AXA Mansard Investments Weekly Market Report | Monday February 19, 2024

Key events on the Global Scene:

Inflation Data Jolts Market Sentiment: Core CPI Exceeds Expectations, Prompting Reassessment of Rate Cut Anticipation.

• The release of inflation data sent shockwaves through the market, particularly as Core CPI MoM exceeded expectations and the previous release, rising to 0.4% compared to the anticipated 0.3%. Furthermore, the year-on-year CPI increased to 3.9%, surpassing market expectations of 3.7%, primarily influenced by the Core Services sector.
• Initially, the stock market had factored in the possibility of a rate cut in March following the January FOMC meeting, where the Fed Chair emphasized the importance of observing a sustained slowdown in inflationary pressures in key data. However, Tuesday's CPI release contradicted these expectations. Consequently, the market may reconsider its anticipation of rate cuts, leaning towards the potential for continued rate hikes. The S&P500 experienced a decline of -1.25%, but it rebounded towards the end of the week. This rebound was attributed to weak Core retail sales, which dropped to -0.6% from 0.4% in December, cooling market expectations of a Fed rate hike.

Key events on the Domestic Scene:

Nigeria Headline Inflation Increased to 29.90% YoY in January 2024; 0.98% higher than the 28.92% recorded in December 2023.

• The inflationary trend in Nigeria persists, primarily fuelled by escalating food prices, and there is no indication of relief as there are no implemented measures to alleviate the situation. The latest data highlights a broad-based surge in all components of the inflation index, both on a monthly and yearly basis. Specifically, in January 2024, food inflation rose to 35.41% year-on-year, marking a 1.09% increase from the 33.93% recorded in December 2023. Additionally, core inflation registered at 23.59% year-on-year, reflecting a 0.53% uptick from the 23.06% recorded in December 2023.

Capital Market Review/Outlook (FI and Equities):

• The Eurobonds market witnessed a bullish sentiment, with yield declining over the week across the curve as buyside interest reverberates on the backdrop of weak core retail-sales data. Hence, the average benchmark yield settled at 9.55%(vs. 9.67%).


• The Nigerian’s bourse declined by c.3.45%, to settle at 105,369.4, while YTD return settled at c. 39.22%. The buying pressure was dominant in the Consumer, Telecommunications & Utilities Sector towards the end of the week, seen in BUA FOODS (+17.00%), GEREGU (+33.30%) and AIRTEL(+10.00%). The Oil/Gas sector gained by 5.25%, while the Financial sector declined by -1.39%. GTCO(-0.4%) led the volume with 56.6million units, and GTCO(-0.4%) leads the value chart with ?2.2 billion.


• In the local bonds market, the FGN bonds market traded with a mild bearish sentiment, ahead of the bond auction next week. Consequently, the average benchmark yield increased by 2 basis points, to settle at 16.65 (vs. 16.63%).

Macro Economic Variables

Key Economic Variables

Securities Recommendations:

Disclaimer:

This newsletter is prepared for informational purposes only and is not intended to predict or guarantee the future performance of any individual security, market sector or the markets. The views and strategies described may not be appropriate for all investors. While every effort has been made to ensure the information provided is accurate, do not rely solely on this information to make a financial or investment decision. Kindly consult your financial adviser before making any financial or investment decision.

AXA Mansard Investments Limited and its employees do not assume any liability or responsibility in relation to the information provided in this material.