Global Economy

U.S.A: The Federal Reserve announced a 25-basis-point cut in the federal funds rate following its policy meeting on Thursday, marking its first easing move since a 50-basis-point reduction in mid-September. Market participants had speculated that Fed Chair Jerome Powell might address the potential impact of the future president’s fiscal policy on monetary policy. However, Powell firmly stated that any such changes would be assessed when announced, emphasizing, “We don’t guess, we don’t speculate, and we don’t assume.” When further questioned, Powell also confirmed that he would not resign if asked by the president.

 

 

Sub-Saharan African Economies

 

U.K: The Bank of England reduced its Bank Rate by 25 basis points to 4.75%, marking the second rate cut in four years. This decision aligns with evidence of slowing price growth in the UK economy, as September’s inflation rate fell to 1.7%, the lowest in over three years. The Monetary Policy Committee (MPC) voted 8-1 in favor of the cut, with Catherine Mann opting to maintain the rate. The MPC’s cautious approach reflects ongoing concerns about domestic inflationary pressures, despite the overall decline in inflation.

Egypt: Egypt’s private sector continued to contract in October 2024, though slightly less than in September. Weak demand, especially in construction, led to declines in output and new orders. However, job creation reached its fastest pace since May, and inventories rose as firms stocked up amid cost concerns. Input cost inflation eased, but high currency and material costs kept selling prices elevated.

Ghana: Ghana’s economic data reveals inflation at a four-month high of 22.1%, driven by cedi depreciation and sharp rises in food prices. This inflationary pressure is impacting the private sector, where high input costs have led businesses to raise selling prices. Despite these challenges, the private sector shows mild expansion, with growth in output, new orders, and employment, though business sentiment is tempered. The data suggests resilience in economic activity, even as inflationary pressures strain both consumers and businesses.

Uganda: Uganda’s inflation rate eased to 2.9%, with notable declines in food prices, while the private sector continues to expand, though cost inflation remains a concern. Despite the challenges, business sentiment remains optimistic, supported by ongoing demand and future growth prospects.

 

Domestic Economy

Major updates during the week:

  • The October Stanbic IBTC Bank manufacturing PMI fell to 46.9, signalling a deterioration in Nigeria’s private sector activities due to  macroeconomic headwinds, which dampen investor confidence and short-term growth.
  • Nigeria’s electricity distribution companies have once again raised the prices of various meter models, marking the second price hike in four months.
  • The Central Bank of Nigeria  has granted commercial, merchant, and non-interest banks the authority to trade with foreign currencies deposited under the newly implemented foreign exchange deposit window. This move aims to stimulate liquidity within the foreign exchange market.

 

 

Nigerian equity market: Local bourse dips for the second consecutive week

The Nigerian stock market continued its downward trend for the second consecutive week, primarily due to significant sell-offs in heavyweight stocks. The All-Share Index declined by 0.20%, closing at 97,236.19 points. This resulted in a N118.40 billion loss for investors, reducing the market capitalization to N58.92 trillion. While stocks like OANDO, NASCON, and ETERNAL experienced significant declines, buying interest in ARADEL, CONOIL, ACCESS, and PZ CUSSON partially offset the negative impact. The Oil and Gas sector led the sectoral gainers with a 5.43% increase, followed by the Banking sector at 2.81%.

Nigerian fixed-income market: DMO hits a new peak of 23.00% for 1-year maturity at PMA.

Trading activity strengthened across Nigerian fixed income instruments this week, driven by broad-based buying interest. At the treasury bills auction, the DMO issued N626bn (vs. N513bn offered), with stop rates rising across all maturities—the 1-year reaching 23.00% from 20.65% prior. In the secondary market, buying interest prevailed despite tight liquidity, lowering the average yield by 34bps to 23.89%. Similarly, bond yields fell by 8bps to 19.41% as investors favored short-term bonds. In the Eurobond market, robust international demand saw yields increase by 41bps to 9.31%. Next week, we anticipate mixed sentiment as investors assess the impact of the upcoming inflation report on security prices.