Momentum doesn’t last forever in financial markets. Whether it’s a stock market rally, an inflation trend, or a policy cycle, every extended move eventually encounters resistance and either pauses or reverses. This week reminded investors of that reality across multiple markets as both natural profit-taking and deliberate policy shifts brought several extended trends to inflection points.
The interesting dynamic wasn’t simply that things changed, but rather how different economies at different stages of their cycles responded to their own specific circumstances. The US continued grappling with persistent inflation concerns even as growth slowed. China attempted to stimulate consumption while simultaneously managing unwanted currency appreciation. Kenya benefited from steadily cooling price pressures that gave its central bank increased policy flexibility. Nigeria began easing monetary policy after more than a year of aggressive tightening successfully brought inflation under control.
Here’s how it all played out.
Global Economy
US: Strong Earnings Can’t Overcome AI Worries
US equities ended the week mixed as investors continued grappling with concerns about artificial intelligence disruption and ongoing trade uncertainty, even as sentiment briefly improved following a Supreme Court ruling on tariffs. The Dow Jones Industrial Average led decliners, falling 1.31%. The S&P 500 proved relatively resilient but still slipped 0.44%. Markets began the week sharply lower after a widely circulated research report intensified fears about AI-driven disruption across industries.
Sentiment briefly improved ahead of NVIDIA’s earnings announcement. When the chipmaker reported strong results, investors hoped it might reverse the risk-off tone, but it didn’t. The stock rallied initially, but couldn’t lift the broader market. When even stellar earnings from the AI sector’s most important company fail to change the mood, it tells you investor concerns run deeper than quarterly results.
Inflation data added to the caution. Producer price inflation accelerated in January with headline PPI rising 0.5% month-over-month, above expectations. The increase was driven largely by a 0.8% jump in services prices. Annual PPI came in at 2.9%. Services inflation proves stickier than goods inflation, and when producer prices are accelerating, it raises questions about whether consumer inflation will follow.
Factory activity softened as new orders for manufactured goods declined 0.7% in December, weighed down by a sharp drop in commercial aircraft bookings. Consumer confidence showed modest improvement in February, edging up to 91.2, though it remained well below its late-2024 peak.
The labour market remained relatively steady, with initial jobless claims ticking up slightly to 212,000 while continuing claims declined to 1.833 million. Employment continues to show resilience even as other parts of the economy exhibit signs of stress, creating a paradox for policymakers. A strong labour market is positive for workers and household income, but it also reduces the Federal Reserve’s urgency to cut interest rates since persistent employment strength can keep inflationary pressures alive.
China: Post-Holiday Optimism Meets Reality
Mainland Chinese equities advanced in a shortened trading week as investor sentiment improved following the Lunar New Year holiday. The CSI 300 Index gained 1.08%, the Shanghai Composite rose 1.98%, and Hong Kong’s Hang Seng Index added 0.82%. Markets were looking ahead to the upcoming Two Sessions meetings where key economic targets are typically announced.
However, holiday spending data showed mixed signals for consumption. Total tourism spending climbed to 803.5 billion yuan with 596 million domestic trips recorded. That sounds impressive until you look at per-trip spending, which edged slightly lower, raising questions about the strength of consumer demand. When more people are traveling but spending less per trip, it suggests households are being careful with their money despite government efforts to boost consumption.
On the policy front, Shanghai eased homebuying restrictions, shortening the social security requirement for non-residents and allowing qualified buyers to purchase a second home. The move is part of ongoing efforts to support the property market, which remains a significant drag on economic growth.
Meanwhile, the People’s Bank of China cut the foreign exchange risk reserve ratio to zero, signaling efforts to maintain currency stability after the renminbi reached a near three-year high against the US dollar. A stronger currency helps with inflation control but hurts exporters. The central bank is trying to prevent the yuan from rising too fast while also maintaining market confidence.
Sub-Saharan African Economies
Eurobond yields across major Sub-Saharan economies showed mixed movements week-on-week:
Nigeria: Economic Growth Picks Up Slightly
Nigeria’s economy grew 4.07% year-over-year in Q4 2025, up slightly from a 3.98% expansion in Q3. The oil sector advanced 6.79%, accelerating from 5.84% in the previous quarter. Average daily crude oil production reached 1.58 million barrels per day in Q4, up from 1.54 million barrels per day in the same period last year, though down from 1.64 million barrels per day in Q3.
The non-oil sector rose 3.99%, up from 3.91% in Q3. The expansion was broad-based. Agriculture grew by 4%. Information and communication expanded by 7.55%. Real estate added 3.43%. Finance and insurance jumped 8.30%. Trade increased by 2%. Construction rose 5.08%. Even manufacturing managed 1.13% growth despite ongoing challenges.
For the full year 2025, Nigeria’s economic growth reached 3.9%, above the 3.4% achieved the previous year. The improvement reflects better oil production, reduced inflation, and currency stability compared to 2024. But Nigeria still needs significantly faster growth to absorb its young, rapidly expanding workforce. The direction is right even if the pace remains inadequate for the scale of the challenge.
Kenya: Inflation On a Steady Decline
Kenya’s inflation rate cooled further to 4.3% in February 2026, the lowest since July last year, down from 4.4% the prior month. Price growth moderated primarily for key consumer price index components like transportation, which fell to 4% from 4.8% in January, and housing, water, electricity, gas and other fuels, which declined to 1.8% from 2.2%.
Food inflation remained stable at 7.3% despite a tighter supply of staples. On a monthly basis, the consumer price index rose just 0.2%, slowing substantially from a 0.6% increase in the previous month. This level of price stability provides the central bank with meaningful flexibility to shift its focus from inflation containment toward growth support. Kenya’s improving inflation dynamics have opened policy space that didn’t exist a year ago, allowing policymakers to prioritize economic expansion without the immediate risk of rekindling price pressures.
Domestic Economy
Major Updates During the Week
1. Central Bank Cuts Rates for First Time in Over a Year
Nigeria’s Monetary Policy Committee cut its benchmark rate by 50 basis points to 26.5% while leaving other parameters unchanged. This marks the first rate reduction since the Central Bank began its aggressive tightening cycle to fight inflation. The decision signals that policymakers believe inflation has declined enough to start easing borrowing costs without risking a resurgence in prices.
The context for this move matters. Inflation has fallen for ten consecutive months, dropping to 15.10% in January from highs above 30% in 2024. The naira has stabilized and foreign reserves are improving. When you add it all up, the committee saw enough evidence to justify making borrowing marginally cheaper.
But perspectives are important here. A benchmark rate of 26.5% is still extraordinarily high by global standards. This isn’t a pivot to easy money. It’s a recognition that the previous rate of 27% was doing its job and could be brought down incrementally without undermining price stability. For businesses and consumers, the cut means slightly cheaper loans. While for equity investors, it’s another signal that the macro environment continues to improve.
2. GDP Data Shows Broad-Based Expansion
The National Bureau of Statistics reported that Nigeria’s economy grew 4.07% year-over-year in Q4 2025, compared to 3.76% year-over-year in Q4 2024. The acceleration was driven by both oil and non-oil sectors, with particularly strong performances in information and communication, finance and insurance, and construction.
3. Revenue Targets Raise Tax Concerns
Nigeria’s National Revenue Service is targeting ₦40.7 trillion in revenue for 2026, banking on stronger non-oil collections and new oil royalty flows. The ambitious target reflects government confidence in economic growth and improved tax administration. However, if collections underperform expectations, the pressure to introduce additional taxes or raise existing rates will intensify. New taxes could pose upside inflation risks, particularly if they target consumer goods or energy products that feed directly into the consumer price index.
Equity Market: Profit-Taking Ends the Bull Run
Bears returned to the Nigerian equities market this week, ending a three-week winning streak as investors locked in gains across heavyweight counters. The NGX All-Share Index declined 1.11% for the week to close at 192,826.78 points. Market capitalization fell 1.12% to ₦123.76 trillion. After climbing over 25% year-to-date in just six weeks, some profit-taking was inevitable and healthy.
Losses were pronounced in consumer goods, industrial goods, insurance, and oil and gas sectors following a regulatory warning against speculative trading. During the week, trading in ZICHIS was suspended effective February 23rd, pending the outcome of an exchange review into recent activity. When regulators step in like this, it tends to cool speculative enthusiasm across the broader market.
Market breadth was weak with just 32 gainers versus 69 losers. Notable advances in OKOMUOIL and select banking names provided limited support but weren’t enough to offset broader selling pressure. On a sectoral basis, performance was broadly negative with banking the lone gainer, rising 0.71% for the week. The fact that financial stocks held up while everything else declined suggests institutional investors still see value in the sector even as they take profits elsewhere.
Fixed Income Market: Bond Yields Plunge Ahead of Rate Cut
At the February 2026 bond auction, the Debt Management Office offered ₦800 billion via the reopening of the JUN-32, MAY-33, and FEB-34 bonds. Total subscriptions rose to ₦2.69 trillion, up from ₦2.5 trillion in January, but allotment declined to ₦524.27 billion from ₦1.5 trillion previously. The DMO is being selective about how much debt it accepts even when demand is exceptionally strong.
Stop rates eased across all tenors. JUN-32 and MAY-33 cleared at 15.74%, while FEB-34 came in at 15.50%. These rates reflect strong demand and tighter market conditions. When stop rates fall, it means the government can borrow more cheaply, reducing debt servicing costs over time.
The bullish sentiment extended into the secondary market where yields declined across different instruments:
- Treasury bill yields declined 25 basis points to 17.20%, driven by buying on short and mid-tenor instruments.
- Government bonds fell 48 basis points to 15.54%, with particularly strong demand at the long end of the curve.
- Nigeria’s Eurobonds moved in the opposite direction, closing on a bearish note with yields up 9 basis points to 6.98%.
The divergence between local currency instruments rallying and dollar bonds selling off suggests domestic investors are more confident about the macro story than foreign investors are currently. That gap in sentiment is worth monitoring.
The Bottom Line
This week showed how different economies at different stages of their cycles respond to their own specific challenges.
Central banks operate with imperfect information and delayed effects. The decisions they make today reflect conditions from months ago, and the full impact of those decisions won’t materialize for months to come. This inherent lag creates opportunities for economies that get the sequencing right, and problems for those that move too slowly or too aggressively. The divergence in policy paths across major economies this week reflects exactly that dynamic playing out in real time.
What separates economies that successfully navigate policy transitions from those that stumble is the durability of the improvements that justify those transitions.
The trajectory established over the coming months will determine whether this week’s developments marked the beginning of a sustainable easing cycle or merely temporary pauses before the next adjustment becomes necessary.
