June 22, 2026/United Capital Update

Global Markets

United States

The US Federal Reserve kept its policy rate unchanged at 3.50%-3.75% for a fourth consecutive meeting in June, in line with expectations. Updated projections revealed a divided policy stance, with some officials still expecting further rate hike this year. While the Fed lowered its 2026 growth forecast to 2.2%, it raised inflation projections sharply for both 2026 and 2027. PCE inflation was revised to 3,6% from 2.7% for 2026. For 2027, it was raised to 3.3% from 2.7%. Policymakers noted that economic activity and labour market conditions remain resilient despite elevated uncertainty linked partly to Middle East tensions. The revised outlook suggests rates may remain higher for longer, supporting the US Dollar and potentially tightening financing conditions for emerging markets.

Euro Area

Euro Area construction output rose by 0.9% year-on-year in April 2026, accelerating from a revised 0.2% increase in March. Growth was driven by stronger specialised construction activities, while building construction remained weak despite a slower rate of contraction. Construction activity improved in Germany and Spain but remained subdued across several major economies, including France and the Netherlands. Construction is a key indicator of investment, infrastructure development, and broader economic activity. The increase suggests improving business confidence and underlying growth momentum across the region.

Asia 

In Asia, the Bank of Japan raised its key interest rate by 0.25% to 1.0% at its June meeting. The is the highest level since 1995 and in line with market expectations. The move was aimed at limiting inflationary pressures from rising energy costs linked to the Middle East conflict. Policymakers warned that underlying inflation could exceed the 2% target but maintained that financial conditions would remain accommodative to support economic activity. The decision reinforces Japan’s gradual policy normalisation path and could support the Yen while modestly tightening domestic financing conditions.

Oil Markets

Oil prices declined sharply during the week. This was as concerns over potential supply disruptions from the Middle East eased, reducing the geopolitical risk premium embedded in prices. Brent crude fell by 11.65% week-on-week to US$79.85/bbl, while Bonny Light remained unchanged at US$96.75/bbl. The decline was further supported by expectations of adequate global supply and a lack of significant disruptions to key oil transit routes despite ongoing regional tensions.

Outlook

This week, global markets are expected to trade with cautious optimism following a turbulent first half of the year, with attention shifting to the durability of the US–Iran interim peace agreement and its impact on oil supply. The Federal Open Market Committee (FOMC) has signalled a more hawkish outlook, with higher inflation projections and a growing split among officials on the likelihood of further rate hikes. In Europe, markets are now focused on how Euro Area assets adjust alongside the policy rate increase by the European Central Bank (ECB) and Fed guidance. A widening rate differential may continue to support the US Dollar and maintain pressure on emerging-market currencies. In oil markets, focus will be on the pace of implementation of the peace agreement and whether supply normalisation leads to further price moderation. In Japan, attention will be on whether equities can maintain momentum amid shifting currency and energy dynamics. Overall, sentiment will be shaped by confidence in the stability of the Iran agreement. Continued de-escalation will likely support risk assets and ease inflation pressures, while any disruption could quickly reverse recent market gains.

Domestic Economy

Inflation rose to 15.93% in May 2026, up slightly from 15.69% in April 2026. This was broadly in line with United Capital Research’s forecast of 15.94%. This marks the third consecutive monthly increase in headline inflation this year. Food inflation accelerated to 16.96%, remaining above headline inflation, driven by higher prices of key food item staples. Core inflation also rose to 16.82%, indicating strengthening underlying price pressures beyond food and energy. The persistent inflation trend suggests a cautious fixed income market outlook, with yields likely to remain responsive to inflation dynamics and investor return expectations.

Equity Market

The Nigerian equities market closed the week on a negative note, with the NGX All-Share Index (NGX-ASI) falling by 3.59% week-on-week to 235,941.27 points from 244,738.74 points. Consequently, the year-to-date return moderated to 51.62%. Sectoral performance was broadly negative, as all five major indices under our coverage closed in the red. The Banking Index recorded the steepest decline, falling 10.49% week-on-week, followed by the Insurance Index, which lost 7.22%. Similarly, the Industrial Goods Index declined by 4.11%, while the Consumer Goods Index shed 1.61%. The Oil and Gas Index recorded the least loss, declining by 1.06%. Overall, market sentiment remained cautious during the week as investors continued to rebalance portfolios and take profits in some previously strong-performing counters. Nevertheless, the market continues to maintain a solid year-to-date return, supported by sustained domestic participation and continued interest in fundamentally sound stocks.

Fixed Income and Money Market

The fixed income market was mostly bearish during the week, with yields exhibiting mixed but generally upward movements across the curve. In the money market, liquidity conditions remained broadly stable. The Overnight (O/N) rate increased by 0.15% to 22.19%, while the Open Repo Rate (OPR) remained unchanged at 22.00%. Across the Nigerian Treasury Bill (NTB) curve, performance was mostly bearish. Only the 364-day NTB yield eased by 0.23% to 19.27%, suggesting demand at the long end. Conversely, the 91-day and 182-day NTB yields increased by 0.49% and 0.27% to 16.84% and 17.88% respectively, indicating weaker demand for short- and medium-term papers. In the bond market, yields were higher across board. The 3-year and 5-year bond yields increased marginally by 0.14% and 0.04% to 17.13% and 17.64% respectively. The 7-year and 10-year bond yields increased by 0.35% and 1.83% to 17.38% and 16.79%. This highlights shifting investor positioning and short-term market re-pricing. Overall, fixed income trading this week reflected a cautious market environment, with investors adjusting portfolio positions amid evolving yield expectations and selective demand across maturities.

Outlook:

Equity Market

Recent market pullbacks may create opportunities for bargain hunting. The Relative Strength Index (RSI) shows the index is already in the oversold region. In addition, easing geopolitical tensions following the US-Iran peace agreement could support global risk appetite and capital flows into frontier markets. Domestic fundamentals remain supportive, with external reserves above $50 billion. The government’s decision not to introduce new taxes on telecommunications services and petroleum products is also helping to support business activity. However, investors will continue to monitor oil prices, exchange rate movements, and fixed-income yields for direction. Overall, market activity is expected to be driven by a mix of bargain hunting and profit-taking.

Fixed Income Market

The Nigerian fixed income market is expected to maintain a cautious-to-bearish tone in the week ahead, with yields likely to remain elevated across the curve as the market continues to adjust. This repricing trend has already been evident in recent NTB auctions, where stop rates rose across all tenors, led by the 364-day bill, which continues to attract strong subscription despite higher yields. In the week ahead, investor positioning is expected to remain defensive, with preference for short- to mid-dated instruments. However, demand for longer tenors stays more selective amid uncertainty around the inflation path. The 364-Day NTB is likely to remain the key focus for yield-seeking investors. Overall, the market is expected to remain yield-driven, with continued upward pressure across the curve as inflation and policy uncertainty persist.