Global Economy

U.S.A: The U.S. economy grew by 2.8% in the third quarter, according to the Commerce Department’s latest report. Consumer spending, which makes up over two-thirds of economic activity, increased by 3.5%, slightly lower than the previous estimate of 3.7%. Growth was supported by stronger inventory accumulation, business investment, and state and local government spending, despite slight declines in government outlays and exports. Gross domestic output, which averages GDP and GDI (gross domestic income), rose by 2.5%, consistent with the second quarter. Profits saw mixed results: domestic nonfinancial firms gained $30.8 billion, while international profits dropped by $38.3 billion. Overall, the economy continues to expand above the Federal Reserve’s 1.8% target for non-inflationary growth.

 

Sub-Saharan African Economies

Euro Area: Inflation in the Eurozone rose to 2.3% in November 2024, up from 2.0% in October, aligning with market expectations, according to preliminary data from Eurostat. This increase was anticipated due to base effects, as last year’s sharp drops in energy prices are no longer factored into annual comparisons. Energy costs fell 1.9%, a smaller drop compared to October’s 4.6% decline. Meanwhile, prices for non-energy industrial goods rose 0.7%, up from 0.5% in October. However, inflation eased slightly for services (3.9% vs. 4.0%) and food, alcohol, and tobacco (2.8% vs. 2.9%).Core inflation, which excludes volatile items like energy and food, held steady at 2.7%, defying forecasts of a rise to 2.8%. Month-over-month, the Consumer Price Index (CPI) dropped 0.3%, reversing a 0.3% increase in October. This data underscores varying inflation pressures across sectors, driven by both base effects and demand dynamics.

Ghana: The Bank of Ghana held its benchmark interest rate at 27% on November 29, 2024, citing concerns over persistent inflation, driven by volatile food prices. Despite inflationary pressures, economic indicators suggest stronger growth in the second half of the year, with the IMF-ECF Programme supporting macroeconomic stability.

Nigeria: Nigeria’s central bank raised its benchmark rate by 25 basis points to 27.50%, its sixth hike this year, to curb inflation and support the naira. Inflation hit a four-month high of 33.9% in October, while Q3 GDP grew 3.46% y/y, driven by the services sector (+5.19%) and a non-oil sector increase of 3.37%.

Kenya: Kenya’s annual inflation edged up to 2.8% in November 2024 from 2.7% in October, marking the first rise since August but remaining well below the central bank’s 5% target midpoint. while monthly inflation rose modestly by 0.3%, up from 0.2% in October.

Domestic Economy

Major updates during the week:

  • The MPC concluded its final 2024 meeting by raising the MPR by 25bps to 27.50%, citing rising inflation, energy and food costs, FX weakness, and external sector improvements, while maintaining other parameters unchanged
  • Nigeria’s economy showed resilience in Q3 2024, with GDP growth rising to 3.46%, driven by gains in the service sector, although agriculture and industry remain constrained by insecurity, supply disruptions,  and FX instability.
  • The Central Bank of Nigeria (CBN) issued new guidelines for interbank FX trading via the Electronic Foreign Exchange Matching System (EFEMS) to improve transparency, efficiency, and compliance with its regulations.

Nigerian equity market: Nigerian bourse ends week bearish amid sectoral selloffs

The Nigerian equity market closed the week bearish as selloffs in MTNN (-1.16%), ARADEL (-1.67%), and SEPLAT (-6.02%) outweighed gains in ZENITHBANK (+0.45%), FBNH (+3.54%), and UBA (+1.08%). Consequently, the All-Share Index declined by 0.33% to 97,506.87 points, with market capitalization shedding ₦184.73bn to ₦59.11trn. On a sectoral basis, the Insurance sector gained 1.23%, while the Oil and Gas sector led decliners, losing 1.93%. Notable losers included UNILEVER (-9.97%), ETERNA (-16.13%), and JOHN HOLT (-18.91%).

Nigerian fixed-income market: MPR and Inflation prints drive yields higher

This week, following the MPC’s decision to raise the key interest rate by 25 basis points, market participants adjusted pricing in the fixed income space. The Treasury market ended the week on a negative note, with the average yield rising by 99 basis points to 25.16% WoW, primarily driven by increased yields on short- and long-tenor instrument. Similarly, the bond market recorded a modest decline, with the average yield inching up by 6 basis points to close at 19.46%, reflecting the bearish sentiment in mid-tenor instruments. In contrast, Nigeria’s Eurobond market posted a relatively positive performance, with the average yield dropping by 4 basis points to 9.66%, supported by investor demand due to the attractive risk premium. Looking ahead, we anticipate mixed sentiment in the coming trading week as market participants reposition their portfolios.