FCSL WEEKLY MARKET REPORT 29TH JANUARY, 2021

Global Economy –Rundown:
The United State Gross domestic product for the fourth quarter grew by 4%, while on an annualized basis, the United State economy contracted by 3.5% for 2020, however, the country’s economy for the fourth quarter was driven by the boost from export, nonresidential fixed investment, consumer spending, residential investment, and inventories. Further review of the U.S. GDP report revealed that the personal consumption expenditure activity for the quarter increase by 2.5%, as this constitute about 68% of all U.S. activity, also gross private domestic investment surged by 25.3%, however, government spending and investment for the period dipped by 1.2%, which as induced by an 8.4% decline in non-defense spending. While the trajectory for the United State economy for sustained improved growth seems slim for the first quarter, given the increased infection rate that has propelled restrictions on economic activity, however, improved growth will be expected to take shape later in the year, as vaccines become widely distributed.
Domestic Economy –Rundown:
The Monetary Policy Committee of the Central Bank of Nigeria has retained the Monetary Policy Rate at 11.5 percent, and same with other committee’s rate indicators of CRR, Liquidity rate, and the asymmetric rate around MPC that were all maintained at a rate last adjusted in November 2020. The Apex Bank decision was propelled by the fragile recovery of the Nation’s economy, as dedicated by the Manufacturing and Non-Manufacturing index and level of economic confidence, which were taken as more cogent reasons above inflationary pressure concerns that should have prompted a rate hike. However, the committee raised concern about the insistent rise in the public debt stock of the Nation, as government recurrent expenditure remained elevated compared with capital expenditure that poses future debt servicing worries.
Currency:
The Naira appreciated marginally by 0.01% at the I&E FX window to settled at N394.13.00/USD, while at the parallel market, Naira contracted in value to N480/USD.
Equities
The equities market week-on-week performance was bullish at a 3.44% weekly growth and the YTD ASI growth grew to 5.32%. The sector performance of the NSE indices recorded a 0.10% increase, based on monitored indices, however, this performance was hampered by significant contraction recorded in the Oil& Gas index.
Fixed Income:
The system liquidity at the end of the week declined, due to CBN OMO auction debit, as open buyback rate and overnight rates surge to 10.50% and 11.00% respectively.
T-Bills secondary market activities was engulfed with bearish run as the average yield increased by 53bps to 1.00% for the week, as market yields increase across all maturity spectrums. The marginal clearing rate at the T-bills auction settled at 0.55%, 1.30%, and 2.00%, at the respective maturity of 91 days, 182days, and 364 days.
The Bond secondary market activities remained bearish, as the average yield for the week increased by 115bps to 9.10%, as yield across all tenor inched higher.

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