Global Economy

USA: New applications for U.S. unemployment aid fell unexpectedly last week, dropping by 15,000 to a seasonally adjusted 227,000 for the week ending October 19. Despite this, the number of individuals collecting benefits reached the highest level in nearly three years, reflecting difficulties in finding new jobs. The decline in applications followed distortions caused by hurricanes Helene and Milton, with the latter having less impact than initially feared. Additionally, an ongoing strike involving 33,000 Boeing workers is further complicating the labor market data. While the labor market is softening, economists believe the Federal Reserve will likely overlook this in its upcoming meeting, focusing instead on longer-term economic stability as the country approaches the November 5 election.

 

Sub-Saharan African Economies

 

 

China: China implemented anticipated cuts to its benchmark lending rates on Monday, reducing the one-year loan prime rate (LPR) by 25 basis points to 3.10% and the five-year LPR by the same margin to 3.6%. These reductions followed a series of policy rate cuts in September, including a 50-basis-point cut to banks’ reserve requirement ratio and a 20-basis-point cut to the seven-day reverse repo rate. The moves form part of China’s stimulus efforts to bolster the economy, particularly the property sector and consumption. Despite early market optimism reflected in the CSI300 index’s record daily movements, stocks have recently become more volatile amid concerns over the sufficiency of policy support. Nevertheless, China’s economic growth in Q3 exceeded expectations, and officials are confident the full-year growth target of around 5% remains achievable. Further measures, such as another reserve ratio cut, may be expected by year-end.

South Africa: South Africa’s inflation rate eased to 3.8% in September 2024, the lowest since early 2021, largely due to a drop in transportation costs, especially fuel, which is now cheaper than it has been in over a year. Food prices rose at the same pace as in August, with slower increases in items like meat and cereals, though fruit and vegetables became more expensive. Housing and utility costs held steady, while alcohol and tobacco prices rose slightly faster. Overall, the cost of living barely increased from August, with core inflation remaining steady at 4.1%.

Ivory Coast: Ivory Coast’s inflation rate fell to 2.8% in September 2024, the lowest in over three and a half years, down from 4.5% in August. This decrease was mainly due to smaller price increases for food items like oils, fresh vegetables, and dairy. Housing and transport costs also grew more slowly. Month-to-month, overall prices dropped by 1.1% in September, marking the biggest monthly decrease in over five years.

Zimbabwe: Zimbabwe’s inflation soared to 37.2% in October 2024, largely due to a 40% drop in the value of its new gold-backed currency after dollar shortages worsened. These shortages, partly caused by higher food imports following a drought, widened the gap between official and black-market exchange rates.

 

Domestic Economy

Major updates during the week:

  • The IMF lowered Nigeria’s 2024 growth forecast to 2.90% from 3.30% in April, citing insecurity, flooding, food insecurity, and weaker-than-expected economic performance in the year’s first half.
  • The National Pension Commission has banned PFAs from investing in commercial papers issued by non-bank entities due to regulatory concerns and potential risks.
  • The CBN will launch a new BVN platform in December 2024, allowing Nigerians abroad to access banking services remotely.
  • The Nigerian government has banned LPG exports or mandated equivalent imports to stabilize domestic supply and pricing.

Nigerian equity market: NGX soars  as Banking and Oil &Gas stocks gain momentum

The Nigerian Stock Exchange All-Share Index (NGXASI) closed the week on a high note, surging 1.41% to reach 99,448.91 points. This positive performance was primarily driven by significant gains in the oil and gas, and banking sectors. Leading the charge were oil and gas stocks like SEPLAT (+9.25%) and OANDO (+16.43%), as well as banking stocks such as ACCESSCORP (+10.25%) and FBNH (+10.58%). While other sectors, including industrial goods, experienced modest growth, the consumer goods sector saw a slight decline.

Nigerian fixed-income market: Market demand drive rates higher

This week, the Nigerian fixed income market experienced heightened rates and bearish momentum across both auctions and secondary trading. At the Treasury Bills and Bonds auctions, the Debt Management Office (DMO) increased rates to meet bid demands. In the bond auction, N290 billion was sold, exceeding the N180 billion offered, with rates on the longest maturity rising from 19.99% to 21.74%. Similarly, Treasury Bills saw the stop rate increase to 20.65% from the previous 19.86%, with N375 billion sold despite higher bids totaling N489 billion. In the secondary market, bonds traded flat amidst mixed sentiment. Buying interest lowered yields on the 2030 and 2031 bonds, while selling pressure drove yields up 2029 and 2053 bonds. Treasury Bills closed on a bearish note at an average yield of 24.18%, while Eurobond yields edged higher by 13 basis points to 19.58% due to short-tenor sales. Next week, mixed sentiment is expected as investors digest recent economic developments.