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Market Data
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Global
*Data as of 4pm WAT
Market News
Local
FG allocates N33 billion to RCC for Eleme-Onne section of East-West road - Naira Metrics
The Nigerian government has allocated ₦33 billion to the Reynolds Construction Company (RCC) for the Eleme-Onne section of the East-West Road, a critical infrastructure project in the country. This funding is aimed at accelerating the completion of this vital transportation route, which connects the Niger Delta region to the rest of Nigeria and enhances economic activities.
Nigeria’s solid mineral deposit worth over $700bn – Dele Alake - Naira Metrics
Dele Alake, the Special Adviser to the Lagos State Governor on Innovation and Technology, has stated that Nigeria possesses solid mineral deposits valued at over $700 billion. He highlighted the need for the government to prioritize the development of this sector to diversify the country's revenue sources and reduce dependence on oil.
Global
Fed Leaves Rates Unchanged, Signals Another Hike This Year - Bloomberg
The U.S. Federal Reserve has maintained interest rates but adopted a more hawkish stance, projecting another rate hike by year-end and keeping monetary policy tighter through 2024 than previously expected. The Fed's median forecast still anticipates the benchmark overnight interest rate peaking this year at 5.5% to 5.75%.
10-year Treasury yield hits highest level since 2007 - CNBC
The yield on two-year U.S. Treasury notes reached a 17-year high at 5.1970% following the Federal Reserve's hawkish stance on future policy. The 10-year yield also climbed to a new 16-year peak of 4.4310%. The Fed's projection of a forthcoming rate increase and expectations of significantly tighter monetary policy through 2024 have led to higher yields.
Bank of England Holds Rates for First Time in Nearly Two Years - WSJ
The Bank of England's Monetary Policy Committee voted 5-4 to maintain the primary interest rate at 5.25%. Further tightening remains possible if inflation persists longer than expected. The bank anticipates a 0.1% expansion of the UK's GDP in Q3 and plans to reduce its holdings of UK government bonds by £100 billion within the next year.
Weekly Investment Watchlist
Market Commentary:
Asia and Australia:
Asian equities concluded the day with declines across the board. The most substantial losses were observed in technology-oriented benchmarks in South Korea and Taiwan, with Hang Seng and Nikkei also experiencing losses exceeding 1%.
The Bank of Japan (BoJ) is the next major central bank to have a meeting. Unlike the recent surprises from the Bank of England (BoE) and the Federal Reserve, the BoJ’s meeting is expected to proceed as planned, with no immediate changes to policy. However, the yen’s exchange rate, particularly at 148 to the USD, remains a concern. There has been discussion of potential intervention, and comments regarding this issue may arise during the meeting. Hints about the eventual end of easy monetary policy next year may also be discussed.
New Zealand’s Q2 GDP rebounded by 0.9% quarter-on-quarter, following an upwardly revised 0% in Q1. This exceeded consensus estimates of a 0.4% increase. The revision of Q1's figures also meant that the economy avoided a technical recession.
Chevron and striking LNG workers in Australia are close to reaching a new agreement after resolving several issues. A commission proposed a deal on pay and work conditions to end the dispute and has asked both sides to make a decision by Friday morning. This development could have implications for European natural gas prices.
Taiwan’s export orders in August fell for the 12th consecutive month, with steep year-on-year declines in IT and electronics orders, as well as orders from the EU and the US. Total export orders declined by 15.7% year-on-year to NT$1.47 trillion ($46.03 billion), missing consensus estimates of a 10.5% decline and following July’s 12.0% contraction.
Europe, Middle East, Africa:
European equity markets saw declines, with the travel and leisure sector underperforming and restaurants and bars dragging down the retail sector. After a few days of decline, the retail sector bounced back as the best performer of the day.
Analysts at UBS suggest a defensive positioning strategy into 2024 due to the correlation between rising stock prices, which may increase overall market volatility. The brokerage suggests that the soft landing in GDP may not account for a significant margin decline, potentially leading to a hard landing for corporate profits.
ECB’s Nagel stated that it’s too soon to conclude that rates have peaked and that inflation will retreat slowly. If the ECB opts to pause its rate hikes now, it could potentially be a policy mistake. However, with the Federal Reserve and the Bank of England pausing, it is likely that the ECB will also pause at its next meeting on October 26, 2023, ahead of the Fed and BoE meetings in the first week of November.
The Americas:
Cisco (CSCO) plans to acquire Splunk for $157 per share in cash, which amounts to approximately $28 billion in equity value. This transaction is not expected to affect Cisco’s previously announced share buyback program or dividend program.
FedEx reported fiscal Q1 revenue that aligned with consensus estimates, down nearly 7% year-on-year. However, its EPS exceeded expectations by more than 20%. The focus was on the significant margin improvement of 480 basis points in Ground. This margin expansion was attributed to the company’s DRIVE cost-cutting program, diverted freight from UPS during union negotiations, and shifts in market share stemming from Yellow’s bankruptcy.
The United Auto Workers (UAW) and the Big Three automakers are still far apart in their contract talks, with the union’s deadline approaching to escalate a new round of work stoppages.
The central bank of Brazil lowered its key Selic rate by 50 basis points to 12.75% for the second consecutive meeting in September 2023, in line with expectations. The Committee stated that this decision is in line with its strategy to anchor inflation around the target over a relevant horizon while anticipating further cuts of the same magnitude in the next meetings.
The Week Ahead:
Monday:
Tuesday:
Harmonized Index of Consumer Prices (MoM) (EA)
Wednesday:
PBoC Interest Rate Decision (CN)
UK Consumer Price Index YoY is at 6.80%, compared to 7.90% last month and 10.10% last year.
The Federal Reserve kept the target range for the federal funds rate at a 22-year high of 5.25%-5.5%
Thursday:
Initial Jobless Claims (US)
US Existing Home Sales MoM is at -2.16%, compared to -3.26% last month and -4.87% last year.
Friday:
GfK Consumer Confidence (GB)
Retail Sales (MoM) (GB)
HCOB Composite PMI (EA)
S&P Global Services PMI (US)
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