Global Economy
30 July 2018 ( Lagos ) : The US economy grew at an annualized rate of 4.1% in Q2 18, its best pace since Q3 14, boosted by a surge in consumer spending (4%), business investment (5.4%) and government spending (+2.1%). In addition, US PMI for the month of July printed at 55.9 index points lower than the numbers reported for June: 56.2 index points, reflecting slow rate in job crea- tion.
However, the July numbers remains above the threshold of 50, indicating an expansion in the economy. Elsewhere, the European Central Bank held its monetary policy meeting for the month of July, leaving the interest rate unchanged at 0%. However, the committee decided to maintain its net asset purchase program at a monthly pace of €30 million till the end of September 2018 and would likely reduce the pace to €15 billion between September and December 2018 subject to inflation numbers in coming months. The asset purchase program is expected to end by December 2018 .
Domestic Economy
Over in Nigeria, inflation for the month of June was released which revealed continued disinflation as the reading declined to 11.23% YoY (May: 11.61% YoY). As in prior months, base effect, largely from the food basket, underpinned the moderation in inflation even as MoM headline reading advanced to 1.24% (+15bps from 1.09% in May).
The deceleration in consumer prices was evident in both the core (10.39% vs. 10.71% in May) and food basket (12.98% vs. 13.45% in May). Elsewhere, the monetary policy committee meet in the week with the members electing to keep the policy parameters unchanged.
Equities
The Nigerian equity market reversed loses in previous weeks to close 0.09% higher at 36,636.97 pts. Strong performances in First Bank (+10.5%), Guaranty Bank (+4.2%), Zenith Bank (+3.0%) and Nestle (+4.9%) largely outweighed losses in Nigeria Breweries (-3.2%), Lafarge (-15.4%), Dangote Sugar (-6.8%) and Seplat (-3.9%).
Dissecting the performance on a sectorial basis, the various indices closed mixed with the Banking, Construction, Food, and Insurance sectors closing in the green while Brewers, Cement, Personal Care, Oil & Gas and Real Estate sectors closed in the red .
Fixed Income
Average yields in the Nigerian Fixed income market traded higher as it inched up 133bps WoW to 13.19% largely on the back of higher short-term rates. Over the week, the CBN net issued N181 billion to mop-up sizable market liquidity stemming from higher FAAC allocation.
Consequently, Treasury bill yields climbed 28bps WoW to 12.49%. Meanwhile, at the long end of the curve, average bond yield traded almost flat declining 2bps WoW to 13.88% despite stop rates (+30bps MoM to 14%) climbing higher at the July auction.
Reporting for EasyKobo on Monday, 30 July 2018 in Lagos, Nigeria
Source: ARM Securities Limited
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