August 10, 2025/United Capital Report

Global Markets: Markets Rise Cautiously Amid Conflicting Signals

United States

· US equity market appreciated on stronger than expected corporate earnings, , strong labour market data,. and expectation that the Federal Open Market Committee (FOMC) of the Federal Reserve System(Fed) may cut interest rate in  September 2025. Over 80% of S&P 500 firms beat earnings estimates while total non-farm payroll employment improved slightly in July 2025.

· However, stocks with weak earnings were punished sharply. Also, tariff risks persisted, with new US trade pressure on India.

Europe

· European stocks appreciated during the week,, with the Stoxx 600 rebounding as hopes for a Ukraine ceasefire and solid earnings helped offset trade anxiety.

· Conversely, UK markets underperformed as the FTSE 100 slid on a firmer Pound. Swiss stocks slumped on steep new US tariffs. Investors remain cautious as the tariff fallout looms, but dip-buying persists amid softening US Fed rhetoric.

Asia

· Asian stocks rose for a 3rd week in four weeks, lifted by chip-related relief, resilient earnings, and a softer US trade stance.

· Japan outperformed, with the Topix hitting a record on buyback momentum and easing US auto tariffs. SoftBank surged due to its JPY 421bn ($2.9bn) Q2-2025 net profit which beat expectations.

· Semiconductor names like TSMC and Samsung rebounded as exemptions to Trump’s proposed 100% chip tariffs boosted sentiment.

· However, weakness persisted in India and Hong Kong amid tariff headwinds and underwhelming earnings.

Oil Markets

· Brent crude oil fell by 1.7% week on week(w/w) to $65.08/bbl. as Russia weighed a Ukraine truce to avoid US sanctions.

· Prices remain volatile as markets assess Trump’s threats, OPEC+ supply hikes, and resilient US-China demand.

Outlook

Next week, a calmer political backdrop may  support investor sentiments, as markets gain clearer signals on the direction of US trade policy. Focus will turn to the July inflation report, due on 12 August. A surprise downside could fuel equity gains and reinforce rate-cut expectations. Several Fed officials are also scheduled to speak, offering fresh insights into policy outlook. The Bank of England interest rate cut may also support market. Markets will monitor the three-way talks between the US, Ukraine, and Russia, particularly for any implications on oil prices

African Markets: Trade Negotiations, Cocoa Strains, and IMF Talks

West African Cocoa Supply Constraints Persist

• Bloomberg reports that Ghana’s 2025-26 cocoa harvest might decline to 620,000 tons, while Nigeria’s harvest could decline to 305,000-ton per annum. This is due to structural constraints like aging trees, smuggling, and changing weather patterns. This may lead to increase in cocoa price and by extension chocolate and related prices.
• Meanwhile, Ghana raised its farmgate prices by 4.2% to GHS 3,228.8 (US$306.9) per 64kg bag. This represents 70% of the freight-on-board value of the beans. Ghanaian cocoa farmers got two upward price adjustments in the 2024-25 season totaling 50%

Mauritius Q2-2025 Public Sector Debt Rises on Long-Term Borrowings

• Mauritius public sector debt rose by 1% quarter on quarter in Q2, 2025 to MUR 634.7bn (US$13.5bn) from MUR 628.2bn in Q1,2025. Other long-term bonds, the biggest component of public debt, increased to MUR 186.3bn from MUR 181.4bn.
• Nonetheless, Debt-to Gross Domestic Product (GDP) fell from 88.8% to 88.4% as GDP expanded faster than borrowing.

Zambia Seeks Extension of IMF Program

• Zambia plans to extend its International Monetary Fund (IMF) programme by 12 months to secure an extra US$145mn.
• The country signed the economic programme in 2022 as it sought to restructure its USDollar debt after defaulting in 2020.
• The existing programme is due to expire in October 2025. Thus far, the country has received $1.55bn under the $1.7bn Extended Credit Facility.

Outlook

Equities:  African markets will be shaped by a mix of local and global drivers. In Nigeria, focus will remain on strong positioning in financial services sector (Bank and Insurance) while not losing sight of profit taking. In Kenya, subdued foreign interest and central bank signals will guide sentiment. South African equity may trade sideways, with investors tracking China’s July activity data for cues on commodity demand.

Government Fixed Income Securities: Government securities may enjoy further bullish trends as global rate cut in BoE, and expectations in European Central Bank (ECB) and Fed may lead to yield compression.                                                                  

Commodities: Crude oil and Gold may sustain gains while the price of cocoa may remain high.

Risks: Currency depreciation, unexpected geopolitical shocks, and adverse commodity price swings.

Domestic Economy

Insurance Reform Signals Industry Overhaul

· President Tinubu has signed the Nigerian Insurance Industry Reform Act (NIIRA) 2025 into law, introducing a unified, modern regulatory framework.

· Key provisions include higher capital requirements , mandatory policy expansion, digitisation, and faster claims settlement.

Nigeria’s External Position Improves in HY1-2025

· The external position continues to improve with FX inflows from both trade and investments.

· Capital importation increased by 80% in Jan-June 2025 over 2024 figures. FPI accounted for 87% of total capital importation, money market absorbed 72% of capital imported.

· Exports increased by 3%, imports declined 7% and trade balance rose by 53% over the period.

Equity Market

· NGX-ASI rose by 4.21% w/w, closing at 145,756.52 points. BUAFOODS (+25.25%), BUACEMEN (+24.89%) and DANGCEM (+9.95%) led large-cap gains

· Market capitalisation increased to ₦92,21tn, supported by broad-based investor interest. The Nigerian equity market appreciated by 41.61% YTD

Money Market Review

· System liquidity declined, closing at a N0.23trn surplus (from N1.60trn surplus).

· Short-term rates went up, with Open Repo Rate and Overnight Rate climbing by 0.10% and 0.15% w/w to 26.60% and 27.03%, respectively

· In the secondary market, 364-day yield climbed by 0.83% w/w to 19.53%,  

Outlook

Equity Market: We expect investor positioning to remain tilted toward fundamentally strong financial services stocks, particularly banks and insurers, given their resilient earnings profiles and attractive valuations. However, pockets of profit-taking are likely in highly capitalized counters following recent gains. Overall, market activity may reflect cautious sentiment, with selective buying interest in quality names counterbalanced by intermittent sell-offs to lock in gains.

Fixed Income Market: Rates in the fixed income space are projected to hover around current levels, though a modest uptick cannot be ruled out should market liquidity conditions tighten. Investor activity is likely to be skewed toward the short end of the curve, with duration risk being taken selectively.