Expectations from the Markets This Week – 061221 – First Ideas Limited

Expectations from the Markets This Week – 061221

Expectations from the Markets This Week – 061221

Global Economy

  • Data released by the Labour Department on Thursday shows that the number of first-time claims for unemployment benefits rose to 222,000 last week. The number was in line with estimates of 250,000, following the prior week’s sharp drop to a revised 194,000, which was 5,000 below the earlier estimate. The reading is the last for the year and comes as the economy is ending on a strong note.
  • The Organisation for Economic Co-operation and Development (OECD) has predicted the UK economy will grow by 6.9% in 2021 and then 4.7% in 2022.  That is higher than the 5.2% in 2021 and 4.3% in 2022, which has been forecast for the Eurozone. The numbers also mean the UK is expected to enjoy the fastest growth of any of the world’s seven most advanced economies. Meanwhile, the OECD has also issued a stark global warning on the threat posed to the worldwide economy by the new Omicron coronavirus variant.
  • Chinese officials disclosed on Friday that the country will cut the reserve requirement ratio (RRR) for banks at an appropriate time to strengthen support for the real economy, especially for small- and medium-sized enterprises. The decision is expected to allow banks to create credit. The country is expected to retain its prudent monetary policy, maintain liquidity at a level that would ensure the stable and healthy development of the economy.
  • The Labor Department reported on Friday that the United States added only 210,000 jobs last month, analysts had expected more than double the figure, raising questions about the health of the economic recovery. The unemployment rate nonetheless fell more than expected, by four-tenths to 4.2%, US employers have added jobs throughout 2021 as Covid-19 vaccines has allowed a return of normal operations.

Nigeria Economy

  • At the plenary on Thursday, the House of Representatives mandated its committees on anti-corruption and public service to probe projects and budget duplication by MDAs. The motion came a day after Chairman of the ICPC, Prof. Bolaji Owasanoye (SAN), decried the rising cost of personnel and governance, blaming it on illegal recruitment and unilateral increase in wages and remuneration by some MDAs.
  • As part of steps to address the issues preventing Nigerian exports from penetrating international markets, the Nigerian Export Promotion Council stated that through its Export Expansion Facility Programme, it would embark on a capacity building programme for value chain operators. The newly appointed Executive Director/CEO of the Council, Ezra Yakusak, stated that the operators who would be selected for the first pilot phase of the programme would be trained on goods’ safety and quality standards which are a key requirement in exports.
  • In the November edition of its Nigeria Development Update, the World Bank noted that the Nigerian government’s exchange rate management policies are discouraging investments and fuelling inflation in the country. According to the organisation, the CBN’s foreign exchange management system was too rigid, and as such drives inflation in the country. According to the Multi-lateral organisation the NAFEX rate was not a true reflection of the market rate and therefore advised the CBN to introduce enough flexibility into FX management to sustainably respond to external shocks.
  • According to the Nigerian Communications Commission (NCC), it is currently concerned about the failure of some operators to pay levies and salaries. The body disclosed that about 27 licensees of the commission were said to have returned their licenses in the last three years, largely due to the economic realities in the country and situations in the industry. 

Summary and Outlook

The discovery of the omicron variant of the covid 19 infection has introduced complexities into permutations for growth in the first two quarters of next year. While Medical researchers at the University of Oxford as well as WHO officials express optimism about the possible efficiency of vaccines against the new strain of the virus, Moderna affirm that the vaccines are of much reduced protection against the virus. Amidst the uncertainty, travel restrictions have been imposed by Canada, and 29 other countries, stoking fears that Crude Oil prices may tumble below the $70/b it fell to on Thursday. In the event of another lull, Nigeria and other Sub-Saharan African economies, where the rate of vaccination has been low would be the most badly affected. At present Nigeria has only 1.7% of its population fully vaccinated- a major cause for concern.

Commodities Market

Weekly Review and Outlook



  • The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has said it is developing a new Domestic Base Price (DBP) framework and applicable gas wholesale price for the Strategic Sector of the Domestic Gas Market.
  • The Nigerian National Petroleum Company (NNPC) Limited on Tuesday attributed the current global gas crisis to a shortage of investments in the oil sector as activists, investors, and climate change advocates continue to mount pressure on banks and oil companies to withdraw funding for fossil fuel-related projects.
  • The Nigeria Liquefied Petroleum Gas Association (NLPGA) on Tuesday said it is engaging the Federal Government through the relevant agencies on ways to address the Liquefied Petroleum Gas’ (otherwise known as cooking gas) pricing issues to avoid a decline in domestic gas utilisation.
  • The International Oil Companies (IOCs) operating in Nigeria on Wednesday reaffirmed their confidence in the country’s petroleum industry with the advent of the Petroleum Industry Act (PIA) which is set to trigger investment inflows into the industry.
  • The Minister of State for Petroleum Resources, Chief Timipre Sylva, has said the Federal Government remains bullish on the commencement of many oil and gas projects in the country following the signing of over $42billion worth of investment by various Nigerian entities at the Intra African Trade Fair in South Africa.


  • Oil prices rebounded on Monday as investors looked for bargains after Friday’s slump and on speculation that OPEC+ may pause an output increase in response to the spread of Omicron, but the mood remained cautious with little known about the new variant.
  • Iran on Monday said it is determined to return to its pre-sanction oil production level of 5 million b/d, regardless of how the nuclear deal develops. In line with that, the Islamic Republic aims to reach a production level of 4 million b/d by March of 2022.
  • A Reuters survey on Tuesday found that OPEC pumped 27.74 million b/d in November, up by 220,000 b/d from the previous month, but below the 254,000b/d increase allowed for OPEC members under the OPEC+ agreement.
  • The latest Rystad Energy report forecasts that the new COVID-19 variant – Omicron could cost the global oil market as much as 2.9 million b/d of demand in the first quarter of 2022 if it triggers a fresh round of lockdowns.
  • OPEC+ on Thursday agreed to stick to the existing policy of 400,000 b/d monthly oil output increases despite fears that a U.S. release from crude reserves and the new Omicron coronavirus variant would lead to a fresh oil price rout.
  • Oil prices climbed on Friday, extending gains after OPEC+ said it would review supply additions ahead of its next scheduled meeting if the Omicron variant dents demand, but prices were still on course for the sixth week of declines.
  • Brent had a weekly decline of -4.06% (see Table 1).


Gold depreciated by -0.39% while Silver also dipped by -4.20% W-o-W (see Table 1).


  • Cocoa prices appreciated by 2.54% this week.
  • Corn prices appreciated by 0.26% W-o-W while Sugar dipped by -2.59% (see Table 1).

Table 1Weekly Change in Commodity Prices

Commodity03-Dec-2126-Nov-2131-Dec-20Weekly ChgYTD Chg

Source: CNBC

*Data for 03rd December 2021 is as of 6:04pm (Nigerian Time)


  • In the coming week, oil prices are expected to be bearish on the resurgent pandemic in Europe.
  • Gold prices are expected to depreciate in the coming week, as Fed is likely to remain on its part to limit Gold’s recovery attempts.
  • Cocoa prices are expected to continue its bullish move in the coming week following its corrective rebound while trying to test the resistance zone around $2,600/MT
  • Sugar prices are expected to depreciate next week as new stock of sugar is beginning to arrive in the market.
  • Corn prices are expected to continue its price surge as inflation fears, caused by diverse factors would affect the supply of corn in the coming week.

Fixed Income and Money Market 

Currency Market

At the I & E FX window this week, the Naira closed flat against the US dollars for most of the trading session.

The Naira closed at N414.73/US$ on Friday, indicating a week-on-week (W-on-W) appreciation of the legal tender. At the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) window it depreciated by +0.05%.

Average Benchmark Yields
 26-Nov-2103-Dec-21% Change
I & E FX Window415.07414.73-0.08%
NAFEX ($/N)413.37413.56+0.05%

Source: FMDQ

Money Market

System liquidity was elevated for most of the week, supported by multiple inflows, however, money market rates traded in double digits.

At the close of the trading on Friday, open repo (OPR) and overnight rates (O/N) settled at 15.50% and 15.75% respectively indicating a W-o-W uptick of +3.33% and +0.51%.

Money Market Rate
 26-Nov-2103-Dec-21% Change
OPR (%)1515.50+3.33%
O/N (%)15.6715.75+0.51%

Source: FMDQ

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

Treasury Bills Market

The treasury bills market started the week on a quiet note with minimal volumes traded across board, but activity picked up later at the end of the week as investors took advantage of the higher yields.

At the close of trading on Friday, the market was bullish with selling interest seen across all maturities. Average benchmark yields for T. Bills fell by -7.09%, yields on OMO bills and CBN’s special bills fell by -0.34% and -4.55%.

Average Benchmark Yields
 26-Nov-2103-Dec-21% Change
T. Bills (%)4.854.51-7.09%
OMO Bills (%)5.55.48-0.34%

Source: FMDQ

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

FGN Bond Market

The local bond market traded sideways this week with minimal volumes traded across board.

At the close of trading on Friday, the bulls dominated the market with sell pressure across board. Overall average benchmark yields closed at 8.00% indicating a W-on-W decline of -1.94%.

Average Benchmark Yields
 26-Nov-2103-Dec-21% Change
Short Tenor (%)4.694.32-7.99%
Mid Tenor (%)8.688.64-0.51%
Long Tenor (%)12.3712.30-0.54%

Source: FMDQ

FGN Eurobond Market

The Eurobond market was relatively bullish at the end of the week, as the market benefitted off attractive yield levels and the improvement in the U.S. weekly claims for unemployment insurance.

Nigerian Capital Marke

  • This week, activity on the bourse was weak as sell pressure persisted through the week. NGXASI dipped by -2.63% as investors lost N595.05bn this week as the year-to-date return moderated to +4.71%, while the market capitalization settled at N22trillion.
  • The volume and value of shares traded on the exchange this week dipped by -62.78% and -43.91% respectively.
  • Sectoral performance across sectors tracked was broadly bearish this week as the NGX Oil & Gas recorded the highest loss WoW with a decline of -4.55%. NGX Banking, NGX Consumer Goods, NGX-IND closed negative with -2.29%, -0.59%, -0.08% respectively while NGX Insurance closed positive with +2.97% to be the only gainer for the week.

Chart 1
: Movement of NSEASI Index Points 26 Nov. 2021- 03 Dec. 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 745.44 points representing an uptick of +0.07% while the Market capitalization closed the week positive with an uptick of +0.07% to N615.86bn. 

Dangote and Elumelu Index   

Furthermore, the Elumelu Index closed negative with 108.12 basis points from 109.66 basis points recorded the previous week, a W-o-W decline of -1.41%.

UBA and AFRIPRUD declined by -1.22% and -2.47%, TRANSCORP and UBCAP  closed positive with +2.08% and -1.02% while, TRANSCOHOT remained flat  W-o-W. 

Table 1: Dangote Index W-o-W Change

Company26-Nov-2103-Dec-21WoW Chg
Source: NGX,  

Furthermore, the Elumelu Index closed negative with 108.12 basis points from 109.66 basis points recorded the previous week, a W-o-W decline of -1.41%.

UBA and AFRIPRUD declined by -1.22% and -2.47%, TRANSCORP and UBCAP  closed positive with +2.08% and -1.02% while, TRANSCOHOT remained flat  W-o-W. 

 Table 2: Elumelu Index W-o-W Change

Company26-Nov-2103-Dec-21WoW Change
Source: NGX


We expect the market weakness to persist, as investors remain cautious of rising Covid-19 concerns. 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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