Global Economy

USA: Retail sales in May rose a meager 0.1% MoM, missing forecasts and revising April’s decline further downward. This indicates cooling consumer sentiment but might be partially inflated by lower gas prices which fell by 2.2%MoM. Despite the slowdown, with inflation and rising interest rates putting a strain on wallets, consumers seem to be prioritizing essentials and reducing discretionary spending. This tepid performance reinforces some economists’ belief that the Fed might still consider an interest rate cut in September, even though central bank officials themselves recently pushed back expectations to December.

 

Sub-Saharan African Economies

 

Europe: Inflation in the UK has hit the 2% target for the first time in three years. This milestone marks a significant point for the economy following a severe inflationary surge. The Office for National Statistics reported data that matched forecasts, indicating that the UK’s headline inflation is now below that of the US and the Eurozone. Higher-than-expected rises in service prices caused investors to reduce bets on interest rate cuts, leading to increases in both sterling and bond yields.

Rwanda:  Rwanda’s economic growth slowed a bit in Q1 2024 (9.7%) compared to Q4 2023 (10%). Still strong, the growth was driven by services (up 11%) like trade, transport, and communication. While industry (up 10%) and agriculture (up 10%) also grew, the GDP shrank slightly (-0.8%) compared to the last quarter.

Ghana: Ghana’s economy is on the rise. It grew by a robust 4.7% in Q1 2024, the strongest performance since late 2021. This surge is driven by a booming industrial sector (up 6.8%) but tempered by a slowdown in agriculture (4.1%) and services (3.3%). Looking ahead, Ghana’s economic outlook remains positive.

Namibia: Namibia’s recent oil discoveries have made it a hot spot for exploration. While no oil or gas is produced yet, major companies are involved. Production is expected around 2030 with reserves estimated at 2.6 billion barrels.

 

Domestic Economy

Major updates during the week:

  • Nigeria’s annual inflation hits 28-year high with inflation printing at 33.95%  in May 2024.
  • Foreign Exchange depreciation bloats Nigeria’s External Debt stock by NGN17.8trn, causing the total debt stock to surge by NGN24.33trn to NGN121.67trn.
  • Fidelity Bank Plc  opened its N127.10bn rights issue and public offer, in a bid implement its  recapitalisation plan.

 

Nigerian Equity Market: Nigerian equity market drops N103bn as profit taking cancels gains

In the three-day trading week, Nigerian investors saw a N103.31bn loss as the market capitalization dipped to N56.42trn. The All-Share Index dipped to 99,743.05 points and the bearish sentiment this week moved the YtD down to 33.39%. Financial Services and Conglomerates led activity, but losses in major players outweighed gains. Profit taking in banking and insurance countered bargain hunting in other sectors.

 

Nigerian Fixed Income Market: A dominance of the bulls

On the back of a long system liquidity during the week, the Nigerian Secondary treasury bills market closed the week bullish, as the average yield declined by 85bps WoW to 21.06%. This follows net buying interest on the across the curve.

On the other hand, the bond market remained relatively quiet with the average yield advancing by 1bps, as investor continue to take positions in treasury bill instruments. We noticed a mild selloff on the short end of the curve. In all, the Nigerian Fixed Income market closed the week bullish, declining by 42bps to 19.91%.

It was a bearish week for Nigerian Eurobond Instruments as the average yield advanced by 26bps WoW. We noticed selling interest across the curve as investors price in the recent debt stock data released.

Next week, we expect the bond and bills market to be relatively quiet due to the scheduled auctions.