August 4, 2016/Cordros Research

• Sentiments were broadly bullish in global equity markets, with gains being mostly concentrated in the first half. The key drivers of the widespread positive performance were upbeat economic data, monetary policy decisions, better-than-expected corporate earnings and advancement in the price of crude oil – albeit short-lived.

• The Nigerian equities market closed negative in July (5.36% m/m), marking the first monthly loss since April. The decline was driven by  the release of disappointing first half 2016 corporate earnings, CBN’s announcement of the dissolution of the board of Skye Bank Plc, broad-based profit-taking on the gains (17.4% total) recorded over May and June, and rising yields in the fixed income and money markets.

• Average interbank rates increased, in what was a volatile month due to the frequent intervention by the CBN through OMO auctions as well as the recent liberalization of the FX market (which occurred at the end of June).

• The release of June’s inflation figures, the MPC’s decision to increase MPR, and the high stop rates at the CBN’s aggressive OMO auctions drove yields higher in both the treasury bills and bond markets.

• The Naira extended decline against the USD, falling 14.32% in the interbank segment, from June’s closing level. The Naira exchange rate also depreciated at the parallel segment during the month, but at a slower rate relative to the interbank segment.