April 28, 2025/United Capital Research

Markets Rebound Amid Trade Easing and Earnings Strength

US markets spent last week recalibrating after the initial tariff shock and subsequent 90-day reprieve, with trade tensions easing and earnings taking center stage. The S&P 500 initially fell ~1.50% amid tech-led weakness, but under-the-surface resilience in small/mid-caps and equal-weight indices hinted at broader strength. Volatility spiked midweek as speculation around Fed Chair, Powell’s job security surfaced, temporarily pressuring the USD and boosting haven assets. However, reassurances from President Trump and improving trade rhetoric helped restore confidence, driving a sharp equity rebound. The S&P 500 ended the week up >4.00%, led by a 11.00% rally in FANG+ stocks, as earnings sentiment improved. Results have broadly exceeded expectations, particularly in tech, with AI demand a recurring theme. Still, guidance remains cautious, especially from consumer-facing companies navigating cost pressures and persistent tariff uncertainty.

European equities rallied last week, with the STOXX Europe 600 gaining 2.77% w/w, buoyed by easing US-China trade tensions and the retraction of Fed Chair Powell dismissal rumours. Major indices posted strong gains: Germany’s DAX surged by 4.89% w/w, France’s CAC 40 rose by 3.44% w/w, and Italy’s FTSE MIB advanced by 3.80% w/w. While ECB officials struck a cautious tone—highlighting downside risks from tariffs—recession fears were tempered by the bloc’s trade diversity. Still, Germany cut its 2025 GDP forecast to zero, citing export vulnerability, with Bundesbank President Nagel warning of a potential mild recession.

In the UK, retail sales volumes rose unexpectedly to 0.4% m/m in Mar-2025, compared to 0.7% m/m in Feb-2025. Economists had projected a 0.4% m/m decline. Nonetheless, consumer confidence is increasingly weighed by rising energy bills, volatile financial markets, and US trade war. In view of these concerns and their impact on the economy, the IMF reduced its UK’s economic growth estimate for 2025 from 1.6% to 1.1%.

Asian markets ended the week higher, supported by easing global trade tensions and stimulus expectations in China. Japan’s Nikkei 225 gained 2.80% w/w, with the yen weakening slightly as safe-haven demand ebbed and bond yields ticked higher. In China, hopes for additional government stimulus helped lift the CSI 300 by 0.46% w/w and the Shanghai Composite by 0.61% w/w. Hong Kong’s Hang Seng outperformed, rising by 2.82% w/w. Investor sentiment across the region was buoyed by a more constructive global trade tone, though macro headwinds, particularly from tariffs, remain in focus.

This week will be pivotal for global markets, marked by the peak of US earnings season, with a third of S&P 500 companies reporting—including most remaining mega-cap tech names outside Nvidia and Broadcom. Investors will closely watch AI-related commentary. A heavy US economic calendar includes Q1-GDP, PCE, ISM, and labor market data, while globally, key releases span China PMIs, Eurozone GDP and inflation. Although the Fed enters its media blackout, the Bank of Japan will announce its rate decision Thursday. US Treasury refunding updates arrive Monday and Wednesday, and Canada’s election kicks off the week. With markets stabilizing, attention may also return to trade rhetoric and geopolitical risk, setting the stage for a potentially volatile and information-rich stretch.
 
Macroeconomic Highlights
IMF has projected that Nigeria’s headline inflation will average 26.5% in 2025, following a recent rebasing of the Consumer Price Index (CPI) by the National Bureau of Statistics (NBS). The inflation rate, although down from 33.2% in 2024, is expected to spike again to 37.0% in 2026. Consequently, the IMF paints a cautious picture of Nigeria’s macroeconomic prospects amid reform-driven adjustments and external volatility.

IMF has also projected that Nigeria’s economy will grow by 3.00% in 2025. This marks a downward revision from its October 2024 forecast of 3.20% and falls well short of the Federal Government’s ambitious 2025 budget projection of 4.60%. For 2026, the IMF expects Nigeria’s growth to slow slightly to 2.70%, further underlining concerns about the sustainability of current recovery efforts and the broader challenges facing Africa’s 4th largest economy.

Nigeria’s currency in circulation declined to N5.0tn in March 2025, according to the latest data from the Central Bank of Nigeria (CBN), reflecting a continued drop for the third consecutive month in 2025. The report published by the Apex Bank showed that currency in circulation (CIC) fell by 0.79% month-on-month from N5.04 trillion in February 2025 and N5.24 trillion recorded in January 2025. This marks a cumulative decline of N240 billion or 4.58% in the first quarter of 2025.

Nigeria’s broad money supply rose to N114.22tn in Mar-2025 despite aggressive monetary tightening by the Central Bank of Nigeria (CBN), which raised the Cash Reserve Ratio to an unprecedented 50.00%. The March figure represents a 24.00% increase when compared to N92.19tn recorded in the same month of 2024. On a m/m basis, the figure also rose by 3.2% from N110.71tn in February.

Nigeria recorded a net FX inflow of $15.20bn in Q1-2025, reflecting a stronger FX position driven by sustained market reforms and rising investor and diaspora confidence. The latest data, presented at the Nigerian Investor Forum shows that FX inflows rose to $28.92bn in Q1-2025, while outflows stood at $13.72bn, reflecting improved liquidity conditions amid evolving policy shifts.

This week, we expect the macroeconomic environment to be relatively quiet in the absence of any major economic data releases.

Domestic Equities: The Bulls Regained Momentum…NGX-ASI Up by 1.45% w/w
Last week, the domestic equities market opened for four trading days as the Federal Government of Nigeria declared Friday 18th April and Monday 21st April as public holiday to commemorate 2025 Easter celebration. As of close of business last week, the market closed on a Positive note as the bulls dominated the market, majorly on the back of impressive Q1-2025 financial results that have been rolled out. Notably, share price appreciation in MTNN (+5.58% w/w) pulled the main index higher. Also worthy of mention are buy interests in WAPCO (+13.29% w/w), GTCO (+6.78% w/w), NESTLE (+10.00% w/w), ZENITHBANK (+5.68% w/w) and UBA (+5.92% w/w).  As a result, the benchmark NGX-ASI improved by 145bps to close at 105,752.61 points, bringing the YTD return to a steady 2.75% and strengthening market capitalization to N66.47tn. In terms of trading, market activity improved as the average value and volume of stocks traded rose by 30.33% and 21.61% to print at N14.01bn 463.61mn units, respectively. Market breadth was positive as investors’ sentiments climbed to 2.37x (previously, 0.70x), 64 stocks appreciated while 27 depreciated.

Meanwhile, on a sectorial level, performance was Bullish as Three (3) out of Five (5) sectors under our coverage closed in the green territory. The Consumer Goods sector (+8.57% w/w) led the gainers due to buy interests in NESTLE (+10.00% w/w) and DANGSUGA (15.77% w/w). Following was the Insurance sector (+7.30% w/w) on the back of share price appreciation in NEM (+16.28% w/w) and CORNERST (+15.44% w/w). The Banking sector (+5.06% w/w) followed on the back of gains in ZENITHBA (+5.68 w/w) and UBA (+5.92% w/w).  On the flip side, the Industrial Goods sector (-3.43% w/w) led the laggards on account of share price depreciation in DANGCEM (-10.00% w/w) and CAP (-3.61% w/w). The Oil and Gas sector (-0.07%) followed owing to sell-offs in MRSOIL (-9.95% w/w).

On corporate actions, Dangote Cement Plc has released their Q1-2025 Audited Financial Statements declaring a Profit Before Tax (PBT) of N311.97bn and Profit After Tax (PAT) of N209.25bn.

Wema Bank Plc has declared a final dividend of N1.00, with a qualification date of 01-May-2025, a closure of register on 02 to 07 May-2025 and a payment date of 22-May-2025.

Bua Cement Plc has released their Q1-2025 Audited Financial Statements declaring a Profit Before Tax (PBT) of N99.74bn and Profit After Tax (PAT) of N81.12bn.

The equities market also saw the listing of Legend Internet Plc, an internet service provider debut on the NGX through a listing by introduction. The company listed 2.00bn ordinary shares of 50 kobo, achieving an initial market capitalisation of N11.3bn.

Looking forward, the equities market might remain dovish due to elevated interest rate environment in the fixed-income market, we still expect bearish sentiments to linger in the background. Generally, investors await Monetary Policy Committee (MPC)’s decision in their upcoming meeting in May. Concurrently, retail investors are engaging in profit-booking, resulting in selloffs that impede the consistent upward movement of stock prices.

Money Market: Stop Rates Across the Bills Declined at the NT-Bills Auction
Last week, the financial system opened with a surplus balance of N374.93bn. During the week, the financial system was awash with excess liquidity from coupon payments on bonds, NT-bills maturities and FAAC inflows. Although the Central Bank was active in the primary market, nevertheless, the system liquidity remained in a surplus region. As a result, the financial system closed the week with a surplus balance of N1.78tn. Consequently, the average Open Repo Rate (OPR) and Overnight Rate (OVN) fell by 138bps and 147bps w/w from 27.88% and 28.36% to settle at 26.50% and 26.89%, respectively.

The Central Bank of Nigeria conducted an NT-bill auction with an offer size of N400.00bn across the 91-day, 182-day, and 364-day bills. At the auction, investors’ demand was strong, as total subscriptions printed at N1.54tn, indicating an oversubscription rate of 3.85x. The bids were majorly skewed towards the longer-tenured instrument, “364-day bill”, which received total bids of N1.38tn. Notably, the Apex Bank oversold the auction, allotting a total of N714.38bn. That said, the stop rate on the 91-day, 182-day, and 364-day bills fell by 50bps, 100bps and 3bps from 18.50%, 19.50% and 19.63% to settle at 18.00%, 18.50% and 19.60%, respectively.

Also, the Central Bank conducted an OMO auction with an offer size of N500.00bn across the 298-day and 319-day bills. Investors’ demand was strong at the auction, as total subscriptions printed at N1.39tn, indicating an oversubscription rate of 2.78x. At the end of the auction, the Apex Bank over-allotted the auction, selling a total of 1.01tn worth of bills. As a result, the stop rates on the 298-day and 319-day bills settled at 22.37% and 22.73%, respectively.

In the secondary NT-bills market, mild bullish activities return to the market following the decline in rates at the NT-bills auction. As a result, the average yield on NT bills declined by 7bps w/w to close at 20.83% (previously, 20.90%). In the same vein, the average yield on OMO bills fell by 109bps w/w to settle at 27.13% (previously, 28.22%).

This week, we do not expect any inflow to hit the financial system. We believe that the current liquidity will be mopped up following the settlement of the OMO auction (N1.01tn) that was conducted in the previous week. As a result, we expect funding and inter-bank rates to remain at current levels, with the likelihood of inching higher. In the secondary market, we expect the bullish sentiments to be sustained as investors look to fulfil their unmet bids from the primary market.

Bond Market: Bearish Sentiments Dominate the Market
The secondary bond market was relatively quiet as investors were on the sidelines waiting for the outcome of the primary market auctions. Thus, the average bond yield increased marginally by 2bps to settle at 19.02% (previously, 19.00%). Similarly, activities were mainly bearish in the corporate bonds market, as the average yield on corporate bonds rose by 9bps to settle at 21.82% (previously, 21.73%).

In the Nigerian secondary Eurobonds, we observed bullish sentiments return to the market as investors resume cherry-picking activities across the curve. Thus, the average yields in the market declined by 53bps w/w to settle at 10.05% (previously 10.58%).

Looking forward, we expect the Debt Management Office (DMO) to conduct the Apr-2025 bond auction with an offer size of N350.00bn across the reopened 2029 “5-YR” and 2033 “9-YR” papers. At the auction, we expect investors’ appetite to be mildly strong. In the secondary market, we project that mixed sentiments will linger. The outcome of marginal rates at the auction will significantly determine the direction of the market. However, we believe that the bearish undertone will continue as there is a chance that bond yields will likely remain around current levels for the rest of Q1-2025. Meanwhile, we expect bullish sentiments in the Nigerian Eurobonds market to persist as investors look to take advantage of opportunities in the market.

Currency Market: Naira Appreciated at the Official Market
Last week, the Naira appreciated by 2bps w/w at the official market to close at N1,599.55/$, from its previous close of N1,599.94$. Similarly, the Naira remained unchanged at the parallel market to settle at N1,610.00/$. Lastly, Nigeria’s external reserves fell by 21bps to settle at $37.811bn (previously, $37.889bn).

This week, we expect the Naira to hover at current levels if there are no substantial shock.  We expect the CBN to continue to defend the Naira in the Foreign Exchange Market. Ultimately, CBN’s intervention would sustain the Naira at current levels with a possibility of marginal gains. However, we foresee that speculation, hoarding, insufficient supply of FX, high demand for FX, weak capital inflows, capital flight and low foreign investment, debt service pressure, weak FX earnings, corruption and negative real returns would continue to weaken the Naira in the FX market.