Weekly Market Update

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LOCAL EQUITIES MARKET

Local equities market closed on a negative note last week following profit-taking on stocks that earlier had a bullish run. The market opened the week with a 23bps declined on Monday which was followed with losses in all the remaining days of the week. Consequently, The All Share Index (ASI) declined by 42bps WoW to settle at 41,001.99 with market capitalization loosing N81.59bn to settle at N21.45tn.

Market breadth, a measure of Investors’ sentiment also declined from 3.16x to 1.83x as 53 stocks advanced while 19 stocks declined last week. CHAMPION(+44.44%), TRANSEXPR(+37.50%), and NCR(+32.20%) were the top market gainers while JAPAULGOLD(-37.50%), AXAMANSARD(-20.00%) and MRS(-18.55%) top the losers’ chart.

Market activity level was mixed as volume of transaction advanced by 24.35% while value of transactions declined by 20.59%. Trading in Transnational Corporation of Nigeria, Living Trust Mortgage Bank Plc and Japaul Gold and Ventures Plc (measured by volume) accounted for 1.582 billion shares worth N1.564 billion in 2,726 deals, contributing 36.9% and 6.02% to the total equity turnover volume and value respectively.

Outlook for the week

We expect to see some mixed activity this week as some investors hunt for bargains and others take profits with the earnings expectation influencing decision.

FIXED INCOME MARKET

The bond market was largely bearish this week on cautious investor sentiment. Yields rose across the curve. Overall, average benchmark yields spiked by 34bps to 7.30%.

Last week, the DMO conducted its first bond auction in 2021, offering N150 billion worth of bonds. Bid/Cover ratio was 1.95times. Investor demand was strongest on the 15-year paper which was over-subscribed by 2.13times. The 7-year, 15-year and 25-year paper were allotted at 7.98%, 8.74%, and 8.95%, respectively.

Performance in the NTB market improved this week as buy interest was seen along the mid to long end of the curve. Average benchmark interest however rose marginally by 1bps to 0.54%.

Outlook for the week

We expect to see some bargain hunting activities as avenues for yield opportunities has been created on some maturities.

GLOBAL MARKET

The US S&P 500 and Dow Jones indices both advanced by 194bps and 59bps following roll out of 2020 full year earnings and optimism about the new President elect. Similarly, German Dax and Japan Nikkei advanced by 0.63% and 0.73% on renewed investors’ sentiment. However, UK FTSE and French CAC contracted by 60bps and 93bps amid continuous lockdown as a result of the second wave of COVID-19

Outlook for the week

We expect news on US stimulus package by the new administration to buoy market performance this week.

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