AXA Mansard Investments Weekly Market Report | Monday February 26, 2024

Key events on the Global Scene:

US Fed FOMC Minutes Signals Caution on Easing Quantitative Tightening, S&P500 gained 180bps driven by AI-led rally as NVIDIA Earnings Reports Beats Expectations.

• The FOMC minutes sheds light on the Fed Committee view on rate directions, It underscores the cautious approach, noting the risk of rapid easing and acknowledging the potential downsides of maintaining restrictive rates. The Fed believes current interest rates have peaked but emphasizes the need for greater confidence from incoming data before contemplating rate cuts. Additionally, the S&P500 closed the week setting another record all-time highs, largely driven by strong earnings report in NVIDIA (revenue: $22.10b actual v. $20.395B; EPS:$5.16 actual v. $4.64).

Key events on the Domestic Scene:

Nigeria's Q4'2023 GDP Surges by 3.46% YoY, Outpacing Q3'2023; NGN Bond Auction Sees 2031 and 2034 Papers Closing at 18.5% and 19%, 364D N Tbill Auction Concludes at 19%.

• In Q4'2023, Nigeria's GDP exhibited a growth of 3.46%(v 2.54% Q3’2023), primarily propelled by the services sector, which achieved a noteworthy 3.98% expansion, contributing significantly with a 56.55% share to the overall GDP. The agriculture sector experienced a growth of 2.10% (versus 2.05% in Q4'2022), while the industry sector demonstrated substantial improvement, recording a growth of 3.86% compared to a decline of -0.94% in Q4'22. Notably, the Non-Oil sector played a dominant role, contributing 95.3% to the GDP in Q4'23, up from 94.52% in Q3’2023, whereas the Oil sector contributed 4.7% (down from 5.48% in Q3’2023).
• Turning to the fixed income markets, the FGN bond auction saw a cumulative offering of N2.5 trillion for the new issues of the 2031 and 2034 papers. However, only N1.9 trillion was subscribed for, with stop rates set at 18.5% and 19% for the respective papers. In the N Tbill auction, the DMO offered N265.5 billion, with N1.59 trillion allotted. The stop rates were fixed at 19% for the 364-day paper, 17.5% for the 182-day paper, and 17% for the 90-day paper.

Capital Market Review/Outlook (FI and Equities):

• The Eurobonds market witnessed a mixed bearish sentiment early in the week, with yield rising over the week across the curve as jitters around the US Fed pointing a more patient stance on rate cut. Hence, the average benchmark yield increased to 9.81%(vs. 9.55%).


• The Nigerian’s bourse declined by c.-4.29%, to settle at 101,177.8, while YTD return settled at c. 35.32%. The selling pressure was dominant in the Industrial and Banking Sector, seen in DANGCEM (-10.00%), BUACEMENT(-5.54%), WEMA(-17.02%) and STANBIC (-8.30%). The Oil/Gas sector gained by 0.01%, The Industrial sector declined by -7.94%, while the Financial sector declined by -3.02%. FBNH(+3.75%) led the volume with 31.8million units, and FBNH(+3.75%) leads the value chart with ?917.2 million.


• In the local bonds market, the FGN bonds market traded with a mixed bearish sentiment, notably seen in the 34, 38 and 53 papers, as participants cautiously select high-yielding securities. Consequently, the average benchmark yield increased by 68 basis points, to settle at 17.34 (vs. 16.66%).

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.