Expectations from the Markets This Week – 151121 – First Ideas Limited

Expectations from the Markets This Week – 151121

 Expectations from the Markets This Week – 151121

Global Economy

  • According to the Bureau of Economic Analysis (BEA) estimates, US Real GDP grew by only 2% in the third quarter (Q3 2021). This is much lower than the 6.7% growth recorded in Q2 2021, and the 6.3% growth registered in Q1. The slow economic growth was attributed to a slowdown in consumer spending; white house had ended the jobless benefit in September because it served as a disincentive to work. Consumer spending growth was 1.6% annualized rate in Q3 2021. In Q2, it was 12% and in Q1, it was 11.4%.
  • According to official sources, UK’s real GDP growth for Q3 2021 was 1.3% down from 5.5% in the previous quarter. After recovering from its worst decline in 300 years, the country’s economy slowed over the summer on account of supply chain breakdowns and energy shortages. All the major economies have recovered more quickly than the UK economy, which remains 2.1% below its pre-pandemic peak. Germany and Italy are 1.5% and 1.4% below their pre-pandemic best while the US has jumped ahead to be in positive territory by 1.4%. The country’s closest neighbor’s, France, is only 0.1% below where it was before lockdowns were imposed last year.
  • Data from the US Bureau of Labour Statistics suggests that the US consumer price index surged by 6.2% from a year ago, the most since December 1990. That compared with the 5.9% Dow Jones estimate. Month-on-month, the CPI increased 0.9% against the 0.6% estimate. Meanwhile, the US producer price index (PPI) which is a measure of wholesale prices, climbed 8.6% year-on-year, matching the all-time high PPI set in September 2021.
  • The US Senate approved on Tuesday the $1 trillion infrastructure bill meant for the rebuilding of the nation’s deteriorating roads and bridges and funding new climate resilience and broadband initiatives, delivering a key component of President Biden’s agenda. The vote, 69 to 30, was uncommonly bipartisan. Meanwhile, the Democrats still have much work to do on the second pillar of Biden’s domestic program: ‘Build Back Better’ a sweeping expansion of the social safety net and programs to fight climate change prepared at a price tag of $1.75 trillion, the biggest expansion of the U.S. safety net since 1960.

Nigeria Economy

Summary and Outlook

With Nigeria’s Q3 2021 GDP data billed for release at the end of November, analysts express modest optimism about growth on the back of improved oil production (in comparison with 2020) as well large public sector spending. However, the Manufacturing sector has had to contend with rising energy prices while output in the Agricultural sector has continued to be affected by the state of insecurity in many food-producing areas.  

Meanwhile, the risk of imported inflation heightened on account of US inflation data which rose to (6.2%) – a 31-year high. With major economies like the US (2%) and the UK (1.3%) recording lower than projected Q3 2021 growth figures, the 5.9% global growth outlook appears doubtful.

Commodities Market

Weekly Review and Outlook



  • The Executive Secretary of Nigerian Association of LPG Marketers, Bassey Essien, on Monday noted that the reintroduction of customs duty and VAT on imported LPG has halted the importation of the product by some importers. This could further increase the price of the cooking gas in the country.
  • According to OPEC’s November 2021 Oil Market Monthly Report, Nigeria’s oil output dropped by -19% from 1.25mb/d in September to 1.23m b/d in October 2021 based on direct source. From secondary sources, Nigeria’s crude oil output dipped by -45% from 1.40mb/d in September to 1.35m b/d in October 2021. Nigeria’s rig count also declined from 11 to 9.
  • Analysts have observed that petrol subsidy and underproduction of crude oil continue to drain the country’s treasury and unless the government summons the courage to resolve both, the country’s finances will get worse.
  • Analysts at PricewaterhouseCoopers (PwC) found that African countries need an estimated $2.8tn investment to transit from their current energy base and achieve the global net-zero emission target by 2050.
  • The Minister of State for Petroleum Resources, Mr. Timipre Sylva, on Tuesday, noted that the Federal Government has set aside N250bn for willing investors in autogas assembly plants, as part of efforts to ensure that the autogas conversion of vehicles yielded the desired results.
  • OPEC’s Secretary-General, HE Mohammad Sanusi Barkindo, on Tuesday, noted that about $450bn worth of new refinery projects and expansion of existing units would be invested in Nigeria and other developing nations between 2021 and 2045.
  • The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has said that it would become compulsory for oil and gas companies operating in the country to disclose their owners under the Beneficial Ownership (BO) Reporting system. The NURPC disclosed that the Nigerian Oil and Gas Asset Beneficial Ownership Register (NOGABOR) portal has been developed and is onboard.
  • The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, disclosed that the Federal Government is planning to replace fuel subsidy with transport subsidy to pacify the effect of subsidy removal on the masses for a short period.


  • Crude oil prices rose on Monday on the back of positive signs for global economic growth, supporting energy demand, while Saudi Arabia’s state-owned producer Aramco raised the official selling price for its crude.
  • Although Japan has cut its target for coal use and raised those for renewables, it declined to sign the COP26 coal pledge of 40 countries to phase out coal.
  • The Bank of America reported that Brent crude prices could rise to as high as $120 per barrel in the first half of 2022 due to the global gas crisis, booming air travel with international flights returning, and a comeback of Asian demand.
  • The United Kingdom (UK), host of the COP26 climate summit, declined to join the Beyond Oil & Gas Alliance (BOGA). An alliance that intends to pledge a fixed date for countries to phase out oil and gas production. The UK argued that ending domestic oil and gas production will leave a gap in the country’s energy supply.
  • South Africa’s Energy Minister, Gwede Mantashe, said coal-fired power generation would continue to be part of South Africa’s energy mix, noting that he would go to court if necessary to keep coal power plants alive.
  • A group of countries, companies, and cities on Wednesday committed to phasing out fossil-fuel vehicles by 2040, as part of efforts to cut carbon emissions and curb global warming. While Ford, General Motors, and India have signed the agreement, Toyota, Volkswagen, US, China, and Germany rebuff the agreement.
  • The latest OPEC’s report revealed that the global oil demand is now estimated at 96.4mb/d for 2021 and 100.6mb/d for 2022. The downward review for 2021 demand was predicated on slower than anticipated demand from China and India in 3Q 2021.
  • Oil prices slipped on Friday, wiping out gains from the previous session, as the dollar continued to rise on bets the U.S. central bank will bring forward plans to raise rates to tame inflation.
  • Brent had a weekly decline of -0.36% (see Table 1).


Gold appreciated by 2.83% while Silver also gained by 5% W-o-W (see Table 1).


  • Cocoa prices appreciated by 2.90% this week.
  • Corn prices inched up by 3.20% W-o-W while Sugar gained by 1.71% (see Table 1).

Table 1Weekly Change in Commodity Prices

Commodity12-Nov-2105-Nov-2131-Dec-20Weekly ChgYTD Chg

Source: CNBC

*Data for 12th November 2021 is as of 5:40pm (Nigerian Time)


  • In the coming week, oil prices are expected to hold steady as the dollar continues to firm on expectations that the U.S. central bank will bring forward an increase to interest rates to tame inflation.
  • Gold prices are expected to continue its upward trend in the coming week, as inflation fears grow.
  • Cocoa prices are expected to be mixed in the coming week as growing expectations for a second bumper harvest in main growers Ivory Coast and Ghana will likely weigh on prices.
  • Sugar prices are expected to appreciate next week on tight global supply.
  • Corn prices are expected to be dip marginally next week as U.S. Department of Agriculture raises corn yield.

Fixed Income and Money Market 
Currency Market

The Naira started the week on a bearish tone, however, on Wednesday 8 November 2021, the Naira appreciated by 0.08% at the I & E FX window which was maintained throughout the week.

 The Naira closed at N415.10/US$ on Friday, indicating a week-on-week (W-on-W) depreciation of the Naira. At the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) window it also depreciated by +0.05%.

Average Benchmark Yields
05-Nov-202112-Nov-2021% Change
I & E FX Window414.3415.10+0.19%
NAFEX ($/N)413.57413.79+0.05%

Source: FMDQ

Money Market

Money market rates fell to record lows this week supported by significant liquidity inflows. However, the single digits rates did not last till the end of the week.

At the close of the trading on Friday, open buy-back (OBB) and overnight rates (O/N) settled at 14.50% and 15.25% respectively indicating a W-o-W rise of +20.83% and +23.18% for OBB and O/N.

Money Market Rate
 05-Nov-202112-Nov-2021% Change
OBB (%)12.0014.50+20.83%
O/N (%)12.3815.25+23.18%

Source: FMDQ

We expect rates to hover around current levels barring any inflows from the Apex bank.

Treasury Bills Market

The Bills market started the week on quiet sentiments, closing the week on a bullish note.

At the close of trading on Friday, the market was bullish with selling interest seen across all maturities. Average benchmark yield for T. Bills fell by -2.72%, yields on OMO bills fell by -7.70% while yields on CBN’s special bills dipped by -11.01%

Average Benchmark Yields
05-Nov-202112-Nov-2021% Change
T. Bills (%)5.335.19-2.72%
OMO Bills (%)6.095.62-7.70%

Source: FMDQ

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

The DMO sold N196.17 billion worth of notes against N150.82 billion offered at its NTB auction this week. The 91-day, 182-day & 364-day notes were allotted at 2.50%, 3.50%, and 6.50%, respectively. Compared to the previous auction, rates on the 91-day & 182-day were unchanged while the 364-day paper fell by 49bps.

FGN Bond Market

The bond market was relatively quiet this with a bearish bias. At the close of trading on Friday, the market closed on a mixed note. Overall average benchmark yields closed at 8.31%.

Average Benchmark Yields
05-Nov-202112-Nov-2021% Change
Short Tenor (%)5.335.27-1.18%
Mid Tenor (%)8.858.88+0.29%
Long Tenor (%)12.1412.16+0.20%

Source: FMDQ

FGN Eurobond Market

The Eurobond market was largely bearish this week which was influenced by the US data which was released in the week. At the close of trading on Friday, average benchmark yields settled at 6.60% indicating a W-on-W increase of +0.32%.

Nigerian Capital Market

  • Activity on the local bourse this week was positive supported by renewed interests in large cap stocks like AIRTELAFRI and MTNN, however the activity of profit-takers was seen across some stocks. The NGXASI advanced by +2.95%. Investors gained N646.33bn, year-to-date return moderated to +7.41%, while the market capitalization settled at N22.57trillion.
  • The volume and values of shares traded on the exchange this week advanced by +3.03% and +69.25% respectively.
  • Sectoral performance across sectors tracked was mixed this week as the NGX Consumer Goods was the highest gainer for the week with +0.63% while NGX-IND, NGX Oil & Gas, NGX Banking and NGX Insurance, closed negative with -0.01%, -0.69%, -1.31% and, -2.25%, respectively.
  • Market breadth for the week closed negative with 23 gainers led by REGALINS and MULTIVERSE as against 43 losers led by PHARMDEKO and  CONOIL.

Chart 1: Movement of NSEASI Index Points 05 Nov. 2021- 12 Nov. 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 757.16 points representing an uptick of +1.57% while the Market capitalization closed the week positive with an uptick of +1.57% to N625.55bn.

Dangote and Elumelu Index   

Dangote Index closed the week positive with 146.27 basis points from 146.17 basis points recorded the previous week, representing a growth of +0.07%.

DANGSUGAR a growth of +2.40%, NASCON recorded a decline of -3.41%, while DANGCEM remained flat W-o-W.

Table 1: Dangote Index W-o-W Change

Company05-Oct-2111-Oct-21WoW Chg
Source: NGX,  

Furthermore, the Elumelu Index closed positive with 112.63 basis points from 114.26 basis points recorded the previous week, a W-o-W growth of +0.25%.

AFRIPRUD, TRANSCOHOT and UBA remained flat W-o-W. TRANSCORP declined by -3.85% and UBCAP  recorded a growth of  +4.89% W-o-W to close the week negative.

Table 2: Toni Index W-o-W Change

Company05-Oct-2111-Oct-21WoW Change
Source: NGX


In the coming week, we expect the activities of profit takers to collude with bargain hunters on the bourse. Other macroeconomic developments are also 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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