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Breakfast Report - 08 February 2021

According to the Minister of Labour and Employment, Senator Chris Ngige, a meeting between the Federal Government and organised labour would be held in February to consider reports on PMS pricing and electricity tariffs. Since the start of the year, we have not seen the expected review of electricity tariffs and significant uptick in PMS prices despite the ascent of oil prices beyond $50/b. While we look forward to the outcome of these negotiations, we expect inflation to continue its longest build-up as combined factors of currency weakness, supply-side shocks and higher energy costs continually stoke consumer prices. " According to the Minister of Labour and Employment, Senator Chris Ngige, a meeting between the Federal Government and organised labour would be held in February to consider reports on PMS pricing and electricity tariffs. Since the start of the year, we have not seen the expected review of electricity tariffs and significant uptick in PMS prices despite the ascent of oil prices beyond $50/b. While we look forward to the outcome of these negotiations, we expect inflation to continue its longest build-up as combined factors of currency weakness, supply-side shocks and higher energy costs continually stoke consumer prices. 

Equity: The first week of February was largely dominated by profit taking activity, as some investors sold down on gains made in the previous month. Also, given that the ASI opened the week at the overbought region of the 14-day RSI, the domestic bourse shed some of its initial gains. However, given the corrections recorded in the past week, we expect to see some stability in this week, as expected earnings results could be a catalyst for driving the market back to positive territory. 

Stock Watch: Unaffected by the sell offs which pushed other fundamentally sound stocks to the negative territory, GUARANTY trailed MULTIVERSE (+909bps) and NNFM (+977bps) as the third best performing stock for Friday. The Banking stock recorded a gain of 909bps, while its YTD performance improved to +11.28%. 

Fixed Income: We expect the market to kick off this week on a positive note, as we foresee positive sentiment stemming from the approval of the $1.9 trillion stimulus package by the U.S. congress lifting investor sentiment and driving optimism globally.