The Market Today - 12 October 2018
OPEC cuts oil demand growth forecast
In its October report, OPEC forecast an increase in world oil demand by 1.36 mb/d, a decline of 0.05 mb/d from its previous estimate and the third downward revision in as many months. The group also cut the estimate for demand in 2019 for its own crude by 300,000 bpd reflecting an adjustment in the economic projections for Turkey, Brazil and Argentina. Meanwhile, OPEC output increased by 0.13 mb/d to 32.76 mb/d—the highest since August 2017—supported by an increase in output from Saudi Arabia and Libya. With sanctions against Iran continuing to hit output (Iran reported a fall of 0.05 mb/d in September) the group has pledged to increase output to compensate for the loss supply. Despite the slight downgrade in oil demand projections, we expect oil prices to remain stable going into 2019.
Nigerian bourse records mild gains amid mixed trading
Despite three of the four key sectors closing in negative territory, the NSE ASI finished 11bps up thanks to a positive showing from the Consumer Goods sector and a few specific heavyweight stocks. Market breadth was even with 16 advances and 16 declines. With investor sentiment remaining tepid amidst sporadic trading and depressed market turnover, we expect trading in today’s session to remain mixed with a bearish tilt.
Stock Watch: After a spell of five out of eight sessions closing negative, NB has shed 7% in eight sessions to settle at ₦85.00. The stock has retreated 37% YTD and has a 30% upside from its target price of ₦121.77.
Mixed trading in FI market amidst OMO sale
At an OMO auction – first of the week – the CBN offered ₦300 billion across the 91DTM, 182DTM and 350DTM bills, selling ₦250 billion of the 182DTM and 350DTM bills at stop rates of 12.5% and 13.5% respectively (effective yields: 13.33% and 15.51%). Amid this, the interbank call rate declined 67bps to 9.00%. We see mixed trading persisting till week close as investor interest in securities is muted by low liquidity levels and lukewarm sentiment. That said, we anticipate a slightly positive close to the week amidst slivers of buying interest, especially on bills.
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