outlook: Expectations from the Markets This Week – 181021 – First Ideas Limited

outlook: Expectations from the Markets This Week – 181021

Expectations from the Markets This Week – 181021

Global Economy

  • According to the US Labour Department, US inflation picked up slightly to 5.4% in September, up from 5.3% in August and back to July’s 5.4% rate, which was a 13-year high. US Core Inflation came in at 4% while, Economists had expected another 5.3% increase in the CPI. Headline Consumer price index increased m-o-m by 0.4% in September while Core CPI gained 0.2% on a month-on-month basis. The rise in price growth seen last month reflected higher food and shelter costs.
  • Minutes from the FOMC meeting which was held between Sept. 21-22 show that policymakers are prepared to start gradually dialing back the $120 billion in monthly bond buys (quantitative easing), by mid-November. Members of the committee believed that economic recovery remained broadly on track, and so a gradual tapering process could be concluded next year.
  • According to data from the Labor Department said on Friday, U.S. import prices rebounded in September, supported by higher food and energy costs, but underlying imported inflation showed signs of moderating. Import prices rose 0.4% last month after falling 0.3% in August,. In the 12 months through September, prices shot up 9.2% after advancing 8.9% in August. Economists polled by Reuters had forecast import prices, which exclude tariffs, increasing 0.6%. The government reported this week that strong food prices and rents pushed up consumer inflation in September, while higher energy costs kept producer prices elevated.
  • Ahead of a landmark post-lockdown budget due later this month, experts are of the view that Rishi Sunak- chancellor of the British exchequer- is poised to usher in cuts worth 2bn Pounds for government departments tasked with meeting the Tories’ flagship “levelling up” agenda such as local government, further education, prisons and courts. Meanwhile, the chancellor is expected to raise the UK’s tax burden to the highest sustained level in peacetime with a package of tax increases at this month’s budget and spending review.
  • According to a poll of economists, Indonesia’s central bank is expected to hold interest rates steady next week to bolster the economy as activity stalled on account of  the COVID-19 pandemic. Since the onset of the pandemic, Bank Indonesia (BI) has slashed its benchmark seven-day reverse repurchase rate by 150 basis points to a record low 3.50% and injected liquidity worth more than $57 billion. All 29 economists polled expected the rate to remain steady at the conclusion of the  October, 18-19 policy meeting.

Nigeria Economy

  • According to the recently released CPI report for the month of September, by the National Bureau of Statistics, the consumer price index rose by 16.63% year-on-year last month. This represents a 38-basis point decrease compared to 17.01% recorded in August 2021. Meanwhile, food inflation, dropped to 19.57% in September from 20.3% recorded in August, while core price index rose by 13.74%, up 33 basis points from 13.41% in August 2021.
  • Members of the House of Representatives have called on the Federal Government to boost its revenue by widening the tax net to include self-employed Nigerians. While commenting on the 2022 budget, during the plenary session on the floor of the house, the lawmakers recommended a tax reform “which should be see every Nigerian adult contribute”. Under the Finance Act 2020, small companies with an annual turnover of not more than N25 million are exempt from paying the Company Income Tax.
  • At a media briefing earlier in the week, the Minister of State for Finance, Budget, and National Planning. said that the 2021 National Development Plan will require a total of N350tn for infrastructural projects over the next five years. According to the Minister, the private sector will contribute a total of N300tn between 2021 and 2025, while states and the Federal Government will jointly contribute N50tn.
  • During the second reading of the 2022 Appropriation Bill by the House of Representatives on Wednesday, the lawmakers criticised the internal and external borrowings taken by the Federal Government, the country’s huge budget deficit and failure of Ministries, Departments and Agencies to generate adequate revenue to finance the budget. The 2022 proposed budget which has a total estimate of N16.39tn, allocated the sum of N3.9tn for debt servicing, an equivalent of about 25 % of the whole budget. The lawmakers also expressed concern over the public debt stock which is expected to rise by N5tn in the 2022 fiscal year.
  • According to its October 2021 World Economic Outlook Report, which was released on Tuesday, The International Monetary Fund increased Nigeria’s growth prospect to 2.6% and 2.7% for 2021 and 2022, respectively, despite reducing the rate of global growth prospect by 0.1 percentage points to 5.9%, while retaining global growth forecast for 2022 remained unchanged at 4.9% due to the COVID-19 Delta variant. Meanwhile, the IMF identified supply chain disruptions as negatively affecting recovery in the advanced economies, as well as the lack of access to Covid-19 vaccines which have held back prospects for the emerging economies.
  • At the two-day Mid-term Ministerial performance review retreat organised by the Office of the Secretary to the Government of the Federation at the Presidential Villa, Abuja.  Director-General of the World Trade Organisation, Dr. Ngozi Okonjo-Iweala in a virtual address, noted that Nigeria’s trade costs are too high and, therefore, cannot attract investments. The former Minister of Finance and Coordinating Minister of Economy also highlighted the necessity of addressing Nigeria’s security infrastructure cost, linkage cost, regulatory cost, customs cost, and all costs associated with moving goods from the factory to the final consumer.
  • The Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) disclosed earlier in the week that it will be ready to present a new revenue sharing formula to President Muhammadu Buhari for onward transmission to the National Assembly by December. It said the ongoing nationwide consultation  were aimed at avoiding some of the mistakes made in past attempts to review the formula unsuccessful. The current revenue formula provides that the Federal Government gets 52.68 %, the 36 states share 26.72 % while the 774 local government areas in the country share 20.60 % every month. However, there have been calls and attempts to change this formula to ensure equitable distribution of the accrued revenue. The current plan to review the formula would not be the first time the RMAFC had undertaken to tinker with the country’s revenue-sharing arrangement.

Summary and Outlook

The inflation data released by the National Bureau of Statistics shows that headline inflation for the month of September came in at 16.63%. This means that the average Nigerian has lost that much of his real income under one year. This tells badly on the quality of life of the populace. Despite a 73 basis point decline in food inflation, the impact of the harvest season seemed to have been counteracted by the soaring  cost of wheat, bread and cereals. The core index rose by 13.74%,  0.33 percentage points higher than  13.41% which was recorded in August.  Judging by the upward trend on core inflation- a better measure of the long run pattern of  inflation, we may expect the low base effect to taper in the months to come.

Commodities Market



  • According to the latest OPEC Monthly Oil Market report for October, Nigeria’s oil production increased from 1.29m b/d in August to 1.45m b/d in September, an increase of +156% M-o-M based on secondary sources. From the Department of Petroleum Resource (DPR), Nigeria’s oil production increased marginally by +8% M-o-M from 1.24m b/d in August to 1.25m b/d in September.
  • Nigerian National Petroleum Corporation (NNPC) has pledged to invest in the rehabilitation of critical roads infrastructure across the country. The NNPC made the pledge while appealing to the Petroleum Tanker Drivers (PTD) wing of the National Union of Petroleum and Natural Gas Workers (NUPENG) to suspend their planned strike action.
  • The Vice President of Nigeria, Yemi Osinbajo, said the plan to defund gas projects in the run-up to the net-zero emissions will harm developing nations like Nigeria.
  • Some stakeholders in the oil and gas industry have observed that the 0.5 percent levies on sales of all petroleum products and natural gas sold locally for the Midstream and Downstream Infrastructure Fund would be inadequate to meet the annual infrastructure needs in the country.
  • Sahara Group, a leading energy and infrastructure conglomerate, said it would invest over 1billion USD to enhance access to Liquefied Petroleum Gas (LPG) in Africa and emerging economies in a bid to boost energy transition on the continent. The group also said it is in process of building over 120,000 metric tons of LPG storage in eleven countries which included Nigeria.


  • Oil prices climbed on Monday, extending multiweek gains as an energy crisis gripping major economies shows no sign of easing amid a pick-up in economic activity and restrained supplies from major producers.
  • The surge in China’s thermal coal prices in recent days has been supported by increase in demand for coal, flooding in key coal-producing province, and cold weather, just as the government expressed efforts to liberalize the power prices.
  • The Secretary-General of OPEC, Mohammed Sanusi Barkindo, noted that about $9.2 trillion investment in the upstream, $1.5 trillion investment in the downstream, and $1.1 trillion investment in the midstream segment of the petroleum industry would be required between now and 2045 to avoid energy crisis.
  • The OPEC Monthly Oil Market report for October shows that world oil demand is estimated to increase by 5.8m b/d in 2021, revised down from 5.96m b/d in the previous month’s assessment. The world is expected to consume 96.6m b/d of petroleum products this year and an average of 100.8m b/d in 2022.
  • Oil prices climbed on Friday, heading for gains of more than 2% for the week, on increasing signs of robust demand and tighter supplies over the next few months as rocketing gas and coal prices stoke a switch to oil products.
  • Brent had a weekly growth of 2.34% (see Table 1). 


  • Gold gained by 0.51% while Silver also grew by 2.77% W-o-W (see Table 1).


  • Cocoa prices depreciated by -5.16% this week.
  • Corn prices dipped by -1.73% W-o-W while Sugar also declined by -2.42% (see Table 1).

Table 1Weekly Change in Commodity Prices

Commodity15-Oct-2108-Oct-2131-Dec-20Weekly ChgYTD Chg

Source: CNBC,

*Data for 15th October 2021 is as of 5:32pm (Nigerian Time)


  • In the coming week, oil prices are expected to rise amid forecasts of a supply deficit over the next few months, spurred by rising demand due to the easing of travel restrictions.
  • Gold prices are expected to dip in the coming week, as the Fed and other central banks plans to tighten their monetary policy.
  • Cocoa prices to rise in the coming week amid smaller production from Ghana coupled with prospect for demand.
  • Sugar prices are expected to appreciate next week as demand picks up.
  • Corn prices are expected to be bearish next week as U.S. Department of Agriculture reports corn stock will be bigger than previous forecast, with USDA raising its 2021/22 stocks view to 1.5 billion bushels from 1.408 billion. 

Fixed Income Market

Currency Market

  • Naira fell to an all low towards the end of the week (Thursday 14 October 2021 closed at N422.07/US$ at the I & E FX window), this was triggered by the Vice President Prof Yemi Osinbajo’s statement of the Naira being too low at the official window to attract foreign investors, because of the gap between the parallel market and official market. He also stated that it served as a disincentive for “normal businesses”. He called on the CBN Governor to review its FX management strategy, letting the value of the legal tender be market reflective.

  • For most of the trading session this week the Naira depreciated at the I & E FX window, which continued at the end of the week. On a week-on-week (W-on-W) basis, the Naira fell by +0.19% to N415.30/US$ at the close of trading on Friday.

  • The Naira closed the week at $/N415.07 at the I&E FX window, at the NAFEX (spot market) it closed at $/N413.48 as of 14th October 2021.
Average Benchmark Yields
08-Oct-202115-Oct-2021% Change
I & E FX Window414.30415.07+0.19%
NAFEX ($/N)412.71413.48+0.19%

Source: FMDQ 

Money MarketMoney market rates which resumed its single-digit trend at the beginning of the week supported by inflows was not maintained throughout the week. Primary market auction settlement reduced system liquidity causing rates to edge up at the close of the week.

  • At the close of the session on Friday, open buy-back (OBB) and overnight rates (O/N) respectively was 19.5% and 20.00% respectively indicating a W-o-W rise of +39.29% and +37.93% for OBB and O/N.
Money Market Rate
 08-Oct-202115-Oct-2021% Change
OBB (%)14.0019.5+39.29%
O/N (%)14.5020.00+37.93%

Source: FMDQ

Funding rates are expected to trade in double digits trend in the coming week in the absence of any inflow.

Treasury Bills Market

  • The treasury bills market started the week on a quiet note, with minimal volumes traded across board, and maintained a bullish trend for a major part of trading in the week.
  • At the close of the market on Friday, average benchmark yields for T-bills closed at 5.20%, OMO bills at 6.47%, and CBN’s special bills closed at 6.03%. Posting a W-o-W fall of -1.30% for the T-bills, while OMO bills was flat, average benchmark yields for CBN’s special bills fell W-o-W by -0.17%.
Average Benchmark Yields
08-Oct-202115-Oct-2021% Change
T. Bills (%)5.275.20-1.30%
OMO Bills (%)6.476.47+0.02%

Source: FMDQ

We expect activity next week to be dictated by the market liquidity situation. 

The DMO sold N187.24 billion worth of notes against N121.66 billion offered at its NTB auction this week. The 91-day, 182-day & 364-day notes were allotted at 2.50%, 3.50%, and 7.25%, respectively. Compared to the previous auction, rates on the 91-day & 182-day were unchanged while the 364-day paper fell by 25bps.

FGN Bond Market

The bond market was largely quiet today, safe for some interest across selected maturities. At the close of trading on Friday, the market was mixed, with selling pressure at the short end of the curve while the mid-date maturities saw slight interest.

The overall average benchmark yields closed at 8.25% at the close of trading indicating a W-on-W rise of +1.53%.

Average Benchmark Yields
08-Oct-202115-Oct-2021% Change
Short Tenor (%)5.205.43+4.42%
Mid Tenor (%)8.788.76-0.23%
Long Tenor (%)12.1712.170.00

Source: FMDQ

FGN Eurobond Market

The Eurobond market which is largely influenced by the movement of yields of the US Treasuries returned to its bearish path, as inflationary concerns, and the hawkish tilt of the U.S. Feds minutes, this caused yields to advance across board. At the close of trading on Friday average benchmark yield advanced by 1bps to 6.52%.

Nigerian Capital Market

  • Activity on the local bourse this week was positive as the benchmark index closed positive with +1.39% with some bargain hunting activities and investors taking positions across several stocks. Investors gained N328.98bn, year-to-date return moderated to +2.90%, while the market capitalization settled at N21.62 trillion.
  • NGX Group announced Successful Listing on NGX of the entire issued and fully paid 1,964,115,918 ordinary shares of 50 kobo each at N16.15 per share were listed by introduction on the Main Board of Nigerian Exchange limited on Friday, 15 October 2021.
  • The volume and values of shares traded on the exchange this week advanced by +30.24% and +44.12% respectively.
  • Sectoral performance across sectors tracked was positive this week as the NGX Banking was the highest gainer for the week with +2.64%. NGX Insurance, NGX-IND, NGX Oil and Gas, and NGX Consumer Goods closed positive with +1.60%, +0.98%, +0.64% and +0.47% respectively.
  • Market breadth for the week closed positive with 45 gainers led by CHAMPION and FBNH as against 15 losers led by LEARNAFRI and IKEJAHOTEL

Chart 1: Movement of NSEASI Index Points 08 Oct. 2021 – 15 Oct. 2021

Proshare Nigeria Pvt. Ltd.

Source: NSE


The NASD OTC Security Index (NSI) and Market Capitalization closed the trading week with a positive movement in Market capitalization and NSI. The NSI closed the week positive with 746.80 points representing an uptick of +1.68% while the Market capitalization closed the week negative with a decline of -3.35% to N616.99bn.

Dangote and Elumelu Index 

  • Dangote Index closed the week positive with 146.57 basis points from 146.46 basis points recorded the previous week, representing a growth of +0.08%.

  • DANGSUGAR  and NASCON  recorded a growth of +1.44%, +1.97% while DANGCEM remained flat W-o-W.

Table 2: Dangote Index W-o-W Change

Company08-Oct-2115-Oct-21WoW Chg
Source: NGX,  

Furthermore, the Elumelu Index closed positive with 113.10 basis points from 107.32 basis points recorded the previous week, a W-o-W growth of +5.39%.

TRANSCOHOT, UBCAP, AFRIPRUD, UBA and TRANSCORP, closed the week positive with +9.94%, +8.84%, +7.26%, +4.40% and +2.06% W-o-W respectively.

Table 3: Elumelu Index W-o-W Change

Company30-Sept-2108-Oct-21WoW Change
Source: NGX


We expect the positive performance to persist on the bourse in the coming week due to bargain hunting by savvy investors as they take positions towards the earning season. However, corporate actions from listed companies and other macroeconomic developments are likely to impact investors’ decisions.

In addition, we expect investors to monitor the movement of yields in the fixed income market.

About the Author


First Ideas Limited is an investment and financial advisory company established in 1994 to provide advisory services to high net worth individuals, trust funds, financial institutions and medium sized companies in growth sectors.

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