In the global space,
It was a rough first week for equities, as bond yields rose on both high expectations for central bank interest rate hikes and the view that the omicron variant of Covid is heading for a peak in a matter of weeks. Bond yields move higher when investors sell bonds. Technology stocks were particularly hit hard, considering the relationship of their future earnings with interest rates. Banking stocks, however, performed better as investors priced in better earnings with a rising yield environment. Major market indexes, thus, closed in red at the end of the trading week.
The bonds market set investing activities for the week, after rapidly rising interest rates saw the yield on the 10-year Treasury Note, which influences mortgages and other loans, rise from 1.15%, in the previous week, to 1.80% at the close of trades this week. The central bank had already forecasted a tightening policy with at least three interest rate increases this year, and normalizing its bond holdings would tighten it even further.
After a rough start to the year, stocks could face more pressure from the bond market in the week ahead as the central bank Chairman, Jerome Powell, speaks before a Senate panel. Inflation data is also expected to be released in the week ahead, which could help push bond yields higher. Bond yield moves in the opposite direction to bond price.
On the domestic front,
The Nigerian equities market kicked off the year on a positive note. The All-Share Index advanced by 2.66% this week to close at 43,854.42pts, printing a year-to-date return of 2.66%. across sectors, performance was mixed, with the Oil and Gas, Banking and Industrial good sector closing the week in positive territory. On the flip side, it was a rough start for the Consumer goods sector and Insurance sector as they remained in negative territory at the close of trades this week.
On the macroeconomic scene, Capital Importation data was released by the National Bureau of Statistics (NBS). Capital importation increased by 18.47% year on year to USD1.73bn, with Foreign Portfolio Investment accounting for 70.30% of inflows, Foreign Direct Investment representing 6.23% of inflow, and other investments making up the balance of 23.47%.
At the fixed income market, while average bond yield remained flat this week at 10.66%, the average yield on treasury bills inched higher to 4.07% from 4.02% at the close of trades this week.