Financial Markets Today

Financial Markets Today

Yields of treasuries of Developed Economies (DMs) declined on Friday, on increased investors’ risk-on sentiments and higher expectation for a further interest rate cut by the U.S. Federal Reserve Bank at their next Federal Open Committee Meeting (FOMC), next week. The 10YR U.S. treasury, 10YR German treasury, 10YR UK treasury and 10YR French treasury all dropped to -+1.56%, -0.638%, +0.504%, -0.3407% respectively, on renewed investors’ demand, after release of weaker-than-expected U.S. jobs data at 130,000 jobs in August vs market analysts’ expectation of 150,000 jobs and lower than 164,000 in July. This also follows indications by the New York Federal Reserve Bank of the risk of a U.S. economic recession in the next 12 months rising to its highest level in 10 years at 39%.

With continued uncertainties of the possible actions by the FOMC of the U.S. Federal Reserve Bank, U.S./China trade negotiations uncertainties with the expected implementation of higher tariffs by the U.S. on ca $250billion of Chinese imports from 01 October, we expect investors to remain cautious on raising risk-on sentiments in the near term.

MONEY MARKETS

CAPITAL MARKETS

FOREIGN EXCHANGE

COMMODITIES

Amount of money in the banking system was expected to open positive on Friday. The Central Bank Nigeria (CBN) did not conduct an Open Market Operation (OMO) auction today.

Treasury Bills
The treasury bills secondary market ended the week on a bullish note on Friday, on the back of robust interbank liquidity. Demand was seen on some select maturities, particularly at the short-to-mid end of the curve. Average rates lost ca -40bps day-on-day with the 11 June 2020 maturity closing at 13.00% from 13.20%.

Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates traded lower day-on-day at 3.21% and 3.86% from 4.21% and 5.14% 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
The domestic bonds secondary market ended the week on a bearish note on Friday, as yields inched up in reaction to the announcement of an OMO auction and expectation of stop yield levels above 15%. Average yields marginally gained +1bps day-on-day with the February 2028 maturity closing at 14.30% from 14.23%.

Eurobond

The nation’s Eurobonds market ended the week on a bearish note today due to profit taking activities and increased risk-off sentiments. Sell-offs was seen across the curve, as investors took profit on their portfolio holdings to close the week. Average yields gained ca +3bps day-on-day, with the January 2049 maturity closing at 8.03% from 8.00%.

Equities
The Nigerian equities market ended the week on a negative note, as the Nigerian Stock Exchange All Share Index (NSE ASI) lost ca -0.39% day-on-day to close at 27,146.57pts, with market’s year-to-date returns at -13.63%. This was mainly due to losses in Nestle Nigeria Plc (-3.60%), Dangote Cement Plc (-1.27%) and Guaranty Trust Bank Plc (-1.32%).

The NSE Oil & Gas and Banking indices gained ca +71bps and ca +54bps , while the NSE Consumer Goods and Industrial Goods indices lost ca -167bps and -54bps day-on-day respectively. Guaranty Trust Bank Plc led both the volume and value charts with ca 129.26m units traded at ca ₦3.40bn.

In the interbank market, the Naira remained appreciated against the dollar day-on-day to close at ₦306.90/$1 from at ₦306.95/$1 while it remained stable in the parallel market closing at ₦360/$1. In the parallel market, it also remained unchanged against the Pound Sterling to close at ₦447/₤1 while it appreciated against the Euro day-on-day to close at ₦397/₤1 and ₦398/€1. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate appreciated day-on-day to close at ₦361.97/$1 from ₦362.21/$1.

Crude oil prices rose further on Friday, as the U.S. Federal Reserve (Fed) Chairman – Jerome Powel, indicated the Fed could act to sustain economic growth in the U.S., with market analysts interpreting this as a possible signal for an interest rate cut ahead of the 17 – 18 September policy meeting of the Fed. Brent crude oil price gained ca +1.96% day-on-day at $61.54pb, while WTI gained ca +0.76% day-on-day at $56.73pb, as at report time. Spot gold shed ca -0.68% at $1,515.00 per ounce.

Top 5 Equitiy Advancers
Name (Symbol) Closing Price Gain(N) % Change
UACN 6.05 0.55 +10.00%
NPFMCRFBK 1.24 0.11 +9.73%
ABCTRANS 0.35 0.03 +9.37%
CORNERST 0.27 0.02 +8.00%
LASACO 0.29 0.02 +7.41%
Top 5 Equity Decliners
Name (Symbol) Closing Price Gain(N) % Change
NEIMETH 0.45 -0.05 -10.00%
GLAXOSMITH 7.15 -0.75 -9.49%
ETI 7.15 -0.55 -7.14%
NEM 1.77 -0.13 -6.84%
FO 14.5 -0.55 -3.65%
Benchmark T-Bills Discount Rates
  06-Sept-19 05-Sept-19 Change in Rates
90 Days 12.00% 12.80% -0.80%  
174 Days 12.28% 12.89% -0.61%  
342 Days 13.69% 13.38% 0.31%  
Source: FMDQ DQL for 06 Sept 2019
Benchmark FGN Bond Yields
  06-Sept-19 05-Sept-19 Change in Yield
3 yrs: 16.00% 15-Jul-2021 14.42% 14.00% 0.42%  
5 yrs: 15.54% 27-Apr 2023 14.50% 14.41% 0.09%  
10 yrs: 13.98% 23-Feb 2028 14.30% 14.23% 0.07%  
20 yrs: 16.25% 18-Apr 2037 14.51% 14.30% 0.21%  
30 yrs: 14.80% 26-Apr 2049 14.56% 14.56% 0.00%  
Source: FMDQ DQL for 06 Sept 2019
Benchmark FGN EuroBond Yields
  06-Sept-19 05-Sept-19 Change in Yield
3 yrs: NGERIA 6 3/4 01/28/21 4.09% 4.01% 0.08%  
5 yrs: NGERIA 6 3/8 07/12/23 4.79% 4.75% 0.04%  
10 yrs: NGERIA 6 1/2 11/28/27 6.24% 6.22% 0.02%  
20 yrs: NGERIA 7.696 02/23/38 7.34% 7.30% 0.04%  
30 yrs: NGERIA 9.248 01/21/49 8.03% 8.00% 0.03%  
Source: FMDQ DQL for 06 Sept 2019
AIICO Money Market Fund (AMMF)
Net Yield (As at current date) 12.14% 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
31-Oct-19 56 12.20% 12.43%
16-Jan-20 133 12.25% 12.82%
28-May-20 266 12.60% 13.87%
18-Jun-20 287 12.50% 13.86%
Select Macro-economic Indices
Inflation % (July 2019) 11.08 (-2.55% ytd)
PMI (August 2019) 57.90
MPR (%) 13.5 (-5%/+2% around mid-point)
CRR (%) 22.5
Brent Crude Price US$ pbbl 61.54 (+1.96% d/d)
External Reserve (US$’billion) 43.144 (+1.36% ytd)
GDP % (Q2 2019) +1.94% (Q1 2019: +2.10% y/y)
NSE All Share Index (ASI) 27,146.57 (-0.39% d/d; -13.63 ytd)
Market Capitalisation (₦’Trillion) 13.21

Financial Markets Update – 06 SEPTEMBER 2019

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