Global Economy
After a long delay due to government shutdown, GDP data released during the week showed that the US economy decelerated over Q4 2018 to an annualized rate of 2.6% (Q3 18: 3.4%) following slowdown in personal consumption expenditure (2.8% YoY vs Q3: 3.3% YoY), gross private domestic investment (4.6% YoY vs Q3: 15.2% YoY) and government expenditure (0.4% YoY vs Q3: 2.6% YoY). Over the full year 2018, the economy expanded 2.9% YoY compared to 2.2% YoY recorded in 2017. Over in Europe, manufacturing PMI for the month of February contracted to 49.3 index points, the first since June 2013 and a step down from 50.5 index points recorded in January. The contraction reflects weaknesses in Germany, Italy (which touched a 74-month low) and Spain, offsetting the slight improvement observed in France and other regions.
Domestic Economy
The purchasing managers’ index survey for the month of February revealed that the manufacturing and non-manufacturing sectors remained resilient with the PMI for the month settling at 57.1 and 58.4 index points respectively, albeit lower than respective January numbers of 58.5 and 60.1 index points. Going by breakdown of the manufacturing PMI, of the five sub-indices, the slowdown during the month was more evident in production levels, new orders and inventory levels, while the slowdown in the non-manufacturing sector was observed across all its sub-indices.
Equities
The Nigerian bourse closed negative for the second consecutive week, with the NSE ASI Shedding 2.12% WoW to close at 31,827.24 points while market capitalization dipped by N256.67 billion. The broad market loss was driven by bearish sentiments in the Banking (-5.83%), Brewers (-0.18%), Personal care (-5.26%), Food (-3.49%) and Oil & Gas (-2.60%) indices which neutered gains in the Cement (+2.09%) and Insurance (+1.04%) indices. Further breakdown of the performance reveals that sell pressure prevailed across bellwether stocks (GUARANTY: -7.07%, ZENITH: -6.99%, IB: -4.76%, DANGFLOUR: -1.49%, DANGSUGAR: -2.33%, NESTLE: -4.43%, HONEYWELL: -2.88% and OANDO: -11.54%).
Fixed Income
The Nigerian Fixed income market contracted to its lowest this year as average yields dipped 92bps WoW to 13.52% largely driven by foreign and local buying at both ends of the curve. At the short end, average treasury bill yields contracted 115bps WoW to 13.08%. This addition to incursion of liquidity from monthly FAAC inflows (N610 billion) and OMO maturities (N349.64 billion) as well as reduction in OMO rates (1year OMO: -70ps to 14.3%) at the last auction drove the bullish run in treasury bill yields. Similarly, following investors interest at the long end of the curve, bond yields contracted by 69bps WoW to 13.96% with FGN 2020 (-204 bps), FGN 2028 (-84 bps) and FGN 2029 (-79 bps) bonds being the most sought after.
Reporting for EasyKobo on Friday , 01 March 2018 in Lagos, Nigeria
Source: ARM Securities Limited
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