Last week, US stocks hit record highs on hopes of peace in the Middle East. Nigeria’s economy posted its strongest first quarter growth in a decade. And Kenya’s inflation surged to its highest level in over two years, driven by fuel price hikes.
Here are the updates from last week.
Global Economy
US: Peace Hopes Drives Market Higher
US equities ended a holiday-shortened week higher, with several major indices reaching record highs. The rally was driven by optimism around a potential US-Iran peace agreement, lower oil prices, and continued strength in AI-related stocks. The Nasdaq led gains. The S&P 500, Russell 2000, and S&P MidCap 400 all advanced. The Dow Jones rose 0.9%.
But economic data presented a mixed picture. The Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditures index, rose to 3.8% annually. Core PCE, which strips out food and energy, came in at 3.3%. Both numbers are significantly above the Fed’s 2% target. PCE matters because it measures what people actually spend, weighted by how much they spend on each category. The Fed trusts it more than CPI for assessing underlying inflation trends. At the current rate, there’s no near-term case for rate cuts regardless of what equity markets want to believe.
First quarter GDP growth was revised down to 1.6%, reflecting weaker consumer spending and investment. When consumer spending weakens, it reduces company revenues, which eventually pressures hiring and investment. Durable goods orders, however, surged 7.9% in April, supported by strong demand for transportation equipment. Durable goods orders are a leading indicator because they reflect business confidence about what’s coming rather than what already happened. The surge offers some reassurance that Q1 weakness may not persist into Q2.
Overall, resilient economic activity and optimism around technology stocks continued to underpin market performance. For Nigerian investors with US exposure, the rally is real, but the foundation is shakier than the headlines suggest. Consider whether your portfolio is positioned for a potential pullback, not just more gains.
Japan: Peace Agreement Hopes Boost Asia’s Biggest Energy Importer
Japanese equities recorded strong gains during the week, with the Nikkei 225 rising 4.72% and the TOPIX advancing 1.66%. The prospect of a US-Iran agreement was particularly positive for Japan given its reliance on energy imports. Japan imports almost all the oil it uses. The prospect of reduced Middle East tensions was particularly positive for Japan, given its reliance on energy imports.
Easing supply chain concerns further boosted semiconductor and electronics shares, which are core to Japan’s export economy. When global shipping becomes more predictable, manufacturers can plan production schedules reliably, source components without paying crisis premiums, and deliver products on time. That operational predictability translates directly into improved margins and earnings.
Tokyo core inflation slowed to 1.3% in May, marking a sixth consecutive month of deceleration. This is the sixth straight miss on the Bank of Japan’s 2% inflation target. That adds uncertainty to the Bank of Japan’s rate hike outlook. Softer inflation data pushed the 10-year Japanese government bond yield down to 2.66% from 2.76% the prior week, reflecting markets reducing expectations for near-term BoJ tightening.
The yen remained broadly stable against the US dollar as lower geopolitical risks were offset by persistent interest rate differentials between Japan and the United States.
Sub-Saharan African Economies
Eurobond markets had a mixed week, with several countries seeing yields rise.
Kenya: Government Fuel Hikes Push Inflation to 16-Month High
Kenya’s annual inflation rate quickened to 6.7% in May 2026, the highest since January 2024, from 5.6% the prior month. The acceleration was driven primarily by transportation prices, which surged to 16.5% from 10% in April. The government hiked fuel prices in both April and May in the wake of rising global energy costs from the US-Israel conflict with Iran.
Food and non-alcoholic beverages inflation accelerated to 9.4% from 8.8%, partly reflecting higher transportation costs reaching grocery shelves. Housing, water, electricity, gas, and other fuels rose to 3.4% from 2.4%.
The Kenyan government faces a difficult balance. Fuel subsidies shield consumers from global energy price spikes but are expensive and fiscally unsustainable. Removing them protects the budget but exposes households directly to global market volatility. Kenya’s approach of hiking prices in April and May rather than all at once attempts to spread the adjustment, but two consecutive monthly increases have pushed inflation to a level that will pressure the central bank to respond.
Nigeria: GDP Grows at its Fastest Since 2015
Nigeria’s economy expanded 3.89% year-over-year in Q1 2026, moderating slightly from 4.07% in Q4 2025 but marking the strongest first quarter performance since 2015. That comparison matters. 2015 was a challenging year for Nigeria as oil prices were collapsing. Outperforming any Q1 since then reflects genuine progress in building economic activity that doesn’t depend entirely on commodity price cycles.
The non-oil sector rose 3.94%, maintaining a robust pace that’s driving most of the growth. Services led at 4.31%. Industry grew 3.50%. Agriculture expanded 3.15%. Within services, the strongest gains were recorded in information and communications technology, which grew 10.98%. Financial and insurance services grew 8.54%. Transportation and storage rose 7.41%. When ICT and financial services are growing at double-digit rates, it signals that parts of the Nigerian economy are genuinely modernizing. These sectors create jobs, generate tax revenue, and build productive capacity that doesn’t require oil prices to cooperate.
Manufacturing also contributed positively at 3.29%, a meaningful acceleration from 1.13% in Q4 2025. Two sub-sectors deserve specific attention. Oil refining surged 37.46%. Cement production jumped 11.53%. The oil refining surge almost certainly reflects Dangote Refinery coming online and beginning operations.
The oil sector told a different story. Oil GDP growth collapsed to 2.57% from 6.79% in Q4 2025. Daily crude oil production averaged 1.55 million barrels per day, below 1.62 million bpd in the same period last year and 1.58 million bpd in Q4 2025. The report attributes the decline to aged facilities and oil theft. These are not new problems. They’re persistent structural failures that have been reducing Nigeria’s oil output for years.
Domestic Economy
Major Updates During the Week
1. Nigeria’s GDP: Strongest Q1 Since 2015
Nigeria’s real GDP grew 3.89% in Q1 2026 from 3.13% in Q1 2025, marking its strongest first quarter performance since 2015. The non-oil sector drove the expansion, with growth expected to remain broadly stable on adequate liquidity.
2. T+1 Settlement Is Here: What Changes From June 1
Nigeria’s capital market transitioned to a T+1 settlement cycle from June 1, 2026. Under the previous system, when you sold shares, you waited two business days before receiving your proceeds. When you bought shares, you waited two business days before the shares appeared in your account. Under T+1, both happen in one business day instead of two.
The practical implications are real. Faster access to sale proceeds means you can redeploy capital more quickly. For active investors who move between positions regularly, that one day reduction in settlement time compounds over many trades. It’s also less risky. The longer the gap between agreeing to a trade and settling it, the more can go wrong. Counterparties can face liquidity problems. Market conditions can change dramatically. One day of exposure is categorically safer than two.
For international investors, T+1 brings Nigeria into alignment with settlement standards in major global markets. T+1 removes one more friction point that previously made Nigeria harder to include in global portfolios. The timing, coming ahead of Nigeria’s FTSE frontier market reclassification in September, is deliberate. The market is preparing its infrastructure to handle the additional capital flows that reclassification should bring.
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: Modest Close Ahead of Settlement Transition
The Nigerian equities market closed higher during a shortened trading week, with the NGX All-Share Index gaining 0.27% to 250,385.47 points. Market capitalization rose to ₦160.08 trillion. The modest gain came despite negative market breadth, with 51 stocks declining against 34 gainers.
The Oil and Gas sector outperformed with a 2.53% weekly gain. This makes sense given global optimism around a potential US-Iran agreement and the prospect of stabilized energy markets. Oil and gas stocks are direct beneficiaries of favorable energy sector news, whether through higher commodity prices or improved operational conditions. Dangote Sugar commenced its rights issue during the week, offering shareholders two new shares for every three held at ₦60.00 per share. Rights issues give existing shareholders the opportunity to increase their position at a set price, but they also create potential dilution for those who don’t participate.
Market sentiment ahead of the T+1 implementation appeared relatively calm. The previous week saw profit-taking as investors repositioned ahead of the transition. This week, investors returned selectively, suggesting confidence that the operational change will proceed without major disruptions. The oil sector leadership also reflects broader optimism filtering through from global markets about energy stabilization.
Fixed Income Market: Liquidity Surges as Yields Stay Mixed
Fixed income market yields were mixed this week. Treasury bill yields rose 11 basis points to 17.48% amid mild selling pressure, while OMO bill yields declined 4 basis points to 20.72% on sustained demand. FGN bond yields remained broadly stable, though the mid and long ends of the curve edged higher
The most significant development in fixed income was the surge in system liquidity. Liquidity improved dramatically to ₦6.02 trillion from ₦2.79 trillion the prior week, supported by increased placements at the Standing Deposit Facility window. The overnight rate eased 5 basis points to 22.19%. The Open Purchase Rate held unchanged at 22.00%.
On a month-over-month basis, both Treasury bill and bond yields increased across tenors, reflecting the prevailing high-yield environment. Monthly increases in yields while weekly moves are mixed suggests the overall trend is still toward higher rates, even if week-to-week movements show some volatility. The expectation from the fixed income team is that rates could moderate further if liquidity conditions remain supportive. That’s a conditional forecast. If the liquidity surge proves temporary and conditions tighten again, the rate moderation scenario doesn’t materialize.
The Bottom Line
Last week was a story of contrasts and connections. The thread connecting all three is oil. When oil prices move, they reshape inflation, growth, and investment decisions across continents. For the average investor, the lesson is this: no market is an island. What happens in the Middle East affects your mortgage rate in Lagos. What happens in Silicon Valley affects your pension fund’s tech allocation.
Nigeria’s T+1 settlement transition on June 1 is a structural upgrade that could attract more foreign capital. The GDP numbers show the economy is diversifying, but oil still matters. And the fixed-income market is flush with liquidity, which keeps yields attractive but also raises questions about sustainability.
