Global Economy

USA: The number of Americans filing new applications for unemployment benefits saw a slight increase last week, rising by 6,000 to a seasonally adjusted 225,000 for the week ending September 28. This uptick comes amid the disruptions caused by Hurricane Helene in the U.S. Southeast and ongoing strikes at Boeing and ports, which could skew the labor market data in the near term. According to the Labor Department’s report, the labor market is stabilizing as the third quarter concludes, potentially allowing the Federal Reserve to avoid making large interest rate cuts. Additionally, another report indicated that activity in the services sector reached its highest level in over 18 months in September, fueled by strong growth in new orders. Economists had anticipated 220,000 claims for the latest week, highlighting the ongoing complexities in the labor market landscape.

 

 

Sub-Saharan African Economies

 

U.K: Britain’s economy grew at a slower pace than previously estimated in the second quarter, with economic output expanding by 0.5% in the April-to-June period, according to the Office for National Statistics. This figure is slightly below the preliminary estimate of 0.6% growth in gross domestic product, which economists polled by Reuters had expected to be confirmed. However, there are positive signs for finance minister Rachel Reeves as she prepares for next month’s budget. Notably, the household saving ratio increased to 10.0%, up from 8.9% in the first quarter of 2024, suggesting improved household finances and encouraging business investment.

Ghana: Ghana’s inflation rate saw a notable uptick in September 2024, rising to 21.5% from 20.4% in August, marking the first increase after six months of decline. The key driver of this rise was a surge in food prices, which accelerated to 22.1% from 19.1% the previous month. In contrast, non-food inflation eased slightly to 20.9% from 21.5%. On a monthly basis, consumer prices spiked by 2.8%, reversing a 0.7% drop in the previous month. In response to improving economic conditions, including inflationary trends, the central bank reduced its policy rate by 200 basis points, bringing it down to 27%..

Kenya: Kenya’s economy grew by 4.6% in Q2 2024, down from 5% in the prior quarter, marking the slowest pace since late 2022. Protests over proposed tax hikes led to disruptions across various sectors. The agricultural sector, a key driver, expanded by 4.8%, slower than the 6.1% growth in Q1, despite increases in sugarcane, milk, and fruit production. Other sectors such as accommodation, finance, and retail also recorded slower growth. Meanwhile, construction and mining contracted by 2.9% and 2.7%, respectively.

Uganda: Uganda’s inflation rate eased to 3% in September 2024, down from 3.5% in August. Price increases slowed for key sectors like transportation, recreation, alcoholic beverages, and furnishings. Food and non-alcoholic beverage prices continued to decline, while monthly inflation held steady at 0.2%.

Domestic Economy

Major updates during the week:

  • The CBN introduced the Electronic Foreign Exchange Matching System (EFEMS) for interbank FX transactions to improve transparency and efficiency. A test run will take place in November, with a full rollout by December 1, 2024.
  • The Federal Government formalized VAT exemptions for key energy products like diesel, LPG, CNG, and electric vehicles, along with tax incentives for deep offshore oil and gas production and related infrastructure.
  • The World Bank has recently approved three new loan requests for Nigeria, amounting to a total of USD1.57bn.

 

Nigerian equity market: Nigerian equities market turns bearish, shedding 0.95% WoW

After a mixed week, the Nigerian equities market closed bearish, with the NGX All-Share Index (NGXASI) dropping by 0.95% WoW to 97,520.54 points, bringing the year-to-date (YTD) performance to 30.41%. The decline was driven by selloffs in DANGSUGAR (-12.00% WoW), DANGECEM (-10.00% WoW), and banking stocks like FIDELITYBK (-13.33% WoW) and FBNH (-11.19% WoW). Sector performance was mixed, with gains in the Oil and Gas (7.29% WoW), Insurance (3.81% WoW), and Consumer Goods (0.34% WoW) sectors.

 

 

Nigerian fixed-income market: A bearish week

Following last week’s interest rate hike, bearish sentiment dominated the market. For treasury billls, the week ended on a negative note as the average yield rose by 62 basis points to 22.68%. The selling pressure was particularly strong in instruments with more than 270 days to maturity, as yields on the 10-Jul-2025, 24-Jul-2025, and 21-Aug-2025 climbing by 155, 169, & 199 basis points, respectively, to 24.38%, 24.42%, & 24.50%. A similar negative trend was seen in the bonds market, where the average yield increased by 33 basis points to 19.08%, with mid-tenor instruments showing the largest impact, with an average yield increase of 0.47%. We anticipate this sentiment to persist into the week, albeit with a more moderate tone. In the Eurobond market, the week closed slightly negative, with the average yield rising by 6 basis points to 9.63%. This was driven by investors reassessing their positions in the Nigerian market compared to other markets. Looking ahead, we expect relatively flat trading this week as Eurobond holders continue to evaluate their positions.