May 18, 2026/United Capital Report

Global Markets

United States

The US producer price Index (PPI) surged by 1.4% month-on-month in April 2026. This marked the largest increase since March 2022 and exceeding market expectations of 0.5%. The sharp rise was driven by both surging energy costs particularly a 15.6% increase in gasoline prices and broad-based gains in services. Goods prices rose by 2.0%, supported by increases in jet fuel, diesel, industrial chemicals, fresh vegetables, and residual fuel costs. Services inflation accelerated by 1.2%, the strongest increase since March 2022. This was driven largely by higher machinery and equipment wholesaling margins and gains across transportation, fuel retailing, chemical wholesaling, legal services, and health-related retail services. On an annual basis, producer inflation rose to 6.0% in April 2026, the highest level since December 2022, up from 4.3% in March.

Euro Area

The Euro Area economy expanded by 0.8% year-on-year in the first quarter of 2026, slowing from around 1.2% recorded in Q1 2025. The softer growth came amid rising energy prices and broader economic headwinds linked to the Middle East conflict, alongside weak domestic demand. Growth remained weak or slowed across most major economies, including Germany, France, Italy, the Netherlands, Belgium, Austria, and Lithuania. Spain remained one of the bloc’s strongest-performing economies, with GDP growth accelerating slightly to 2.7% year-on-year during the quarter.

Asia

China’s PPI rose 2.8% year-on-year in April 2026, up from 0.5% in March and above forecasts of 1.5%. This was the strongest increase since July 2022, driven by higher global commodity and energy prices linked to the Iran conflict. Beijing’s capacity cuts also supported higher factory-gate prices. Production material costs rose to 3.8%, led by mining, raw materials, and processing. Consumer goods prices stayed in deflation, though declines eased. On a monthly basis, prices rose 1.7%, the fastest since October 2021.

Oil Markets

Oil markets were mixed during the week, as persistent geopolitical tensions continued to influence global energy prices amid shifting supply expectations. Bonny Light crude declined by 13.60% week-to-date to settle at US$110.27/bbl, while Brent crude gained 5.66% to close at US$105.72/bbl. Despite recent volatility, both benchmarks maintained strong year-to-date gains of 73.87% and 73.74%, respectively, reflecting the continued impact of geopolitical risks and earlier supply disruptions on global oil markets.

Outlook

Global markets are expected to trade cautiously, as Middle East tensions, elevated energy prices, and the Fed’s higher-for-longer stance continue to weigh on sentiment. With Brent crude holding above $110 per barrel and the US-Iran ceasefire remaining fragile, energy market volatility is unlikely to ease soon. Equity markets face a mixed outlook AI and technology stocks provide support, but high valuations and slowing earnings are pushing investors to be more selective. Emerging markets remain under pressure from a stronger dollar and tighter global financial conditions. On fixed income, yields are expected to stay high, with sticky inflation and heavy government borrowing leaving little room for declines. Overall, markets are likely to remain range-bound and volatile, with geopolitical developments, inflation data, and central bank signals driving direction.

Domestic Economy

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) is scheduled to meet on May 19–20, 2026. United Capital Research expects the MPC to: Maintain the Monetary Policy Rate (MPR) at 26.5%, retain the standing facility corridor around the MPR +0.5%/-4.5%, keep the Cash Reserve Requirement (CRR) for Commercial Banks at 45%, retain the CRR for Merchant Banks at 16%, retain the Liquidity Ratio at 30%, adjust the CRR on Non-Treasury Single Account (TSA)public sector deposits to 85% from 75%. The Naira appreciated modestly to US$/₦1,375 in April, while crude oil production increased to 1.49mbpd, supported by the reopening of key oil facilities. Overall, we expect the MPC to adopt a cautious hold stance while tightening liquidity conditions through a higher CRR on non-TSA public sector deposits.

Equity Market

The Nigerian Exchange All Share Index (NGX-ASI) extended its bullish momentum during the week, rising by 2.27% week-on-week from 244,775.83 points to close at 250,330.92 points, bringing the year-to-date return to 60.87%. Sectoral performance was broadly positive, led by the Industrial Goods Index, which surged by 10.01% during the week. The Insurance, Banking, and Consumer Goods indices also recorded strong gains of 6.86%, 4.77%, and 3.49%, respectively. However, the Oil & Gas Index declined by 4.42% week-on-week, reflecting profit-taking activities within the sector despite elevated global oil prices.

Fixed Income and Money Market

The fixed income market reflected broadly bearish sentiment during the week, with yields moderating slightly across most money market and fixed income instruments amid improved liquidity conditions. In the money market, the Overnight (O/N) rate declined marginally by 0.05% to 22.20%, while the Open Repo Rate (OPR) remained unchanged at 22.00%, indicating relatively stable system liquidity. In the Nigerian Treasury Bills market, yields declined across all maturities, reflecting renewed investor demand. The 91-day, 182-day, and 364-day NTB yields eased to 16.33%, 17.52%, and 18.76%, respectively. Performance in the bond market was mixed, with the 3-year bond yield rising slightly by 0.01% to 16.19%, while the 5-year and 7-year bond yields declined marginally to 16.70% and 16.83%, respectively. The 10-year bond yield remained unchanged at 14.96%, suggesting relatively balanced demand at the longer end of the curve. Overall, the market maintained a cautious but relatively stable tone, supported by moderate liquidity conditions and selective investor interest across fixed income instruments.

Outlook:

Equity Market

The Nigerian equity market is expected to maintain its positive bias, as investors continue to buy some value stocks in anticipation of strong future earnings. Meanwhile, profit taking is possible. Macroeconomic reform momentum, a supportive oil price environment, and growing foreign investor confidence continue to provide a solid foundation. The FTSE Russell reclassification and the much-anticipated Dangote Refinery listing remain powerful medium-term catalysts that could significantly re-rate the market. Meanwhile, global risk-off sentiment, Naira volatility, and profit-taking pressures at elevated levels are likely to keep gains measured. The market is expected to trend higher, but stock selection will be increasingly critical as the rally matures.

Fixed Income Market

The Nigerian fixed income market is expected to remain active, with system liquidity and CBN open market operations continuing to anchor short-term yields. Treasury bill demand is expected to stay firm, particularly at the short end where real returns remain attractive to both domestic and foreign investors. At the longer end, the 10-year yield currently 14.96% is expected to hold broadly steady. Meaningful compression unlikely given the Fed’s hawkish hold. Overall, the market is expected to remain range-bound, with the short end outperforming and the long end anchored by global rate dynamics and Nigeria’s ongoing fiscal pressures