FREE

Breakfast Report - 06 February 2022

Moody's downgraded Nigeria's sovereign bond from B3 to junk status (Caa1) due to concerns about fiscal and debt sustainability. As a result, investors began to dump Nigeria Eurobonds, demanding higher risk premiums to hold Nigerian Eurobonds. Consequently, yields increased at its fastest pace in three months. We expect bearish sentiments to persist in the near term as investors continue to demand higher risk premium, alongside expectations that the US FED will continue to raise rates to tame inflation.    
                
Equity: The equity market is expected to sustain its bullish momentum with earnings results driving market activity. Mixed sectoral performance is expected, with the banking sector being a strong point. Large-cap counters are expected to elevate activity levels, with positive market breadth expected.
                

Fixed Income: This week, we anticipate mixed trading, as investors pursue attractive tenors across the bonds curve, while system liquidity will dictate activity the NTB segment.
                

Commodities: Commodity prices on AFEX showed mixed results with maize, paddy rice, sorghum, sesame, and cashew down 3.66%, 4.50%, 1.52%, 13.04% and 8.00% respectively, while soybean and cocoa rose 0.48% and 0.56%. YTD, maize, soybean, paddy rice, cocoa and sesame rose 10.27%, 11.21%, 2.94%, 2.19% and 20.48% respectively and sorghum and cashew fell -6.35% and -11.55%. ACI rose 0.91% w/w to 499.58 points and AEI fell -0.41% w/w to 244.66 points. YTD, ACI is up 7.86% and AEI is up 2.34%.