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Financials soar, NSE halts six-day decline

What shaped the market today?
 Following from the softening losses from previous session, the Nigerian bourse snapped a 6-day losing streak at the close of today’s session, buoyed by strong gains across large cap banking names and ahead of the CBN’s rate decision (MPR raised 200bps to 14%). On the global scene, European shares traded higher amidst a slew of earnings and ahead of two key central bank meetings (US Fed and Bank of Japan) expected over the course of the week. Major Asian indices also closed higher save for Japan’s Nikkei which was weighed down by reduced optimism on the size of stimulus package to be announced by Bank of Japan. U.S. markets opened mixed.

 The Financial Services sector (+494bps) almost singlehandedly lifted the NSE ASI following strong gains in heavyweight ZENITHBANK (+473bps), GUARANTY (+498bps), ACCESS (+755bps) and ETI (+839bps). The Consumer Goods sector (+60bps) also closed higher on the back of further gains in NB (+122bps). Industrial Goods (-16bps) and Oil & Gas (-31bps) indices however closed lower amidst respective declines in WAPCO (-41bps) and SEPLAT (-500bps).

 Market breadth remained positive with 27 advances and 16 declines.

What will shape the next trading session?

 With the MPC’s decision to hike the benchmark interest rate by 200bps (to 14%), we expect markedly mixed reaction in banking stocks with likely further gains for Tier I banks who are net placers on interbank market and should benefit from the rate hike. We expect this to steer the broad market index higher in the coming session amidst continued bearish sentiment in other key sectors.