AXA Mansard Investments Limited Weekly Market Report

Key events on the Global Scene:

The S&P500 experienced a notable 1.02% week-over-week gain, propelled by the US Advance GDP quarter-over-quarter surge to 3.3%, surpassing market projections of 2.0%. Additionally, core durable goods orders exhibited a month-over-month rise at 0.6%, surpassing both market expectations of 0.2% and the previous figure of 0.4%. These robust economic indicators underscore the strength and resilience of the US economy. However, the positive data releases have sparked an anticipation of potential rate hikes, setting the stage for heightened expectations leading up to the upcoming FOMC meeting.
Furthermore, Fed Funds Futures are indicating a 2.5% probability of a rate cut by the US Fed in anticipation of the upcoming meeting next week. The forthcoming FOMC meeting is poised to play a crucial role in shaping price direction within the equities and bond markets during Q1 of 2024.

Key events on the Domestic Scene:

The latest auction for the 364-Days bill concluded with a closing rate of 11.54$, featuring an offer amount of N217.53bn. Despite an oversubscription of N1.03 trillion, only N217.53bn was allotted to market participants, resulting in a bid/cover ratio. Notably, the range of bids on the 364-Days bill reached a peak of 19.01%, indicating prevailing market expectations of elevated rates in the Treasury bill market. Additionally, the Naira reached an unprecedented low yesterday N900.96 on the I&E window from N882.24, and to N1,420 from N1,365 on the parallel market.

Capital Market Review/Outlook (FI and Equities):

The Eurobonds market witnessed a bearish sentiment, with yield rising over the week across the curve, supported by stronger-than-expected US GDP data, and expectations that interest could stay restrictive for as long as necessary. Hence, the average benchmark yield settled at 9.34%.

The Nigerian’s bourse gained by c.13.84%, to settle at 94,538.1, while YTD return settled at c. 26.43%. The buying pressure was dominant in the Consumer & Industrial Sector seen in BUACEMENT (+45.80%), DANGCEM (+53.94%), DANGSUGA(+17.30%). The Oil/Gas sector gained by +8.82%, while the Industrial sector gained by +46.8%. FCMB(+7.9%) led the volume with 106.8million units, and FIDELITYBK(+6.8%) leads the value chart with ?1.30 billion.

In the local bonds market, the FGN bonds market traded with a mixed bearish sentiment, with selling interests on the mid to long-end of the curve. Consequently, the average benchmark yield increased by 45 basis points, to settle at 14.64%.

Macro Economic Variables

Equities	This week	Prior week
S&P 500	+2.50%	+1.54%
NGX ASI	+36.69%%	26.43%
Fixed Income
Overnight	18.83%	23.25%
Open Buy Back	17.58%	22.10%
1 year T-bill	12.64%	4.73%
5-year bond	12.72%	12.72%
10-year bond	13.81%	13.81%
Currency
FX Reserves ($'bn)	32.87	32.87
USD/NGN	891.90	902.45
Crude Oil (N/$)
Brent	81.99	79.24

Key Economic Variables

CPI (%) YoY	DEC-23	NOV-23
Headline Inflation	28.92%	28.20%
GDP (%) YoY	Q3 23	Q2 23
Real GDP	2.54%	2.51%
Monetary Policy Rate (%)	18.75%

Securities Recommendations:

Security	Rationale
AXA Mansard Money Market Fund	The fund is currently at c.11.39% as at 26th January, 2024.
USD FD	Protects the investor from devaluation of the Naira and exchange rate risk with a return of c.4% - 5%p.a

Disclaimer:

This article 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.