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The Market Today - 07 March 2018

OPEC Chiefs meet with Shale Executives                                                            

OPEC chiefs and executives from U.S. shale companies met at the start of the week in a bid to improve the relationship between the two key agents in the global oil market. U.S. anti-trust law prevented the parties from discussing issues related to crude oil output and price fixing so focus was placed on expectations for medium-term global oil demand and capital investment in the oil & gas sector. OPEC secretary-general Mohammed Barkindo expressed the group’s bullish outlook for demand and emphasized the need for continuous investment to ensure long-term supply. Whilst the meeting is unlikely to generate any concrete action plans – primarily due to U.S. anti-trust laws – we are encouraged by the sign of thawing relations between OPEC producers and the U.S. shale industry and imagine that the oil market would welcome the development.                                                           

Late recovery drives ASI 22bps higher                                                   

Having traded lower for most of the session, the Nigerian stock exchange recorded another positive close (+22bps) following a late recovery in select blue-chips. Noting the negative market breadth and downbeat intraday trading, sentiment on the Nigerian bourse was largely varied and thus forecast further mixed trading today.                                                      

Stock Watch: UNILEVER has gained 22% over the last five sessions. The stock currently trades at ₦59.60 and has returned 45% ytd. The stock was the largest gainer on the floor yesterday.                                                         

Slight buys in a predominantly quiet Fixed Income session                                                        

The CBN conducted an OMO auction yesterday, offering ₦150 billion on the 114DTM and 219DTM bills. While the apex bank was unsuccessful on the shorter bill, it sold ₦68 billion on the 219DTM at a stop rate of 14.40% (effective yield: 15.76%). Trading in the T-bills market was slightly positive with yields declining 1bp on average. Meanwhile, trading in the bond space was downbeat with yields across benchmark bonds advancing 3bps on average with mild sell pressure observed across the curve. As the apex bank continues to mop-up liquidity in the system, we expect the market to remain quiet in today’s session barring any significant cash inflow.