May 25, 2026/United Capital Report

Global Markets

United States

The S&P Global US Composite Purchasing Managers’ Index (PMI) remained unchanged at 51.7 points in May 2026, reflecting resilient but slower private sector growth. Meanwhile, the US Manufacturing PMI rose to 55.3 points, its highest level since May 2022, supported by stronger output and job creation. The services sector remained weak at 50.9 points from 51 points in the previous month. Rising energy costs and supply disruptions also pushed input prices to their highest level since late 2022. Overall, this suggests that US economic activity remains resilient, although growth momentum is becoming uneven across sectors.

Euro Area

The S&P Global Eurozone Composite PMI fell to 47.5 points in May 2026 from 48.8 points, signaling the sharpest decline in private sector activity since October 2023. The decline was driven by weaker services activity, while manufacturing growth slowed but remained in expansion territory. Meanwhile, rising energy prices from the Middle East conflict increased input costs and weakened consumer purchasing power. In addition, the European Commission lowered the Euro Area’s growth forecast and raised its inflation outlook due to prolonged energy shocks. Weak PMI readings and the lower growth forecasts suggest slowing economic activity across the Euro Area.

Asia

China’s retail sales rose by 0.2% year-on-year in April 2026, reflecting the weakest consumer demand since December 2022. Consumer spending weakened sharply due to the economic impact of the Iran war, particularly in automobile and housing-related purchases. China’s industrial production also slowed to 4.1% year-on-year, marking its weakest growth since July 2023. Weaker retail sales and industrial output suggest slowing economic momentum in China amid rising external pressures.

Oil Markets

Oil markets traded lower during the week as optimism around US-Iran ceasefire negotiations reduced geopolitical risk premium. Bonny Light crude fell by 2.33% to $111.54/b, while Brent crude declined by 2.97% to $102.58/b. The easing concerns over prolonged Strait of Hormuz disruptions largely drove the decline in prices. Meanwhile, the spread between both benchmarks narrowed slightly as both grades moved lower during the week. Despite the decline, oil prices remained elevated overall due to Middle East supply disruptions and falling global inventories.

Outlook

Global markets are expected to remain cautious this week as investors monitor elevated oil prices, US-Iran negotiations, and key US economic data. Markets are also assessing the direction of monetary policy under new US Federal Reserve Chairman, Kevin Warsh. US equities may remain under pressure as rising Treasury yields and elevated oil prices continue to weigh on inflation and investor sentiment. Although NVIDIA reported strong earnings, gains in technology stocks remained limited. Meanwhile, emerging market assets may face continued pressure from a stronger US Dollar and tighter global financial conditions. In the oil market, prices are expected to remain volatile due to uncertainty surrounding US-Iran negotiations. The International Energy Agency (IEA) also noted that the global oil market is expected to remain in deficit until Q4 2026, supporting elevated oil prices. However, any progress in diplomatic negotiations could ease geopolitical tensions and reduce oil prices.

Domestic Economy

The Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) retained the Monetary Policy Rate (MPR) at 26.50% to sustain exchange rate stability, curb inflationary pressures, and support investor confidence. The MPC also maintained all other monetary policy rates, including the corridor around the MPR. Meanwhile, S&P Global upgraded Nigeria’s sovereign credit rating from “B-” to “B” with a Stable Outlook. The agency cited stronger external reserves, improved FX reforms, higher oil production, and better macroeconomic resilience. Overall, these developments reinforce confidence in Nigeria’s reform trajectory and could support capital inflows, Naira stability/appreciation, stronger demand for FGN Bonds, and increased foreign participation in the Nigerian capital market.

Equity Market

The NGX All-Share Index closed bearish last week, declining by 0.25% week-on-week from 250,330.92 points to 249,712.37 points. Year-to-date return moderated slightly to 60.47%. Sectoral performance was broadly negative, with three of the five sectors under our coverage closing in the red. The Insurance Index declined the most, losing 1.77% week-on-week. The Industrial Goods Index followed with a loss of 1.24%, while the Consumer Goods Index declined the least at 0.84%. On the gainers’ side, the Banking Index led with a 1.11% week-on-week gain. The Oil and Gas Index closed marginally positive, gaining 0.07%.

Fixed Income and Money Market

The fixed income market reflected broadly bearish sentiment during the week, with yields increasing across most money market and fixed income instruments amid cautious investor sentiment. In the money market, the Overnight (O/N) rate declined marginally by 0.02% to 22.18%, while the Open Repo Rate (OPR) remained unchanged at 22.00%, indicating relatively stable system liquidity. In the Nigerian Treasury Bills market, yields rose across all maturities, reflecting weak investor demand and cautious sentiment. The 91-day, 182-day, and 364-day NTB yields rose to 16.56%, 17.58%, and 18.81%, respectively. Performance in the bond market was bearish, with the 3-year, 5-year and 7-year bond yields rising to 16.23%, 17.22%, and 17.00%, 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 tone during the week as investors demanded higher yields across most fixed income instruments amid persistent inflationary concerns.

Outlook:

Equity Market

The Nigerian equity market is expected to trade cautiously this week as profit-taking activities compete with continued investor demand. Although the NGX-ASI remains at historically elevated levels, selective buying in fundamentally strong stocks is expected to support the market. Banking stocks are likely to remain in focus following the MPC’s decision to retain the MPR at 26.5%. Meanwhile, expectations surrounding the FTSE Russell Frontier Market reclassification could continue to support foreign investor interest ahead of its September 01, 2026 commencement date. However, rising inflation, elevated US Treasury yields, and global risk-off sentiment may limit upside potential. Overall, the market is expected to consolidate around current levels, with selective opportunities likely across banking, industrial goods, and oil and gas stocks.

Fixed Income Market

This week, the Nigerian fixed income market is expected to trade cautiously after the MPC retained the MPR at 26.5%. The yields on short-tenor securities may respond to the liquidity position and inflation rate expectations. The long-term securities will respond to the credit rating and the positive macroeconomic environment. Meanwhile, demand for Treasury bills is expected to remain strong, especially at the short end of the curve. Investors are likely to prefer shorter-term instruments due to uncertainty around inflation and interest rates. Stable exchange rate and attractive yields are also expected to support investor participation. Pension fund administrators and other institutional investors are expected to remain active, although investment decisions may become more selective. Overall, the market is expected to remain active but largely range-bound during the week.