August 31, 2026/United Capital Update
Global Markets
United States
The United States Price Consumption Expenditure inflation remained elevated at 3.7% year-on-year in July 2026, unchanged from June 2026. This also came in above the 3.6% consensus forecast. The persistent price pressure reinforces concerns that inflation is proving sticky which may potentially delay further US Federal Reserve policy easing. Higher-for-longer US interest rates could tighten global financial conditions and lead to capital flight from emerging markets. For Nigeria, this may pressure capital flows and the Naira while increasing external financing costs.
Euro Area
The S&P Global Euro Area Services Purchasing Managers’ Index (PMI) remained steady at 51.7 points in August 2026. This came in slightly above expectations, supported by stronger tourism spending and the fastest services growth outside France and Germany in three years. Employment also increased, while stable export orders indicated continued external demand. However, weaker business confidence points to cautious growth expectations, while faster input-cost growth could pressure margins. The resilient services sector should support Euro Area growth and global demand, with potential spillovers to Nigeria through trade and commodity demand.
Asia
Japan’s annual inflation rate accelerated to 1.9% in July 2026 from 1.6% in June 2026, reaching the highest level since December 2025. The increase reflected slower electricity price declines following reduced government energy subsidies, alongside firmer food, transport and household goods prices. Core inflation also rose to 1.8%, the highest since March 2026, but remained below the Bank of Japan’s 2% target. The persistent inflation pressure could strengthen expectations for further policy normalisation, while higher Japanese yields may tighten global financial conditions. Tighter global liquidity could moderate capital flows into emerging markets, although stronger Japanese demand could support global trade.
Oil Markets
Crude oil prices fell during the week, with Brent crude declining by 3.75% to US$88.52/b as at August 27, as easing concerns over Middle East supply disruptions and improved prospects of reopening the Strait of Hormuz weighed on prices.
Outlook
This week, global markets will shift focus from Jackson Hole to the US labour market, with Friday’s August jobs report as the key event. US markets will remain closed on Monday for Labour Day, with major data releases starting Tuesday. Investors will assess incoming data to gauge the direction of policy rate decision in September when the Federal Open Market Committee meets. Equities may consolidate near record highs after last week’s rally, while September’s historically weaker seasonality could limit further gains. Gold should remain supported by safe-haven demand, while the Dollar may stay fragile and sensitive to incoming labour market data. The Euro and Yen will remain influenced by central bank policy divergence.
Domestic Economy
Nigeria’s external reserves rose to $53.3bn as of August 26, the highest level in nearly 18 years. This was supported by stronger crude oil earnings and increased FX inflows. The reserves surpassed the Central Bank of Nigeria’s $51.04bn year-end target and now provide over 13 months of import cover based on estimates. Stronger reserves improve Nigeria’s ability to meet external obligations, support Naira stability and strengthen investor confidence. Higher reserves also improve Nigeria’s external position, supporting regional and global confidence in the economy.
Equity Market
The Nigerian equities market closed the week on a positive note, with the NGX All-Share Index (NGX-ASI) rising by 0.81% week-on-week to 241,298.47 points. Consequently, the year-to-date return improved to 55.06%. The gain was supported by renewed buying interest, particularly in the Banking and Oil & Gas sectors, which outweighed declines across the Consumer Goods, Insurance and Industrial Goods indices.
FTSE Russell has confirmed that Nigeria’s reclassification to Frontier Market status will proceed, effective September 21, 2026. The decision markets Nigeria’s return to the global Frontier Market universe and represents an important milestone for the nation’s capital market.
Fixed Income and Money Market
The fixed income market traded mostly bullish during the week, with Nigerian Treasury Bill (NTB) yields falling across the mid to longer tenors, while bond yields declined across most tenors. In the NTB market, the 182- and 364-day yields declined by 0.06% and 0.25% to 18.57% and 20.54%, respectively. Meanwhile the 91-day yield rose by 1.21%. This suggests stronger demand for longer-dated bills as investors lock in attractive real returns. Bond yields were largely lower, with the 3-year, 5-year, and 10-year yields declining by 0.16%, 0.05% and 0.01%, respectively. The 7-year bond yield remained flat to settle at 20.54%. In the interbank market, the Overnight (O/N) rate fell by 0.04% to settle at 22.07%, while the Open Repo Rate (OPR) remained unchanged at 22.00%.
Outlook:
Equity Market
The Nigerian equity market may appreciate this week as investors take position in the market ahead of the September 21, 2026 FTSE Russell Inclusion date. Investors are likely to favour stocks with strong earnings, attractive valuations, and reliable dividend prospects. Continued profit-taking could limit broader gains and keep market activity relatively measured.
Fixed Income Market
Nigeria’s fixed income market should remain active this week, with Treasury bill yields likely to stay near current levels. The 364-day stop rate settled at 17.15% at the latest auction, and so demand should remain tilted toward longer-dated instruments. Federal Government bond yields should remain broadly stable, with the Debt Management Office’s issuance calendar continuing to shape investor expectations. Softer August inflation should support a gradual moderation in yields over the medium term. Open Market Operation bills will remain an important liquidity management tool for the CBN, while investors continue to seek attractive government securities. Overall, demand for government securities should remain steady, supported by ample system liquidity and improving investor sentiment.t.