market
System liquidity opened the session at ₦722.57 billion short, driven by primary market repayment. The Open Buy Back (OBB) and the Overnight (OVN) closed the day at 32.33% and 32.83%, respectively.
FGN Treasury Bills Market
The FGN Treasury Bills Market began the week on a calm note with a bearish bias due to the tight system liquidity from the OMO auction settlement. Consequently, we saw the 10 Feb OMO bill exchange hands at 20.75% in contrast to 20.45% last week. There was a reversal of this trend as trades were consummated on the 10 Feb OMO bill at 19.80% and the 5 Feb NTB at 18.40%. At the auction this week with N700 billion on offer across the standard maturities, the DMO sold N774.13 billion out of a 2.4trn subscription. Stop rates on the 91-day, 182-day and 364-day bill declined by 100bps, 50bps and 189bps to close at 17.00%, 18.00% and 18.43%, respectively. Sequel to the auction, the newly issued 364-day NTB exchanged hands at 18.05% while the 10 Feb OMO bill was also seen bid at 19.70% and offered at 19.40%. Week-on-week, the average benchmark yield declined by 2.45% to close at 19.90%.
We expect a calm session as focus shifts to the bond auction.
FGN Bond Market
The FGN Bonds Market traded on a mildly active note to start off the week. At the onset, trades were consummated on the 29s and 35s at 20.70% and 21.55%, respectively, while the 33s was seen quoted 20.40/20.20. However, the bullish sentiments intensified following the MPC meeting and the Bond offer circular. The MPC Committee voted to keep all parameters constant while the DMO released the bond offer circular featuring N200bn on the 29s and N150bn on the 31s with the removal of the 35s. Consequently, we saw trades consummated on the 31s, 34s and 35s as low as 19.90%, 18.80% and 18.00%, accordingly. Week-on-week, the average benchmark yield declined by 66bps to close at 19.08%.
We expect the bond auction to take centerstage.
FGN Eurobond Market
The FGN Eurobonds Market started off the week on a bearish note after the largest drop in retail sales in nearly two years. However, the bulls resurfaced following the FOMC Minutes, which showed that the Feds will be slowing down quantitative tightening. This overshadowed concerns regarding the inflation risk from Trump tariffs. Initial jobless claims released this week came in 4K above the 215K forecast. Week-on-week, the average benchmark yield declined by 4bps to 8.82%.
We expect the bullish trend to persist.
Currency Market
The value of the Naira to the dollar appreciated by 57bps to close at ₦1501.08/$ at the Nigerian Foreign Exchange Market Window (NFEM).
Equities Market
The local bourse ended the day with the benchmark NGX All-Share Index (ASI) declining by 7bps to close at 108,497.40. Market capitalization also decreased, closing at ₦67.62 trillion. The market breadth was negative at 0.78x, with 25 advancers and 32 decliners. This performance was driven by gains in CHAMPION (+9.87%), DANGSUGAR (+8.95%) and OMATEK (+8.00%), and losses in IKEJAHOTEL (-7.56%), ACADEMY (-7.33%), and TIP (-6.98%).
Trading activity was mixed on the day, with the volume of shares traded decreasing by 24.98% to 315.10 million units, while the total value of shares traded decreased by 0.76% to ₦8.35 billion. The most actively traded stocks by volume were ELLAHLAKES with 40.47 million units, FIDELITYBK with 21.02 million units, and ZENITHBANK with 20.04 million units. In terms of value, ARADEL led with ₦1.20 billion, followed by ZENITHBANK at ₦990.32 million, and UBA at ₦741.56 million.
Reflecting the day’s performance, the NGX All-Share Index reflected a 1-week decline of 0.63% with an overall year-to-date gain of 5.41%. Other notable indices are the NGX Top 30 Index (-0.08%; -0.32% 1WK; 5.89% YTD), NGX Banking Index (-0.55%; -3.93% 1WK; 10.90% YTD), NGX Oil & Gas Index (-0.58%; -5.14% 1WK; -6.11% YTD), and NGX Insurance Index (-0.25%; 1.66% 1WK; 4.26% YTD).
