Last week, US stocks extended their longest winning streak in years. Nigeria’s central bank held interest rates steady, even as inflation climbed for a second month. And the NGX, after seven weeks of gains, finally took a breather.
Here’s what went down in the markets last week.
Global Economy
US: Eight Straight Weeks of Gains
US equities closed the week higher, driven by strong AI-related sentiment and easing geopolitical concerns. The S&P 500 gained 1.8%, extending its winning streak to eight weeks. The Nasdaq rose 2.0%, while the Dow Jones advanced 1.2% to a record high. Optimism was supported by stronger-than-expected earnings from NVIDIA and signs that US-Iran negotiations may reduce the risk of further conflict.
Economic data showed resilient growth but persistent inflation pressures. The May Flash PMI held at 51.7, with manufacturing activity rising to a four-year high of 55.3. Consumer sentiment, however, fell to a record low of 44.8. A reading that low means consumers are more pessimistic about their financial situation and economic outlook than at almost any point in recent history.
In the housing sector, higher borrowing costs continued to weigh on activity. The average 30-year mortgage rate rose to 6.51%. Housing is one of the most interest rate-sensitive sectors in any economy. With mortgages this expensive, people are locked out of homeownership, and this in turn, suppresses construction activity that would otherwise create jobs and economic activity.
The 10-year Treasury yield declined to 4.56% from a mid-week peak of 4.69%. Federal Reserve meeting minutes reinforced concerns that inflation remains too high and could warrant further policy tightening. The back-and-forth in Treasury markets reflects genuine uncertainty about whether the Fed’s next move is a hike or a cut. That uncertainty is unlikely to resolve quickly.
If you are an investor with US exposure, enjoy the rally, but keep an eye on the exit. When sentiment and prices diverge this sharply, corrections tend to follow.
Japan: The Yen Weakens as Inflation Cools
The Japanese yen weakened from the JPY 158/$ range to approximately JPY 159.1/$ during the week. The driver was softer inflation data that reduced expectations of near-term monetary tightening by the Bank of Japan. Japan’s core inflation rate slowed to 1.4% year-on-year in April, down from previous levels and below both the BoJ’s 2.0% target and the 1.7% consensus forecast. This marked the third consecutive month below target.
The moderation reflected easing energy costs and the continued impact of government fuel subsidies, suggesting the weakness may be partly policy-driven rather than reflecting genuine demand weakness.
Combined with stronger global risk sentiment and the equity market rally, the weaker inflation print weighed on the yen as investors scaled back expectations for further policy normalization.
Japan is a major trading partner for many countries and a significant source of global capital flows. A weaker yen means Japanese exports get cheaper on global markets. When Japanese investors expect low domestic returns, they invest heavily abroad, which supports asset prices globally. If the BoJ eventually does raise rates, that capital could return to Japan, reducing global liquidity and putting downward pressure on emerging market assets including Nigerian stocks and bonds.
Sub-Saharan African Economies
African Eurobonds showed mixed performance as geopolitical uncertainty continued weighing on sentiment. Investors are no longer treating African sovereign debt as a single trade. Each country’s fiscal position, inflation dynamics, and policy response is being evaluated independently.
Nigeria: CBN Holds Rates as Inflation Climbs for Second Month
Nigeria’s central bank left its key interest rate steady at 26.5% on May 20th, following a 50 basis point rate hike in February. This meeting was significant for its timing. It was the first MPC gathering since the Iran conflict erupted and started driving energy prices globally. Governor Olayemi Cardoso said a cautious and vigilant stance was needed to anchor inflation expectations and safeguard macroeconomic stability.
Cautious and vigilant is central bank code for: we’re watching carefully and ready to act, but we’re not moving yet. With inflation climbing again, rate cuts are off the table for now. If you are a borrower, expect expensive loans to continue. If you are a saver, those high fixed-income yields are not going anywhere soon. For the naira, it signals the CBN prioritizes stability over stimulating growth through lower rates.
Nigeria’s headline inflation climbed for a second month to 15.7% in April, the highest since November, reversing eleven months of disinflation. All other monetary parameters remained unchanged. The asymmetric corridor stayed at plus 50/minus 450 basis points around the policy rate. The Cash Reserve Ratio remained at 45% for commercial banks and 16% for merchant banks. The liquidity ratio held at 30%.
Keeping everything unchanged creates predictability, which businesses and investors need to make decisions. But it also means the tools for managing inflation remain set to the same positions they’ve held since February, while the inflation environment has shifted.
Ghana: Rate Pause After Five Consecutive Cuts
The Bank of Ghana left its benchmark interest rate unchanged at 14% in its May 2026 meeting, pausing after five consecutive rate cuts. Policymakers said the decision reflected a cautious but supportive stance designed to anchor inflation expectations while also supporting economic activity.
Governor Johnson Asiama explicitly cited the Middle East conflict as having stoked inflationary concerns and underlined policy uncertainty with potential implications for the domestic economy.
Ghana’s annual inflation rate ticked up to a three-month high of 3.4% in April from 3.2% in March, but remained subdued overall. At 3.4%, Ghana still has the luxury of low inflation compared to most African economies. But the direction is moving upward, and the central bank clearly prefers to pause and assess before cutting further. For investors in Ghanaian bonds or equities, this means stability for now, but watch for any further inflation surprises.
Domestic Economy
Major Updates During the Week
1. CBN Holds Rates at 26.5%
The Central Bank’s Monetary Policy Committee held the benchmark interest rate at 26.5% at its May meeting. This was the first MPC gathering since the Iran conflict erupted, and the decision to hold reflects caution in the face of renewed inflationary pressure.
2. World Bank Plans $23 Billion for Africa
The World Bank Group unveiled a financial plan to mobilize about $23 billion in private capital for Africa through a massive scaling up of its risk mitigation instruments over the next four years. Risk mitigation instruments are tools that make investing in Africa less risky for private capital. They include guarantees that protect investors if projects fail, insurance against political risks, and partial risk coverage that absorbs losses up to certain limits.
This is significant for Nigeria’s infrastructure and development financing needs. If executed well, it could unlock projects that have been stalled due to funding gaps. The four-year timeline is realistic for deploying this scale of capital. Whether Nigeria is positioned to attract a meaningful share depends on governance quality, project preparation, and how well the country competes against other African markets for that capital.
3. Tax Revenue Misses Target by ₦2.24 Trillion
Nigeria’s Q1 2026 tax revenue collection missed its target by ₦2.24 trillion. Weaker Companies Income Tax and petroleum royalties offset resilient VAT and PPT collections. This raises concerns over budget implementation and fiscal pressures despite ongoing revenue reforms. For investors, this could translate into higher borrowing, more pressure on the naira, or delayed project execution. Watch the Q2 numbers closely.
Equity Market: Seven-Week Rally Ends
The Nigerian stock market closed the week on a bearish note as investors engaged in profit-taking following a seven-week rally. The NGX All-Share Index declined 0.25% to 249,712.37 points. Market capitalization fell 0.23% to ₦160.08 trillion. After seven consecutive weeks of gains that pushed year-to-date returns above 60%, some selling was inevitable.
Selling pressure was largely concentrated in industrial goods, consumer goods, and insurance sectors. These were sectors that led gains during the rally. Market sentiment also remained cautious ahead of the T+1 settlement cycle implementation scheduled for June 1st. Investors anticipating operational changes from the new settlement system may have reduced positions to avoid complications during the transition period.
Despite the weak performance, 38 equities advanced during the previous week, led by gains in OANDO, SKYAVN, REDSTAREX, STANBIC, TRANSCORP, ZENITHBANK, and UBA. Fifty-five stocks declined, including CAP, BERGER, NASCON, DANGSUGAR, ACCESSCORP, GTCO, and SEPLAT.
Sectoral performance was mixed, with only two of the five major sectors closing positive. Banking stocks that were crushed in early May continued recovering. Only two of five major sectors closed positive, with banking leading at 1.11% for the week.
Fixed Income Market: Bonds Weaken as MPC Holds
Trading activity this week was shaped by a confluence of events, including the Monetary Policy Committee meeting, the NTB auction, and the bonds auction.
System liquidity was largely positive, exceeding ₦5 trillion. The CBN MPC held interest rates and all other parameters steady at the May meeting.
In the fixed income market, activity traded range-bound following the release of the auction results. The bonds market continued its bearish sentiment, with the average yield rising by 12 basis points, driven by selling interest on the mid to long tenor of the curve.
Treasury bills closed slightly bearish, driven by slight selling activities on the short-dated instruments. The movement was modest compared to bonds. Short-tenor yields rose just 4 basis points while long-tenor yields fell 1 basis point. The relative stability in bills compared to bonds continues a pattern where investors are more comfortable with short-term government paper than committing to longer maturities.
In the Eurobond market, Nigerian sovereign papers closed slightly bearish, driven by the mixed impact of geopolitical conflicts on the Nigerian economy. The absence of clear directional movement suggests investors are genuinely uncertain about how Middle East developments will affect Nigeria’s fiscal position, oil revenues, and credit profile.
The Bottom Line
Last week was a study in contrasts. For the average investor, the lesson is that momentum can carry markets further than fundamentals suggest, but it rarely lasts forever. The US rally, the NGX climb, and the fixed-income yield environment have all been driven by specific conditions that are starting to shift. Consumer sentiment is cratering. Inflation is climbing. Settlement rules are changing.
