The Nigerian equities market opened the first week of December on a bullish note, supported by bargain hunting in fundamentally strong counters as investors positioned for a potential year-end rally. Notably, gains in DANGCEM (+15.0%), UBA (+9.7%), NB (+12.4%), GTCO (+3.0%) and ZENITHBANK (+3.7%) drove the All-Share Index higher by 2.5% w/w to 147,040.07 points
December 5, 2025/Codros Report
Global
Based on recently released data from S&P Global, the United States (US) Composite PMI eased slightly to 54.20 points in November (October: 54.60 points), indicating a mild moderation in overall business activity across both the manufacturing and services sectors. More specifically, the Manufacturing PMI eased to 52.20 (October: 52.50) due to slower demand growth, partly reflecting weaker export orders amid elevated input price pressures linked to high trade tariffs. Similarly, the Services PMI moderated to 54.10 points (October: 54.80), driven by soft export demand and persistent cost pressures. On employment, hiring expanded for the ninth consecutive month, though gains remained modest given elevated labour costs. Meanwhile, inflationary pressures intensified, with both input and output prices rising to their highest levels in nine months. Despite the slight ease, overall sentiment remains tilted to the upside, buoyed by the end of the government shutdown, expectations of higher federal spending in the year ahead and moderating interest rates. Accordingly, US private sector activity is expected to remain resilient, anchored by sturdy domestic demand, increased government spending, and improving business confidence. Nonetheless, lingering cost pressures and heightened geopolitical uncertainty could temper sentiment and moderate the pace of expansion.
Based on newly released Eurostat data, headline inflation in the Euro Area inched up by 10bps to 2.2% y/y in November (October: +2.1% y/y), slightly above market expectations (+2.1% y/y). The uptick was primarily driven by higher services inflation, which climbed to an eight month high of +3.5% y/y (October: +3.4% y/y), alongside a slower pace of deflation in energy prices (-0.5% y/y vs October: -0.9% y/y). However, food inflation was unchanged (+2.5% y/y), reflecting steady price increase of processed food, alcohol & tobacco (+2.3% y/y), despite unprocessed food inflation (+3.3% y/y vs October: +3.2% y/y) inching higher. Similarly, core inflation (excluding energy, food, alcohol, and tobacco) held steady at 2.4% y/y, indicating that underlying price pressures remain contained. On a month-on-month basis, consumer prices recorded a disinflation rate of 0.3% (October: +0.2% m/m). We expect the recent uptick in inflation to be temporary, given that core price trends remain steady and continue to signal mild underlying pressures. Moreover, soft wage growth and cautious consumer spending should help keep price increases contained. Looking ahead, with inflation hovering only marginally above target and activity showing early signs of stabilization, we anticipate that the ECB will keep policy rates unchanged at its December meeting.
Global Market
The global equities market traded higher this week as risk appetite strengthened, with investors positioning for a potential year end rally amid growing conviction of a 25bps US Fed rate cut in December. At the time of writing, US equities (DJIA: +0.3%; S&P 500: +0.1%) were poised to end the week in positive territory, supported by rotations into the financials and defensive sectors as markets priced in a more accommodative Fed stance. Sentiment was further lifted by subdued US labor market indicators pushing market implied probabilities for a rate cut toward near certainty ahead of the delayed September PCE release due later today. Meanwhile, European equities (STOXX 600: +0.4%; FTSE 100: –0.1%) delivered a mixed performance as investors digested eurozone inflation prints, global rate expectations, and a series of corporate updates. In Asia, major indices (Nikkei 225: +0.5%; SSE: +0.3%) closed higher, mirroring Wall Street’s positive tone and rising expectations of a December Fed cut. Finally, the MSCI Emerging and Frontier Markets (MSCI EM: +0.7%; MSCI FM: +1.5%) indices closed higher, reflecting gains in China (+0.3%) and Vietnam (+3.1%), respectively.
Domestic Economy
According to the Nigerian Bureau of Statistics (NBS), the economy maintained its upward momentum, growing by 3.98% y/y in Q3-25 (Q2-25: 4.23% y/y). Parsing the breakdown, oil sector grew slower by 5.84% y/y (Q2-25: 20.46% y/y), primarily due to lower crude oil production growth in the quarter (Q3-25: 1.64 mb/d | Q2-25: 1.68 mb/d) reflective of the combined effects of PENGASSAN’s industrial action and scheduled turnaround maintenance at key facilities. Meanwhile, the non-oil sector extended its gains, expanding by 3.90% y/y (Q2-25: 3.64% y/y), driven by stronger growth in the Agriculture (+3.79% y/y vs Q2-25: +2.82% y/y) and Services (+4.15% y/y vs Q2-25: +3.94% y/y) sectors, despite a mild slowdown in the Manufacturing (+1.26% y/y vs Q2-25: +1.60% y/y) sector. Nigeria’s economy is expected to remain resilient in the near term. We project oil production to rise to 1.66 mb/d in Q4-25 as facilities resume operations and utilisation improves. However, oil sector growth will likely soften (Q4-25E: +0.03% y/y vs. Q3-25: +5.84% y/y) due to a high base. In contrast, non-oil growth is expected to strengthen to 4.12% y/y (Q3-24: +3.91% y/y), supported by festive spending, increased travel, hospitality, and year-end activities. Overall, we forecast real GDP growth of 4.01% y/y in Q4-25, resulting in full-year growth of 3.84% (2024: +3.34% y/y.
The Purchasing Manager’s Index (PMI) printed above the 50-point threshold for the twelfth consecutive month, rising to its highest level in 23 months and signalling sustained growth in business activity. According to CBN, the composite PMI increased to 56.4 points in November (October: 55.4 points), reflecting broad improvement across key sectors. Specifically, the Agriculture sector PMI (58.2 points vs October: 55.7 points) expanded for the 16th consecutive month, supported by stronger farming activities, improved inventories, higher new orders, and increased employment amid the ongoing main harvest. The Services sector PMI (56.8 points vs October: 55.6 points) expanded for the tenth straight month on the back of increased output, new orders, inventory build-up, and employment gains—supported by notable improvements across educational services, wholesale trade, and entertainment-related sub-sectors (motion pictures, cinema, sound recording, and music production). Meanwhile, the industry PMI held steady at 54.2 points, remaining above the expansion threshold for the third consecutive month, underpinned by resilient consumer demand that continued to support output, new orders, and delivery times. Looking ahead, we expect private sector activity to remain on an expansionary path, supported by gradually improving macroeconomic conditions, including a more stable naira, easing inflationary pressures, and stronger consumer demand during the festive season.
Capital Markets
Equities
The Nigerian equities market opened the first week of December on a bullish note, supported by bargain hunting in fundamentally strong counters as investors positioned for a potential year-end rally. Notably, gains in DANGCEM (+15.0%), UBA (+9.7%), NB (+12.4%), GTCO (+3.0%) and ZENITHBANK (+3.7%) drove the All-Share Index higher by 2.5% w/w to 147,040.07 points. Consequently, the year-to-date return settled higher at +42.9%. On market activity, trading volume increased by 59.8%, while trading value declined by 17.2% w/w. Sector performance skewed positive, with the Industrial Goods (+7.4%), Banking (+3.2%), Consumer Goods (+1.6%), and Insurance (+1.5%) indices all advancing, while the Oil & Gas (-0.6%) index was the lone decliner for the week.
Looking ahead, we expect the market to trade with a positive bias, although the tape may remain choppy as bouts of bargain hunting are interspersed with intermittent profit taking.
Money Market and Fixed Income
Money Market
System liquidity strengthened this week, averaging NGN2.93 trillion (Previous week: NGN1.93 trillion), buoyed by NGN772.93 billion in OMO maturity inflows. As a result, the OVN rate steadied at 22.7%
Barring any liquidity mop-up by the CBN, we expect inflows from OMO maturities (NGN1.07 trillion) to further boost system liquidity, causing the OVN rate to taper.
Treasury Bills
The Treasury bills market turned bearish this week, as the market reacted to the increase in the stop rate of the long dated bill. Consequently, the average yield across all instruments increased by 9bps to 19.2%. Across segments, average NTB yields climbed by 14bps to 17.0% while average OMO yields increased by 15bps to 22.0%. At Wednesday’s NTB PMA, the DMO offered NGN700.00 billion in bills, with aggregate subscription reaching NGN774.84 billion (Bid-to-offer: 1.1x). Ultimately, NGN709.62 billion was allotted (Bid-to-cover: 1.1x), with stop rates maintained on the 91-Day (15.30%) and 182-Day (15.50%) papers, while the 364-Day stop rate surged by 146bps to 17.50%. Notably, the DMO revised its Q4-25 NTB auction calendar, implementing two key adjustments. First, an additional auction has been scheduled for Wednesday, December 10, with a total offer size of NGN750.00 billion, comprising NGN100.00 billion for the 91-Day, NGN150.00 billion for the 182-Day, and NGN500.00 billion for the 364-Day. Second, the offer size for the December 17 auction has been increased from NGN365.00 billion to NGN700.00 billion, made up of NGN100.00 billion for the 91-Day, NGN100.00 billion for the 182-Day, and NGN500.00 billion for the 364-Day.
Next week, we anticipate that robust liquidity inflows will strengthen demand for bills, exerting downward pressure on yields. At the same time, investor attention is likely to centre on the ad hoc NTB auction scheduled for Wednesday (December 10), as market participants assess potential yield cues and near-term issuance posture.
Bonds
Similarly, the FGN bond secondary market skewed bearish, as investors adopted a risk-off stance in response to the sharp repricing at the NTB auction and persistent concerns about the sizeable NGN20.10 trillion budget deficit, which continue to heighten uncertainty around the government’s near-term funding requirements and supply pressures. Consequently, the average yield increased by 2bps to 15.6%. Across the benchmark curve, the average yield increased at the short (+10bps) end following selloffs in the FEB-2031 (+61bps) bond, while it closed flat at the mid and long segments.
We also expect the off-calendar NTB auction next week to shape trading conditions in the FGN bond secondary market, as market participants recalibrate their positioning in response to potential yield signals and the DMO’s near-term funding posture.
Foreign Exchange
The naira depreciated this week by 0.4% w/w to NGN1,454.00/USD, as demand pressures overshadowed the USD100.00 million supply from the CBN. Meanwhile, gross FX reserves increased for the ninteenth consecutive week, growing by USD184.88 million w/w to USD45.04 billion (December 4). In the forwards market, the naira rates depreciated across the 1-month (-0.2% to NGN1,479.85/USD), 3-month (-0.2% to NGN1,528.99/USD), and 1-year (-1.2% to NGN1,732.71/USD) contracts, while it appreciated on the 6-month (+0.1% to NGN1,585.72/USD) contract.
The global environment remains supportive of net capital inflows amid ongoing global monetary easing and reduced geopolitical tensions, while a positive current account position and rising external reserves continue to underpin investor confidence. Furthermore, the pace of growth in goods import demand remains relatively slow, helping to contain demand pressures. Therefore, we expect the naira to remain broadly stable over the near to medium term, driven by strong net FX liquidity.
