Global Economy
USA: The US GDP saw a slight upward revision to 1.4% growth for Q1’24, according to the Bureau of Economic Analysis’s third estimate, compared to a 3.4% growth rate in Q4’23. Consumer spending grew by just 1.5%, down from the initial 2% estimate, suggesting high interest rates are weighing on the economy. The Labor Department also reported a dip in first-time unemployment claims, which could mitigate fears of a significant labor market shift. The GDP uptick was driven by increases in consumer spending, residential and non-residential fixed investments, and state and local government spending, partially offset by a decline in private inventory investment and an increase in imports.
Europe: Britain’s economy rebounded from recession faster than initially reported in Q1’24, with GDP expanding by 0.7% quarter-on-quarter, according to the Office for National Statistics (ONS). This follows two consecutive quarters of contraction in the second half of 2023. Despite this improvement, the broader economic outlook remains fragile, particularly as the UK heads into an election where polls indicate a potential victory for the Labour Party under Keir Starmer over Prime Minister Rishi Sunak’s Conservative Party. The longer-term growth picture remains weak, with Q1 GDP only 0.3% higher than a year earlier, slightly above the initial 0.2% estimate.
Kenya: Inflation in Kenya slowed to 4.60 percent in June from 5.10 percent in May of 2024. This was mainly driven by the rise in prices of commodities under Transport (7.7%); Food and Non-Alcoholic Beverages (5.6%); and Housing, Water, Electricity, Gas, and other fuels (3.1%).
Uganda: Inflation in Uganda quickened for the second month to hit a near one-year high of 3.9% in June 2024, up from 3.6% in the prior month. The main upward pressure came from prices of education (12.1% vs 11.1% in May); health (7.9% vs 7.5%); housing & utilities (6.2% vs 5.8%); recreation & culture (5.8% vs 5.9%); miscellaneous goods & services (5.2%, the same rate as in May) and clothing & footwear (4.7% vs 4.2%).
South Africa: South Africa notched a trade surplus of ZAR 20.1 billion in May 2024, significantly higher than the downwardly revised ZAR 9.68 billion in the previous month. It was the widest trade surplus in six months, as exports soared by 5.7% over a month to a six-month peak of ZAR 178.4 billion.
Domestic Economy
Major updates during the week:
- The CBN discontinued the price verification system for foreign exchange transactions (effective from July 1, 2024).
- Nigeria’s total trade value rose 4% to $8.1bn in Jan 2024, but a 6% import jump offset gains from a 3% rise in exports, leading to a slightly lower trade surplus.
- Recent CBN circular permits eligible IMTOs to sell FX directly at the official window.
- Nigerian banks to repay $132mn in USSD debts to telecom operators after CBN intervention.
Nigerian Equity Market: Nigerian Stocks Break 100,000 Mark, Oil & Gas Fuels Market Rise
The Nigerian stock market rose modestly this week, breaking the 100,000 mark for the first time in 10 weeks. The All-Share Index gained 0.32%, adding N178bn to market capitalization. Financial services, conglomerates, and oil & gas led activity, with Seplat, Transcorp, and Ucap posting strong gains. Despite a decline in overall trading volume, the market ended positive.
Nigerian Fixed-Income Market: A bearish week
During the week at the June Bond Auction, the DMO sold N297bn across three maturities (2029s, 2031s and 2033s). Despite the recent low participation in the bond space, there was a significant uptick in stop rates to 19.64%, 20.19%, and 21.50% respectively. At the treasury bill auction, the DMO also sold N284.3bn across the regular maturities, while the stop rates for the 91 and 182 days remained the same, there was an increase in the stop rate for the 364-day instrument by 18bps to 20.68%.
On a WoW basis, the treasury bills market closed bearish with an average yield higher by 10bps to 22.07% due to selling interest on the long end as players sell their instruments to fund their auction settlements. At the bond market, it was a slightly bullish week as we observed buying interest on the 2033s and 2032s. A similar sentiment was seen in the Nigerian Eurobond space with the average yield declining by 9bps to 10.19%
