Fundamentally, earnings have been solid, with 76.00% of companies beating estimates, while consumer resilience, despite macro uncertainties, provided an additional backstop. Industrials led sector performance on strong demand commentary, while Energy stocks lagged alongside falling crude prices. Markets are adjusting to recent shocks, but April’s strong recovery suggests a generally positive outlook, even though risks from news events remain high.

European markets posted strong gains as tariff concerns eased, with the STOXX Europe 600 Index rising 3.44% w/w. Germany’s DAX climbed 4.63% w/w, while France’s CAC 40 and Italy’s FTSE MIB rose by 3.57% w/w and 4.13% w/w, respectively. Economic growth in the eurozone accelerated to 0.40% q/q in Q1-2025, beating expectations, while inflation remained sticky at 2.20% y/y. Core inflation edged higher to 2.70% y/y. However, sentiment indicators weakened, reflecting concerns about future output. In the UK, housing market momentum slowed, with prices and mortgage approvals falling. Business confidence also dipped amid worries over US tariffs and rising employment costs, pointing to growing economic caution across the region.

The Bank of Japan left rates unchanged as expected, while lowering growth forecasts and highlighting trade uncertainties, which markets interpreted as dovish. This sent local yields lower and pressured the yen against the US dollar. Meanwhile, trade negotiations are progressing, with officials aiming to bring forward the next round of talks to mid-May, targeting a potential agreement by June. Japan’s Finance Minister also signaled that US Treasury holdings could be considered as a bargaining tool in negotiations, adding a new layer of complexity to the discussions.

Oil prices ended the week lower, pressured by a firmer US dollar and shifting OPEC+ dynamics. Brent crude failed to sustain gains above its 20-day moving average and retreated toward early April lows, with markets reacting to reports that Saudi Arabia may prioritise market share over price support. Additionally, speculation around OPEC+ bringing forward talks to discuss a potential 400kb/d production increase weighed on sentiment. Brent is attempting to stabilise just above the key $60.00/bbl level, but the broader tone remains fragile amid heightened supply concerns.

Markets head into the new week with a busy agenda despite a lighter economic calendar. Investors will digest key central bank decisions from the Federal Reserve, Bank of England, and Brazil, alongside US ISM Services data and global PMIs. Focus will also sharpen on China’s economic releases amid lingering growth concerns. Treasury Secretary Bessent’s Congressional testimony and Mark Carney’s White House visit add political dimensions to the mix. Corporate earnings season remains in full swing with a heavy slate of US and global reports. While macro catalysts are somewhat lighter ahead of April inflation prints, market sentiment remains sensitive to rate path signals, trade headlines, and geopolitical developments.

Macroeconomic Highlights
The Central Bank of Nigeria (CBN)’s January 2025 Monthly Economic Report shows that Nigeria’s debt servicing obligations for the month of January stood at N696.27bn, while total retained revenue amounted to only N483.47bn, indicating that debt service alone consumed about 144.00% of all government earnings in the month.

The Nigerian Economic Summit Group (NESG) has flagged the 2025 federal budget as grossly inadequate to meet Nigeria’s critical social and infrastructure demands, despite a notable expansion in overall spending compared to previous years. While there is a marginal improvement in capital expenditure allocations for 2025 compared to prior years, the NESG emphasized that it is still far from sufficient to bridge Nigeria’s vast infrastructure gap. 

The Lagos State Government has announced that it generated N582.45 billion in revenue during the first quarter of 2025, representing 79.00% of its quarterly target of N728.90 billion. This performance also accounted for 20.00% of the state’s total annual revenue projection of N2.92 trillion, excluding net grants and the opening balance.

The African Development Bank Group has approved a new five-year Country Strategy Paper for Nigeria, committing about $650m annually between 2025 and 2030 to drive economic transformation, build resilience, and foster broad-based prosperity. The Bank disclosed this in a statement published on its website on Thursday, saying that $2.95bn would be provided over the first four years of the plan, to be complemented by an estimated $3.21bn in co-financing from development partners.

Electricity subsidy has increased to about N762bn in the first four months of 2025. Figures from various reports of the Nigerian Electricity Regulatory Commission showed that the subsidy on power was approximately N178bn in January. It rose to N194bn in February, N192bn in March, and N194bn in April. The Federal Government is therefore going to pay a sum of N198.42bn as electricity subsidy in April. The amount is N5.82bn higher than the N192.6bn incurred as subsidies in March.

Nigeria is on track to fully repay its International Monetary Fund Rapid Financing Instrument loan by 2029. The latest repayment schedule published by the Fund on its website showed that the country had secured approval for an emergency financial support of 2,454.50 million Special Drawing Rights, which translates to about $3.32bn at the prevailing exchange rate of SDR1 to $1.35404 as of May 1, 2025.

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

Domestic Equities: The Bulls Maintained Momentum…NGX-ASI Up by 0.27% w/w
Last week, the domestic equities market opened for four trading days as the Federal Government of Nigeria declared Thursday 1st May as public holiday to commemorate 2025 Workers’ Day celebration. As of close of business last week, the market closed on a Positive note as the bulls dominated the market. Notably, share price appreciation in TRANSCOR (+5.81% w/w) pulled the main index higher. Also worthy of mention are buy interests in PRESCO (+9.55% w/w), NB (+17.95% w/w), ZENITHBA (+2.15% w/w), GTCO (+1.59% w/w) and WAPCO (+2.10% w/w).  As a result, the benchmark NGX-ASI improved by 27bps to close at 106,042.57 points, bringing the YTD return to a steady 3.03% and strengthening market capitalization to N66.65tn. In terms of trading, market activity improved as the average value and volume of stocks traded rose by 34.55% and 18.63% to print at N18.85bn 549.99mn units, respectively. Market breadth was positive however, investors’ sentiments declined to 1.41x (previously, 2.37x), 64 stocks appreciated while 27 depreciated.

Meanwhile, on a sectorial level, performance was Bearish as Three (3) out of Five (5) sectors under our coverage closed in the red territory. The Oil and Gas sector (-2.90% w/w) led the laggards due to sell-offs. Following was the Insurance sector (-2.89% w/w) on the back of share price depreciation in MANSARD (-7.43% w/w) and SUNUASSU (-5.19% w/w). The Banking sector (-0.38% w/w) followed on the back of losses in ETI (-18.75 w/w) and JAIZBANK (-4.48% w/w).  On the flip side, the Consumer Goods sector (+2.89% w/w) led the gainers on account of share price appreciation in NB (+17.95% w/w) and UNILEVER (+5.65% w/w). The Industrial Goods sector (+0.40%) followed owing to buy-interests in WAPCO (+2.10% w/w) and BETAGLAS (+9.96% w/w).

On corporate announcement, Zenith Bank Plc has released their Q1-2025 Audited Financial Statements declaring a Profit Before Tax (PBT) of N350.82bn improving by 9.57% from Q1-2024 figure of 320.19bn and Profit After Tax (PAT) of N311.83bn improving by 20.71% from Q1-2024 figure of 258.34bn.

Access Holdings Plc has released their Q1-2025 Audited Financial Statements declaring a Profit Before Tax (PBT) of N222.78bn improving by 9.88% from Q1-2024 figure of 202.74bn and Profit After Tax (PAT) of N182.75bn improving by 14.73% from Q1-2024 figure of 159.29bn.

Fidelity Bank Plc has released their Q1-2025 Audited Financial Statements declaring a Profit Before Tax (PBT) of N105.77bn improving by 167.77% from Q1-2024 figure of 39.50bn and Profit After Tax (PAT) of N91.10bn improving by 189.76% from Q1-2024 figure of 31.44bn.

Guaranty Trust Holding Company Plc has released their Q1-2025 Audited Financial Statements declaring a Profit Before Tax (PBT) of N300.38bn declining by 41.02% from Q1-2024 figure of 509.35bn and Profit After Tax (PAT) of N258.03bn declining by 43.54% from Q1-2024 figure of 457.02bn.

Looking forward, the equities market might be mixed 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: The Financial System Remains Awash with Liquidity
Last week, the financial system opened with a surplus balance of N1.63tn. During the week, the financial system was awash with excess liquidity following strong activities in the CBN’s Standing Deposit Facility (SDF). Additionally, there was an inflow of N259.35bn from bond coupon payments. Although the Central Bank was active in the primary market, the system liquidity remained in a surplus region. As a result, the financial system closed the week with a surplus balance of N1.25tn. Consequently, the average and Overnight Rate (OVN) fell by 2bps w/w from 26.89% to settle at 26.87%. Meanwhile, the average Open Repo Rate (OPR) remained unchanged at 26.50%.

In the secondary NT-bills market, mild bearish activities returned as investors await proper guidance for rate direction in Q2-2025. As a result, the average yield on NT bills climbed by 24bps w/w to close at 21.07% (previously, 20.83%). Conversely, the average yield on OMO bills fell by 13bps w/w to settle at 27.00% (previously, 27.13%).

This week, we do not expect any major inflows into the financial system. Hence, we believe that system liquidity will remain at current levels. As a result, we do not rule out the possibility of the CBN conducting an OMO auction to mop up the existing liquidity in the financial system. The Central Bank is also expected to conduct an NT-bills auction across the 91-day, 182-day, and 364-day bills. Thus, we expect rates to remain at current levels with a possibility of tapering further. In the secondary market, we expect bearish sentiments to persist.

Bond Market: Marginal Rates at the Auction Remain Unchanged
The Debt Management Office (DMO) conducted the Apr-2025 bond auction with an offer size of N350.0bn across the reopened 2029 “5-YR” and 2033 “9-YR” bond papers. At the auction, investors’ demand was mildly strong, as total subscriptions printed at N495.95bn, indicating an oversubscription of 1.42x. The bulk of the bids were skewed towards the longer instrument, “2033”, which received total bids of N452.16bn. Notably, the DMO mildly over-allotted the auction, selling just N397.90bn worth of bond papers. That said, the marginal rate on the 2029s and 2033s remained unchanged at 19.00% and 19.99%, respectively.

The secondary bond market was relatively quiet as investors were on the sidelines waiting for the outcome of the primary market auction. Thus, the average bond yield increased marginally by 2bps to settle at 19.04% (previously, 19.02%). Similarly, activities were mainly bearish in the corporate bonds market, as the average yield on corporate bonds rose by 16bps to settle at 21.98% (previously, 21.82%).

In the Nigerian secondary Eurobonds, we observed bearish sentiments return to the market as investors remain cautious towards the market due to concerns in the global market and recent depreciation in the Naira. Thus, the average yield in the market climbed by 58bps w/w to settle at 10.63% (previously 10.05%).

Looking forward, we project that mixed sentiments will linger. 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 Q2-2025. Meanwhile, we expect bearish sentiments in the Nigerian Eurobonds market to continue on the back of global concerns and developments.

Currency Market: Naira Depreciated at the Official Market
Last week, the Naira depreciated by 16bps w/w at the official market to close at N1,602.18/$, from its previous close of N1,599.55$. The Naira remained unchanged at the parallel market to settle at N1,610.00/$. Lastly, Nigeria’s external reserves rose by 33bps to settle at $37.934bn (previously, $37.811bn).

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.