June 23, 2025/United Capital Report
Muted Reaction to Global Risk as Fed Message Anchors Markets
US markets entered the week on edge after Israel and Iran exchanged direct missile strikes, marking a notable escalation from prior symbolic attacks. While the targeting of each country’s domestic energy infrastructure stirred concerns, the market response remained largely contained outside of oil markets. Markets saw some relief came as better-than-expected data out of China lifted sentiment early in the week. China’s retail sales grew by 6.4% y/y in May, up from 5.1% y/y in April. Still, geopolitical risk lingered, with President Trump hinting at potential US involvement and setting a two-week deadline for a decision, adding to an already crowded July agenda that includes trade negotiations and the anticipated “Big Beautiful Bill.” The G7 summit offered little in terms of market catalysts, as President Trump cut meetings short to return to Washington. Meanwhile, the FOMC held rates steady at 4.25 – 4.50%, with Chair Powell reiterating confidence in the current stance given resilient economic conditions. Markets were largely unmoved, with the S&P 500 trading in a tight range near the 6,000 mark, ending the week 0.20% w/w lower.
European equities ended the week broadly lower, with the STOXX 600 down by 1.5% w/w as major indexes posted a 2nd consecutive weekly decline. Sentiment remained cautious amid geopolitical tensions and shifting Central Bank signals. While the Bank of England held rates steady, the Norges Bank, SNB, and Riksbank all delivered surprise cuts, reinforcing the region’s diverging policy paths. Technically, the DAX continued its retreat from all-time highs and is now testing its 50-day moving average, while France’s CAC slipped below key support levels. The FTSE 100, however, remains comfortably above trend.
Asian markets were mixed, with Japan ending slightly higher while China lagged. The Nikkei held firm, supported by the Bank of Japan’s decision to taper bond purchases more slowly than expected, reducing monthly buying to ¥200.00 bn next year in a bid to limit bond market volatility. Meanwhile, Nippon Steel finalized its acquisition of US Steel, a notable cross-border deal. In contrast, mainland Chinese stocks and Hong Kong equities extended their decline amid persistent concerns around weak domestic demand and lingering property sector headwinds. South Korea stood out with another week of strong performance, buoyed by tech strength and resilient export data.
Crude prices extended their rally for a 3rd consecutive week, buoyed by escalating tensions in the Middle East and a sharp drawdown in US inventories. Brent crude rose by 3.70% w/w, adding to last week’s 12.0% w/w surge and the prior week’s 6.0% w/w gain, briefly exceeding $79.00/bbl. before paring gains into Friday’s close. Volatility was amplified by shifting signals around potential US involvement in the region. The Department of Energy reported an unexpectedly large crude inventory draw of 11.5m bbls., reinforcing the bullish tone. With geopolitical risks still simmering, oil markets traded with a bid throughout most of the week.
The coming week brings a packed calendar that could inject renewed volatility into global markets. Monday kicks off with global flash PMIs, offering an early read on economic momentum across major economies. In the US, all eyes will be on May PCE inflation data due Friday, a key input into the Fed’s policy calculus. Chair Powell’s dual testimony before Congress on Tuesday and Wednesday will dominate the Central Bank narrative, alongside a flurry of Fed speakers, potentially providing fresh clarity on the FOMC’s internal policy divide. Meanwhile, early-cycle earnings resume with reports from FedEx, Nike, and Micron, and the week concludes with the closely watched Russell Reconstitution, which could drive a spike in end-of-week trading volumes. Markets will also digest a heavy slate of global macroeconomic data, including UK’s GDP, Eurozone’s sentiment surveys, and China’s industrial profits. There will also be several Central Bank appearances from the ECB, BoE, BoJ, and Mexico’s interest rate decision. It is set to be a data-rich and headline-heavy week that could reshape investor positioning.
Macroeconomic Highlights
Nigeria’s headline inflation rate dropped to 22.97% in May 2025, marking the second consecutive month of decline, according to new data released by the National Bureau of Statistics (NBS). The latest figure reflects a continued easing of price pressures, down from 23.71% recorded in April 2025. On a y/y basis, the headline inflation rate was 10.98% lower than the 33.95% recorded in May 2024. Similarly, the food inflation rate in May 2025 stood at 21.14% year-on-year, marking a significant drop of 19.52 percentage points from the 40.66% recorded in May 2024. The Core inflation, which excludes the prices of volatile agricultural products and energy, stood at 22.28% in May 2025. This shows a decrease from April 2025 were core inflation rate stood at 23.39% on a y/y basis.
The Federation Account Allocation Committee distributed N1.659tn for May 2025. This amount represents a decline of N22.00bn, or about 1.31%, from the N1.681tn shared in April 2025. A statement from the Office of the Accountant-General of the Federation, issued by Director (Press and Public Relations) Bawa Mokwa, on Wednesday, confirmed that the disbursement was made during the FAAC meeting held in Abuja in June 2025.
The long-term dispute between telecommunications operators and commercial banks over unpaid Unstructured Supplementary Service Data fees appears to be ending, as telecom companies confirm the recovery of 95.00% of the N180bn owed. This development signals a vital step towards resolving a five-year standoff that had threatened mobile banking services, a crucial channel for millions of Nigerians, particularly in rural areas with limited internet access.
The United Kingdom has reaffirmed Nigeria’s continued eligibility for duty-free access on 99.00% of goods exported to the U.K under the Developing Countries Trading Scheme (DCTS), a post-Brexit trade initiative aimed at boosting commerce with developing nations. This assurance comes amid global trade tensions created by the recent announcement of sweeping tariffs by the United States. The scheme is designed to support economic growth in developing countries by lowering trade barriers, simplifying export requirements, and making it easier for local businesses to tap into the UK market.
The Federal Government of Nigeria has launched the ASIF Investment Platform, a flagship initiative designed to unlock high-impact, cross-border investments in infrastructure, renewables, manufacturing, and healthcare across Africa. This platform was unveiled at the 4th Annual Meeting of the Africa Sovereign Investors Forum (ASIF) in Abuja. The ASIF Investment Platform aims to de-risk mega-projects and to create a favourable investment environment by mitigating risks associated with large-scale projects.
This week, we expect the National Bureau of Statistics to release the Q1-2025 Rebased GDP Report.
Domestic Equities: The Bulls Maintained Momentum…NGX-ASI Up by 2.35% w/w
As of the close of market last week, the domestic equities market closed on a positive note as the bulls dominated the market. Notably, share price appreciation in MTNN (+9.51% w/w) pulled the main index higher. Also worthy of mention are buy interests in GTCO (+18.81% w/w), BUAFOODS (+4.58% w/w), SEPLAT (+9.78% w/w), PRESCO (11.68% w/w) and STANBIC (+9.64% w/w). As a result, the benchmark NGX-ASI improved by 235bps to close at 118,138.22 points, bringing the YTD return to a steady 14.78% and strengthening market capitalization to N74.53tn. In terms of trading, market activity improved as the average value and volume of stocks traded climbed by 35.68% and 4.01% to print at N23.08bn and 713.18mn units, respectively. Market breadth was positive; however, investors’ sentiments declined to 1.31x (previously, 1.41x), 55 stocks appreciated while 42 depreciated.
Meanwhile, on a sectorial level, performance was Bullish as Four (4) out of the Five (5) sectors under our coverage closed in the green territory. The Oil and Gas sector (+5.27% w/w) led the gainers due to buy-interests in SEPLAT (+9.58% w/w). Following, was the Banking sector (+3.58% w/w) on the back of share price appreciation in ETI (+1.67% w/w) and FIDELITY (+0.78% w/w). The Insurance sector (+2.37% w/w) followed on the back of share price appreciation in NEM (+13.33% w/w) and CORNERST (+7.24% w/w). The Consumer Goods sector (+2.16% w/w) followed owing to buy-interests in BUAFOODS (+4.58% w/w) and INTBREW (+3.77% w/w). Lastly, on the flip side of the coin, the Industrial Goods sector was the sole laggard on the back of selloffs in BUACEMEN (-2.33% w/w) and CUTIX (-0.32% w/w).
Looking forward, the equities market might continue in its upward trend leading to a slight gain in the ASI. This is hinged on the market benefiting from the excess liquidity in the financial system. Similarly, investors might start positioning for Q2-earning season in June, favoring corporates with FX gains, cost control, clear growth trajectory, and those with potentials for quality interim dividend payment. On the flip side, a potential OMO auction and bonds auction might reduce the inflow of funds into the equities market as elevated yields keep investors anchored to the fixed income market instruments. Similarly, positive sentiments will be moderated by elevated inflation, heightened interest rate, weak Naira and general uncertainty in the global and domestic macroeconomic space. We expect retail investors to continue to take profit from the previous week’s gains, tactically slowing the upward movement of the equities market. We advise investors to cherry pick fundamentally sound stocks with potential for interim dividend payment.
Money Market: Stop Rates Declined Across the Bills at the PMA
Last week, the financial system opened with a surplus balance of N1.13tn. During the week, system liquidity improved due to inflows from OMO maturities worth N985.88bn. Nevertheless, the Apex Bank was active in the primary market, as mop-up activities via an OMO auction (total sales of N1.07tn) wiped out the excess system liquidity. That said, the financial system closed the week with a surplus balance of N180.96bn. Consequently, the average Open Repo Rate (OPR) and Overnight Rate (OVN) climbed by 70bps w/w and 75bps w/w from 26.50% and 26.96% to settle at 27.20% and 27.71%, respectively.
The Central Bank of Nigeria (CBN) conducted an NT-bills auction with an offer size of N162.02bn across the 91-day, 182-day, and 365-day bills. At the auction, investors’ demand was strong, as total subscriptions printed just at N1.23tn, indicating an oversubscription rate of 7.61x. The bids were majorly skewed towards the longer-tenured instrument, the “365-day bill”, which received total bids of N1.10tn. Notably, the Apex Bank sold the exact amount on offer. That said, the stop rates on the 91-day, 182-day, and 365-day bills declined by 18bps, 15bps, and 51bps from 17.98%, 18.50%, and 19.35% to settle at 17.80%, 18.35%, and 18.84%, respectively.
In the secondary NT-bills market, we observed bullish sentiments supported by the outcome of the Primary Market Auction (PMA). As a result, the average yield on NT bills declined by 13bps w/w to close at 20.51% (previously, 20.64%). Meanwhile, the average yield on OMO bills rose by 75bps w/w to settle at 26.70% (previously, 25.95%).
This week, we expect a total of N216.76bn from bond coupon payments and N283.79bn from NT-bills maturity to hit the financial system. Additionally, we expect inflows from FAAC payment during the week. Nevertheless, these will be wiped out due to the anticipated bond auction. As a result, we expect the money market and FTD 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 fulfill their unmet demand from the primary market.
Bond Market: Bullish Activities Sustained in the Secondary Market
The secondary bond market was bullish, as the downward movement of rates in NT-bills PMA spurred buying interest amongst investors. Thus, the average bond yield fell by 27bp to settle at 18.57% (previously, 18.84%). Similarly, activities were bullish in the corporate bond market, as the average yield on corporate bonds decreased by 38bps to settle at 21.39% (previously, 21.77%).
In the Nigerian secondary Eurobonds, buy interests returned among investors as the average yields in the market declined by 28bps to settle at 8.97% (previously, 9.25%).
Looking forward, we expect the Debt Management Office (DMO) to conduct the May-2025 bond auction with an offer size of N100.00bn across the reopened 2029 “5-YR” paper and a new 2032 “7-YR” paper. At the auction, we expect investors’ appetite to be mildly strong. In the secondary market, we project that mild bullish sentiments will persist. The outcome of marginal rates at the auction will significantly determine the market’s direction. Meanwhile, we expect the recent positive improvements in the global market to continue driving bullish sentiments among investors in the Nigerian Eurobonds market.
Currency Market: Naira Appreciated at the Official Market
Last week, the Naira appreciated by 13bps w/w at the official market to close at N1,547.36/$, from its previous close of N1,549.35/$. Similarly, the Naira appreciated by 31bps at the parallel market to settle at N1,595.00/$ from its previous close of N1,600.00/$. Lastly, Nigeria’s external reserves fell by 81bps to settle at $37.714bn (previously, $38.021bn).
This week, we expect the Naira to hover at current levels if there are no substantial shocks. We anticipate 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. Similarly, inflows from remittances and other FX earnings might support the Naira in the new week. However, legacy issues, debt service pressure, speculations, hoarding, insufficient supply of FX etc. would continue to weaken the Naira in the FX market.
