Global Economy US – Consumer Prices

In April, U.S. consumer prices rose less than expected, with the annual inflation rate easing to 3.4% from 3.5% in March, matching market forecasts. A key driver of the reduction in price pressures was shelter, which makes up nearly a third of the index’s weighting, as costs slowed to 5.5% from 5.7%. In contrast, energy costs increased slightly by 2.6%, up from 2.1% prior, and transportation costs rose faster at 11.2% compared to 10.7% in March. Core inflation slowed to 3.6% annually, the lowest since April 2021, and monthly CPI growth eased to 0.3% from 0.4%, indicating a potential move toward the Fed’s 2% target

 

 

Europe: Expansion Of The Eurozone Economy

The Eurozone economy expanded by 0.3% in the first quarter of 2024, recovering from a technical recession characterized by 0.1% contractions in the previous two quarters. This marks the strongest GDP growth since Q3 2022, with German GDP rebounding to 0.2% from -0.5%, and France and Italy both accelerating to 0.2% and 0.3%, respectively. Notably, the Spanish economy grew robustly at 0.7%. After a year of stagnation in 2023, the Eurozone appears to be on the path to recovery.

 

Sub-Saharan African Economies

South Africa: South Africa’s unemployment rate climbed to 32.9% in Q1 2024, the highest in a year, up from 32.1% in the previous quarter. The number of unemployed individuals increased significantly by 330,000, reaching 8.2 million, marking the highest figure since comparable records began in 2008.

Angola: In April 2024, Angola’s annual inflation rate surged to 28.20% from 26.09% in March, reaching the highest level since June 2017 and marking the 12th consecutive month of acceleration. This increase reflects the continued impact of a weaker kwanza and the removal of fuel subsidies in June last year.

Zambia: The Central Bank of Zambia raised its benchmark interest rate by 100 basis points to 13.5% during its meeting on May 15, 2024, the highest level since April 2017, in line with expectations. This follows a 150 basis points hike in February and marks the sixth consecutive increase in the policy rate. The central bank’s actions aim to support the local currency and mitigate inflation amidst the country’s worst drought in decades.

 

Domestic Economy

Major updates during the week:

  • Inflation data for April was released during the week with headline inflation printing at 33.69%
  • CBN intervention offers limited support as Naira continues its descent
  • FIRS collected N3.94trn in tax revenue in Q1 2024
  • Labour rejects N48,000 minimum wage proposed by FG

 

 

Nigerian Equity Market: Investor caution prevails in the local bourse

The Nigerian equity market extended its bearish run for another week, closing four out of five trading sessions in negative territory. Investor sentiment remained cautious, leading to market capitalization declining from N55.56 trillion the previous week to N55.51 trillion last week, and the year-to-date return dropped further to 31.23%. The Banking sector bore the brunt of the selling pressure, declining by 5.31% week-on-week.

 

 

Nigerian Fixed Income Market: The reign of the bulls

Last week, the DMO sold NGN380.77bn worth of bonds across three maturities, and for the first time this year, sold an additional NGN301.3bn worth of bonds to non-competitive bidders, aiming to reduce borrowing costs. The average stop rate slightly decreased to 19.64%, with the new MAR-2033 bond at 19.89%. The secondary treasury bills market closed bullish with the average yield declining to 22.17%, driven by buying interest in the short-end. In contrast, the bond market closed bearish with the average yield increasing to 18.69% as investors remained cautious ahead of the MPC meeting. Overall, the fixed income market closed bullish at 20.43%. The Eurobond market was bearish, with the average yield rising to 9.73% due to selloffs across the curve.