FCSL WEEKLY MARKET REPORT-21ST AUGUST, 2020

Global Economy –Rundown:
The European Union and United Kingdom transitional trade agreement ended in a stalemate, as both parties were tightfisted on the fundamental issue around the state aid rules, fishing quotas, migration, security, dispute-settling mechanisms, and human rights guarantees, which are grey areas that must be resolved, else the possibility of agreeing to a deal before the deadline date will be thwarted. While the only positives of the deliberation were in the area of energy and anti-money laundering cooperation from 2021. The potential downside to a non-transitional trade agreement as at deadline date will be an amplified economic crisis given the pole position both parties hold in global trade.
Domestic Economy –Rundown:
The country’s consumer price index for the month of July inched up to 12.82%, this indicates that the elevated inflationary trend is not receding any moment soon, as the composite food index inch higher by 2% from previous month index to 15.48%, while the core inflation index declined by 2% to 10.10% for the month against prior month readings of 10.30%. The month inflationary trend was propelled by an upward price level witnessed on basic household consumables, medical supplies & services, and transportation, as the monthly food sub-index and core inflation sub-index increased by 1.54% and 0.75% respectively.
Currency:
The Naira closed the week flat, as the exchange rate at the I&E FX window did not change from the previous week at a benchmark rate of N386.00/USD, while at the parallel market, Naira dipped to N477/USD.
Equities
The equities market bullish run persisted although at a slow pace, as the week-on-week performance indicated a 0.09% appreciation, while the YTD ASI growth was a negative growth of 6.04%. The sector performance of the NSE indices was bullish for the week, as the average change of the NSE Indices was 1.15%, based on the indices monitored. The marginal rally on the ASI was spurred by rebound recorded on the Insurance index.
Fixed Income:
The system liquidity at the end of the week was N490.00BN, and open buy back and overnight rates firmed up to 2.00% and 2.63% respectively on the strength of system liquidity.
T-Bills secondary market activities, was bearish as average yield inched higher by 12bps to 1.38%% for the week, most yield appreciation was recorded at the medium end of the yield curve.
The Bond market auction of the previous week recorded an aggregate allotment of N116.65Billion, at a respective clearing rate of 6.70%- 10years, 9.35%-15years, 9.75%-25years, and 9.90%-30years. At the Bond secondary market, activities were mainly bearish, as the average yield for the week inched up by 8bps to 8.37%.
 

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