Weekly Market Update

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Investors’ sentiment remain weak at the local equities market with selloffs witnessed across some major tickers last week. The market opened the week with an 8bps loss on Monday which was followed with positive sentiment on Tuesday and Tuesday in reaction to Zenith Bank relatively impressive 2020 financial results. The market however returned to the negative region on Thursday and Friday. Consequently, The All Share Index (ASI) declined by 0.96% WoW to settle at 39,799.89 while market capitalization closed at N20.82tn. In summary, the year-to-date performance moderated to -1.17%.

Market breadth, a measure of investors’ sentiment also declined as 19 stocks advanced while 3 stocks declined. ACADEMY (+17.14), OANDO(+12.38) and UPDCREIT(+9.35%) were the top market gainers while LASACO(-26.79%), AFRIPRUD(-21.23%) and SUNASSURE(-18.52%) top the losers chart.

Market activity level improves as both volume and value of transaction advanced by 25.32% and 13.27% respectively. Trading in Wema Bank Plc, Zenith Bank Plc and First Bank Holding Plc (measured by volume) accounted for 782.167 million shares worth N8.914 billion in 4,624 deals, contributing 40.52% and 43.15% to the total equity turnover volume and value respectively.

Outlook for the week

We expect to see similar bearish sentiments this week with upward movement in fixed income yield pressuring market performance.

FIXED INCOME MARKET

The Bond market witnessed renewed investor interest last week. Buying interest was seen across all maturities which resulted in a 24bps compression in average benchmark yields to 9.94% last week from 10.18% in the previous week.

The Central Bank sold N147.26 billion worth of notes against N128.22 billion offered at its NTB auction this week. The offer was over-subscribed by 1.50x. We also witnessed a significant spike in stop rates. The 91-day, 182-day & 364-day notes were allotted at 2.00%, 3.50%, & 5.50% respectively. Compared to the previous auction, stop rates rose by 100bps, 150bps and 150bps, respectively.

Outlook for the week

We expect to see similar trend this week taking precedents from the auction result of last week.

GLOBAL MARKET

The US S&P 500 and Dow Jones indices both went down by 0.96% and 3.95% following significant upward movement in treasury yields. Similarly, other major indices closed negative amid fears of increasing fixed income rates. Notably, the UK FTSE, German DAX and Japan NIKKEI went down by 2.45%, 2.12% and 1.48% respectively.

Outlook for the week

We expect similar performance this week as asset reallocation and fear of inflation influence investors position.

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