Financial Markets Today

Financial Markets Today

Global financial markets turned highly volatile today, of the back of the outcome from the meeting of the Federal Open Markets Committee (FOMC) of the U.S. Federal Reserve Bank (Fed), as the FOMC cut its benchmark interest rate for the first time in 10years, by 25bps to 2.00% – 2.25% from previous 2.25% – 2.50%. The FOMC also announced the commencement of its Balance Sheet drawdown of ca $3.8 trillion from 01 August 2019, a month earlier than previously announced. Yields on treasuries in Developed Economies (DMs) trended lower with the U.S. 10yr, UK 10yr, Japanese 10yr, German 10yr and French 10yr treasuries all dropping to ca +2.013%+0.604%, -0.158%, -0.442% and -0.1861% respectively, while equity prices declined after a bullish opening coming of comments by the Fed’s Chairman – Jerome Powell indicating today’s cut was not the start of a long series of further cuts by the Fed.

We expect continued volatility in global financial markets in the near term as investors evaluate both the action of the FOMC and comments by the Fed Chairman, as well as keeping a watch on ongoing U.S./China trade negotiations which commenced today.

MONEY MARKETS

CAPITAL MARKETS

FOREIGN EXCHANGE

COMMODITIES

The Amount of money in the Nigerian interbank system opened positive today at ca ₦241.29bn, lower than yesterday’s opening of ca ₦293.01bn. 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 with demand seen across the curve, particularly at the long-end of the curve and less activity on the shorter dated papers. This was due to market anticipation of lower stop rates at the Primary Market Auction (PMA). Average rates marginally dipped ca -1bps as the 19 September 2019 maturity closed at 10.50% from 10.57%. Kindly find below a summary of the results of the today’s PMA:

Tenor 91-Days 182-Days 364-Days
Maturity Date: 31-Oct-19 30-Jan-20 30-Jul-20
Amount Offered: ₦28.018 billion ₦15.000 billion ₦50.000 billion
Subscription ₦47.956 billion ₦56.81 billion ₦700.79 billion
Amount Allotted: ₦28.018 billion ₦43.11 billion ₦352.83 billion
Range of bids 9.3500% – 10.7500% 10.0000% – 12.3664% 10.5000% – 13.2450%
Stop Rate 9.75% 10.6000% 11.1800%

Bank Placements
Open Buy Back (OBB) and Overnight (O/N) rates traded lower day-on-day to close the day at 3.29% and 4.00% from 4.57% and 5.21% 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 7.50% for 30 – 60 days tenor on ₦10mln – ₦100mln.

Bonds
Trading activities in the domestic bonds secondary market was mixed today, with some sell-offs seen on short-dated maturities while some demand was witnessed at the long-end of the curve. Average yields dipped marginally by ca -4bps day-on-day, with the April 2037 maturity closing at 13.71% from 13.74%.

Eurobond

The nation’s Eurobond market closed on a bullish note today, with demand seen on most maturities on the yield curve and halting 3-days of consecutive sell offs, with Investors expectation of a rate cut by the U.S. Federal Reserve Bank. Average yields shed ca -7bps day-on-day with the January 2049 maturity closing at 7.97% from 8.03%.

Equities
The Nigerian equities market dipped to close on a negative note today, as the Nigerian Stock Exchange All Share Index (NSE ASI) lost ca -0.37% day-on-day to close at 27,718.26pts, and market’s year-to-date returns further dropping to -11.81%. This was mainly due to losses in Nestle Nigeria Plc (-2.27%), Zenith Bank Plc (-0.54%), and Guaranty Trust Bank Plc (-0.35%).

The NSE Banking and Industrial indices gained ca +71bps and +27bps respectively while the NSE Consumer and Oil & Gas indices lost ca -352bps and -2bps respectively. Zenith Bank Plc led the volume chart with ca 39.14m units while MTN Nigeria led the value chart with ca ₦725.21mn 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 traded flat against the Pound Sterling and the Euro day-on-day to close at ₦455/₤1 and ₦400/€1 from ₦402/€1 respectively. The FMDQ Nigerian Autonomous Foreign Exchange (NAFEX) Fixing rate depreciated day-on-day at ₦362.42/$1 from ₦361.68/$1.

Crude oil prices gained for the fifth consecutive day, on the back of reports from the Energy Information Administration (EIA), showing U.S. crude oil inventories declined by ca 8.5 million barrels week-on-week compared to market expectations of ca 2.6 million barrels. Brent crude oil price gained ca +0.66% day-on-day at $65.21pb, while WTI gained ca +0.67% day-on-day at $58.44pb, as at report time. Spot gold lost ca -0.195% at $1,431.80 per ounce.

Top 5 Equitiy Advancers
Name (Symbol) Closing Price Gain(N) % Change
JBERGER 20.6 1.85 +9.87%
FO 19.65 1.65 +9.17%
MBENEFIT 0.24 0.02 +9.09%
WAPIC 0.42 0.03 +7.69%
JAIZBANK 0.45 0.03 +7.14%
Top 5 Equity Decliners
Name (Symbol) Closing Price Gain(N) % Change
UPL 1.62 -0.18 -10.00%
BERGER 5.70 -0.60 -9.52%
DANGSUGAR 9.80 -1.00 -9.26%
NB 50.00 -5.00 -9.09%
ETERNA 3.00 -0.30 -9.09%
Benchmark T-Bills Discount Rates
31-Jul-19 30-Jul-19 Change in Rates
85 Days
10.71%
10.61% 0.10%
176 Days
10.62%
10.63% -0.01%
351 Days
10.67%
10.91% 0.00%
Source: FMDQ DQL for 31 July 2019
Benchmark FGN Bond Yields
31-Jul-19 30-Jul-19 Change in Yield
3 yrs: 16.00% 15-Jul-2021 12.70% 12.35% -0.35%
5 yrs: 15.54% 27-Apr 2023 13.00% 13.01% -0.01%
10 yrs: 13.98% 23-Feb 2028 13.73% 13.64% 0.09%
20 yrs: 16.25% 18-Apr 2037 13.71% 13.74% -0.03%
30 yrs: 14.80% 26-Apr 2049 14.00% 14.00% 0.00%
Source: FMDQ DQL for 31 July 2019
Benchmark FGN EuroBond Yields
31-Jul-19 30-Jul-19 Change in Yield
3 yrs: NGERIA 6 3/4 01/28/21 4.02% 4.09% -0.07%
5 yrs: NGERIA 6 3/8 07/12/23 4.55% 4.62% -0.07%
10 yrs: NGERIA 6 1/2 11/28/27 6.12% 6.19% -0.07%
20 yrs: NGERIA 7.696 02/23/38 7.38% 7.44% -0.06%
30 yrs: NGERIA 9.248 01/21/49 7.97% 8.03% -0.06%
Source: FMDQ DQL for 31 July 2019
AIICO Money Market Fund (AMMF)
Net Yield (As at current date) 12.79% 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 85 10.71% 10.98%
31-Oct-19 92 9.61% 9.85%
16-Jan-20 169 10.88% 11.46%
28-May-20 302 10.94% 12.03%
Select Macro-economic Indices
Inflation % (June2019) 11.22 (-0.18% ytd)
PMI (June 2019) 57.40
MPR (%) 13.5 (-5%/+2% around mid-point)
CRR (%) 22.5
Brent Crude Price US$ pbbl 65.21 (+0.66% d/d)
External Reserve (US$’billion) 44.943 (+1.33% ytd)
GDP % (Q1 2019) +2.01% (Q4 2018: +2.38% y/y)
NSE All Share Index (ASI) 27,820.57 (-0.37% d/d; -11.81 ytd)
Market Capitalisation (₦’Trillion) 13.51

Financial Markets Update – 31 JULY 2019

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