Financial Markets Today

Financial Markets Today

Global crude oil prices crashed to their lowest in 2-months today, with Brent crude oil price dropping more than -7% day-on-day trading at $60.28 per barrel, while yields on the benchmark U.S. 10YR Treasury note which moves inversely to price, also dropped to its lowest since 2016, on significant rise in global risk-off sentiments and escalating trade tensions. This comes on the back of an announcement by the U.S. President – Donald Trump of the effective halt to existing bilateral U.S./China agreement reached at the G20 meeting late June, with the commencement of 10% tariffs on ca $300 billion of additional imports from China. This is expected to commence from 01 September.

With this coming a day after the U.S. Federal Reserve Bank’s (Fed) decision to cut its benchmark interest rate by 25bps, citing rising negative impact of continued trade tensions on the U.S. economy, we expect further escalation of global trade tensions in the coming months. We also expect possible reprisal response by the Chinese government on imports from the U.S. and expect this to further support market analysts expectation of an additional rate cut by the U.S. Fed in 2019, while raising risk-off fears on Emerging (EMs) and Frontier Markets (FMs) risk assets.

MONEY MARKETS

CAPITAL MARKETS

FOREIGN EXCHANGE

COMMODITIES

Amount of money in the Nigerian interbank system is expected to open positive today, on inflow from maturing Open Market Operations (OMO) treasury bills of ca ₦88bn. The Central Bank of Nigeria (CBN) did not conduct an Open Market Operation (OMO) auction today.

Treasury Bills
Activities in the treasury bills secondary market closed the day on a moderately bullish note, with buy interest seen on some maturities. Most of today’s activities was on short and long dated papers supported by expected improved interbank liquidity. Average rates marginally dipped ca -1bps as the 02 July 2020 maturity closed at 10.94% from 11.38%.

Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates traded lower day-on-day to close the day at 2.50% and 3.21% from 3.29% and 4.00% respectively. Average fixed deposit rates amongst banks monitored showed:
– tier-1 rated banks at 3.00% for 30 – 60 days tenor on ₦10mln – ₦100mln.
– tier-2 rated banks at 7.00% for 30 – 60 days tenor on ₦10mln – ₦100mln.

Bonds
It was a quiet session in the domestic bonds secondary market today, with low transaction volumes. Some sell-offs was seen at long-end of the curve with average yields gaining ca +2bps day-on-day, as the April 2049 maturity closed at 14.07% from 14.00%.

Eurobond

The nation’s Eurobond market closed on a bearish note today, with sell offs across the curve, as Investor’s continue to react to yesterday’s comments by U.S. Federal Reserve Chairman – Jerome Powell. Average yields gained ca +11bps day-on-day with the January 2049 maturity closing at 8.08% from 7.97%.

Equities
The Nigerian equities market closed on a positive note today, as the Nigerian Stock Exchange All Share Index (NSE ASI) inched up ca +0.11% day-on-day to close at 27,748.46pts, and market’s year-to-date returns at -11.71%. This was mainly due to gains in MTN Nigeria Plc (+1.61%).

The NSE Consumer Goods Index was the lone gainer with ca +8bps while the NSE Banking, Oil & Gas and Industrial indices lost ca -96bps, -54bps and -8bps respectively. Zenith Bank Plc led the volume chart with ca 11.59m units while Dangote Cement Plc led the value chart with ca ₦505.70mn worth of trades.

The Naira remained stable against the dollar day-on-day in the interbank market and in the parallel markets to close at ₦306.85/$1 and ₦360/$1 respectively. In the parallel market, it appreciated against the Pound Sterling and the Euro day-on-day to close at ₦452/₤1 from ₦455/€1 and ₦398/€1 from ₦400/€1 respectively. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate appreciated day-on-day at ₦362.11/$1 from ₦362.42/$1.

Crude oil prices crashed today, halting its previous day’s rally on significant rise in global growth uncertainties and risk-off sentiments after the U.S. President – Donald Trump announced the re-commencement of tariffs on Chinese imports from 01 September. Brent crude oil price lost ca -7.39% day-on-day at $60.24pb, while WTI lost ca -7.70% day-on-day at $54.07pb, as at report time. Spot gold gained ca +0.91% at $1,450.90 per ounce.

Top 5 Equitiy Advancers
Name (Symbol) Closing Price Gain(N) % Change
FIDSON 4.50 0.40 +9.76%
BERGER 6.25 0.55 +9.65%
NASCON 14.00 0.90 +6.87%
HONYFLOUR 1.00 0.05 +5.26%
UNITYBNK 0.68 0.02 +3.03%
Top 5 Equity Decliners
Name (Symbol) Closing Price Gain(N) % Change
ETERNA 2.70 -0.30 -10.00%
NCR 5.30 -0.50 -8.62%
FO 18.05 -1.60 -8.14%
WAPIC 0.39 -0.03 -7.14%
JAPAULOIL 0.20 -0.01 -4.76%
Benchmark T-Bills Discount Rates
01-Aug-19 31-Jul-19 Change in Rates
84 Days 10.65% 10.71% -0.06%
175 Days 10.68% 10.62% 0.06%
351 Days 10.67% 10.67% 0.00%
Source: FMDQ DQL for 01 Aug 2019
Benchmark FGN Bond Yields
01-Aug-19 31-Jul-19 Change in Yield
3 yrs: 16.00% 15-Jul-2021 12.97% 12.70% 0.27%
5 yrs: 15.54% 27-Apr 2023 13.46% 13.00% 0.46%
10 yrs: 13.98% 23-Feb 2028 13.59% 13.73% -0.14%
20 yrs: 16.25% 18-Apr 2037 13.78% 13.71% 0.07%
30 yrs: 14.80% 26-Apr 2049 14.07% 14.00% 0.07%
Source: FMDQ DQL for 01 Aug 2019
Benchmark FGN EuroBond Yields
01-Aug-19 31-Jul-19 Change in Yield
3 yrs: NGERIA 6 3/4 01/28/21 4.13% 4.02% 0.11%
5 yrs: NGERIA 6 3/8 07/12/23 4.66% 4.55% 0.11%
10 yrs: NGERIA 6 1/2 11/28/27 6.23% 6.12% 0.11%
20 yrs: NGERIA 7.696 02/23/38 7.48% 7.38% 0.11%
30 yrs: NGERIA 9.248 01/21/49 8.08% 7.97% 0.11%
Source: FMDQ DQL for 01 Aug 2019
AIICO Money Market Fund (AMMF)
Net Yield (As at current date) 12.70% per annum
Added Benefit Personal accident insurance cover
AIICO Capital Guaranteed Income Note (GIN) Rates p.a.
Amount (NGN) 30 Days 60 Days 90 Days 180 Days 364 Days
10,000,001 – 50,000,000 10.00 10.50 11.00 12.00 13.00
50,000,001 – 100,000,000 11.00 11.25 11.50 12.50 14.00
100,000,001 – 400,000,000 12.00 12.25 12.50 13.00 14.50
Trading Treasury Bills Rates p.a.
Maturity Dates Tenor (Days) Discount Rate Effective Yield
24-Oct-19 84 10.65% 10.92%
31-Oct-19 91 9.82% 10.07%
16-Jan-20 168 10.74% 11.30%
28-May-20 301 10.83% 11.89%
Select Macro-economic Indices
Inflation % (June 2019) 11.22 (-0.18% ytd)
PMI (July 2019) 57.60
MPR (%) 13.5 (-5%/+2% around mid-point)
CRR (%) 22.5
Brent Crude Price US$ pbbl 60.24 (-7.39% d/d)
External Reserve (US$’billion) 44.923 (+1.33% ytd)
GDP % (Q1 2019) +2.01% (Q4 2018: +2.38% y/y)
NSE All Share Index (ASI) 27,748.46 (+0.11% d/d; -11.71 ytd)
Market Capitalisation (₦’Trillion) 13.52

Financial Markets Update – 01 August 2019

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