Global Economy

U.S.A: The annual inflation rate in the US rose for a 2nd consecutive month to 2.7% in November 2024 from 2.6% in October, in line with expectations. The rise is partly influenced by low base effects from last year. Energy costs declined less (-3.2% vs -4.9% in October), mainly due to gasoline (-8.1% vs -12.2%) and fuel oil (-19.5% vs -20.8%) while natural gas prices rose 1.8%, compared to 2%. Also, inflation accelerated for food and prices fell much less for new vehicles (-0.7% vs -1.3%). On the other hand, inflation slowed for shelter (4.7% vs 4.9%) and transportation (7.1% vs 8.2%) and prices continued to decline for used cars and trucks. On a monthly basis, the CPI rose by 0.3%, the most since April, slightly above October’s 0.2%, and also matching forecasts. The core CPI rose 3.3% on the year and 0.3% on the month, the same as in October and in line with forecasts..

Sub-Saharan African Economies

Euro Area: The European Central Bank (ECB) has decided to cut its key interest rates for the fourth time this year by 25 bps in December 2024, as expected. This move reflects a more favourable inflation outlook and improvements in monetary policy transmission. Inflation is expected to gradually decrease, with forecasts of 2.4% in 2024, 2.1% in 2025, and 1.9% in 2026. Core inflation, excluding energy and food, is also expected to fall, with a target of 2% in the medium term. Despite easing financing conditions due to the rate cuts, borrowing costs remain tight due to previous hikes still affecting existing loans. Economic recovery is projected to be slower than before, with growth expected at 0.7% in 2024, 1.1% in 2025, and 1.4% in 2026. The ECB remains focused on ensuring inflation returns to its 2% target and will adjust its policies based on incoming data, without committing to a fixed rate path.

 

Egypt: Egypt’s inflation rate eased to 25.5% in November 2024 from 26.5% in October, falling below market expectations of 26.4%. This marks the lowest rate since December 2022, driven by cooling food prices and a favourable base effect, despite rising fuel costs. Monthly inflation slowed to 0.5%, but the central bank is expected to keep its 27.25% interest rate unchanged at the December 26 meeting.

Ghana: Ghana’s economy expanded by 7.2% y/y in Q3 2024, the fastest pace since Q2 2019, up from 6.9% in the previous quarter. Growth was driven by strong performances in the industrial (+10.4%) and services (+6.4%) sectors, while the agricultural sector grew by 3.2%.

South Africa: South Africa’s annual inflation edged up to 2.9% in November 2024 from 2.8%, marking the first increase after five months of easing, though it remains well below the South African Reserve Bank’s preferred midpoint target of 4.5%. Core inflation eased to 3.7% while monthly consumer prices remained flat.

Domestic Economy

Major updates during the week:

  • Nigeria’s Q3 2024 foreign trade data reveals a trade surplus of ₦5.81trn, down from ₦6.95trn in Q2, with oil exports dominating at 82.5% of total exports (₦13.41trn), highlighting the need to diversify non-oil exports.
  • Nigeria’s November 2024 composite PMI declined to 48.90 from 49.6 in October, reflecting weaker activity across sectors amid rising energy costs, inflationary pressures, and exchange rate depreciation, with GDP growth projected to slow below Q3’s 3.46% despite remaining above 3%.
  • Nigeria has issued ₦1.1trn in sovereign Sukuk to fund 124 federal road projects, with growing adoption by sub-nationals and corporates

Nigerian equity market: Nigerian stock market gains ₦707.61bn in bullish week

The Nigerian bourse ended the week on a bullish note, fueled by strong buying interests in heavyweights such as ARADEL, CONOIL, and MTN. The All-Share Index climbed by +1.19% to close at 98,760.59 points, up from 98,210.75 points the previous week, while market capitalization rose by ₦707.61bn to ₦60.24trn. Gains in ARADEL (+18.28%), CONOIL (+33.52%), AFRIPUD (+59.75%), NNFM (+15.25%), and PZ (+13.64%) . On a sectoral level, four of the five major indices recorded gains, with the Oil and Gas index leading the charge at +7.61%, while the Industrial Goods sector ended the week in losses.

Nigerian fixed-income market: The bears dominate the bond market.

At this week’s treasury bills auction, the DMO issued nearly twice the amount on offer (₦275 billion) despite receiving total bids of ₦908 billion. As a result, the stop rate for the 364-day maturity declined further to 29.53% from 29.75%. In the secondary market, treasury bills experienced mixed sentiment, with the average yield falling by 2 basis points WoW despite notable selling pressure on short- and mid-tenor maturities. In contrast, the bond market closed the week on a negative note, as the average yield rose by 4 basis points to 19.53%, driven by mild selling pressure across the curve. The Eurobond market also remained bearish, with the average yield increasing by 18 basis points to 9.36%, reflecting shifting investor sentiment toward the Nigerian economy.