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The Market Today - 9 May 2018

Trump Iran decision drives oil prices higher                                                       

United States President Donald Trump pulled out of a nuclear deal with Iran which was due for a renewal in mid-May. The conclusion of the deal would most likely lead to the re-imposition of sanctions on the Middle Eastern state, a reality that has driven up oil prices. Iran expanded its oil exports in 2015 after the deal was initially agreed and has played a significant role in the OPEC output cut which has supported oil prices. As the deal comes to an end, there is a higher risk of geopolitical tensions in the region and a large question mark on the sustainability of Iran’s oil exports. As such, oil prices have rallied in response to Trump’s decision, with Brent crude breaking the $76/bbl barrier for the first time since November 2014.                                                        

Nigerian bourse returns to negative territory                                                   

The uptrend on the Nigerian Stock Exchange was short-lived as the bourse closed mildly under, shedding 4bps yesterday. Aside from movement in DANGCEM, underlying sentiment in the market remained mixed yesterday. Barring any significant market catalyst, we expect mixed sentiment to persist in today’s session.                                                              

Stock Watch: CCNN has advanced 20% over the last six sessions. We highlight that the company released better than expected Q1’18 earnings last week. They also recently announced the completion of expansion of their Sokoto plant. The stock currently trades at a five-year high of ₦23.45 and has returned 147% ytd.                                                        

Mixed sentiment permeates Fixed Income market                                                        

In the absence of an OMO auction yesterday, Interbank call rate declined to 6.00% (previous: 7.58%). Meanwhile, trading in the T-bills space was largely tilted towards the sell side, with yields advancing 13bps on average. Meanwhile, trading in the bond space was mixed, with yields on benchmark bonds declining 2bps on average. We expect increased sell pressure observed in the market yesterday to persist in another mixed session today.