Global Economy

USA: The Commerce Department reported that the personal consumption expenditures (PCE) price index, a key inflation measure tracked by the Federal Reserve, rose by 0.2% in September, following an unrevised 0.1% increase in August. Over the 12 months through September, the PCE price index rose by 2.1%, marking the smallest year-over-year increase since February 2021 and down from 2.3% in August. Excluding food and energy, the core PCE index rose by 0.3% for the month, up from 0.2% in August, and increased by 2.7% on an annual basis. This progress toward the Fed’s 2% inflation target supports expectations that the central bank may opt for another 25 basis-point interest rate cut at its upcoming meeting. Last month, the Fed initiated its policy easing cycle with a significant 0.5% rate reduction, the first cut in borrowing costs since 2020, to further support economic growth amid moderated inflation.

 

 

Sub-Saharan African Economies

 

 

Eurozone: The Eurozone’s GDP grew at its fastest pace in two years in the third quarter of 2024, with a quarterly expansion of 0.4%, driven by stronger-than-expected performances in Germany and France. This growth rate, reported by Eurostat’s preliminary flash estimates, exceeded economists’ forecasts of 0.2% and marked an acceleration from the 0.2% growth recorded in the previous quarter. This quarter’s growth is the most robust since Q3 2022, showcasing the resilience of the eurozone economy amid global market tensions and concerns over the upcoming U.S. elections. The euro strengthened in response to the positive data, though European stocks fell as broader market uncertainty persisted. In the broader European Union, GDP grew 0.3% quarter-on-quarter, consistent with the rate from Q2. Annually, seasonally adjusted GDP for both the euro area and the EU rose by 0.9% in the third quarter, indicating stable growth momentum across the region.

Kenya: In October 2024, Kenya’s inflation rate dropped to 2.7% from 3.6% in September, staying well below the central bank’s preferred target of 5%. This decrease was mainly due to slower price increases in food and non-alcoholic drinks, as well as housing and utilities. Transport costs even fell compared to last month. Overall, monthly consumer prices held steady with a slight increase of 0.2%, the same as in September.

Nigeria: Nigeria’s private sector contracted sharply, with the PMI falling to 46.9, the lowest since March 2023. High inflation, currency weakness, and rising fuel costs led to steep declines in orders, output, and purchasing activity, while input costs surged. Business confidence hit a record low, though companies continued modestly increasing staffing.

South Africa: South Africa’s coalition government projects a higher budget deficit of 5% of GDP for 2024/25, up from 4.5% previously, due to lower revenue. For 2025/26, the deficit is seen at 4.3%, and debt stabilizing at 75.5% of GDP. Economic growth is expected at 1.1% this year, rising to 1.7% in 2025 with improved power supply.

 

Domestic Economy

Major updates during the week:

  • President Bola Tinubu will submit Nigeria’s Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP)  to the National Assembly, initiating budget discussions.
  • Nigeria’s internet consumption declined in September 2024, marking the first drop since February, with data usage falling to 850,249.09 terabytes, a 0.82% decrease from August.
  • The Central Bank of Nigeria has been advised to avoid forex auctions and instead adopt a transparent framework for foreign exchange interventions. This recommendation, part of the World Bank’s Nigeria Development Update, aims to stabilize the naira against foreign currencies.

 

 

Nigerian equity market: Stocks decline as heavyweights drag All-Share Index down 2.03%

The Nigerian bourse ended a three-week rally, with the All-Share Index down -2.03% Week-on-Week to 97,432.02 points. Market capitalization fell by N1.22trn to N59.04trn due to selloffs in BUA CEMENT (-11.09%), ARADEL (-25.75%), CADBURY (-9.89%), MTNN (-4.89%), and FBNH (-6.09%), despite gains in GTCO (+6.35%), ZENITHBANK (+3.38%), and others. Total turnover was 2.72bn shares worth N54.63bn, with Financial Services leading activity at 1.82bn shares in 20,173 deals.

Nigerian fixed-income market: Mixed sentiment, as investors position on the long end

In the last trading week of the month, sentiment in the fixed income market was mixed. Treasury bills traded with a positive tilt, ending the week at an average yield of 24.22%, down 11 basis points from the previous week. There was increased buying interest at the longer end of the curve. Meanwhile, the bond market showed a bearish trend as average yields rose by 18 basis points to 19.49%, driven by notable selling pressure on short- and mid-term maturities. The Eurobond market also saw heightened selling pressure, resulting in a 15-basis-point increase in average yield to 9.73%, with more activity on the short end.

For the coming week, we expect sentiment to remain mixed as investors assess the potential impact of the upcoming inflation report on interest rates and monitor any shifts in the primary market auctions.