The Nigerian domestic market closed the week on a positive note, as gains in MTNN (+5.0%), SEPLAT (+10.0%), ZENITHBANK (+6.3%) and FIRSTHOLDCO (+3.4%) moved the All-Share Index higher by 2.4% w/w to 246,992.44 points.
September 4, 2026/Cordros Report
Global
According to the Bureau of Labor Statistics, US non-farm payrolls increased by 162,000 in August, up from a revised 23,000 increase in July and significantly above market expectations of +56,000. The higher than expected print points to some resilience in the labour market, following the slowdowns observed over the summer. More specifically, the rebound was led by gains in food services (+59,000) and local government education (+42,000), following declines in these areas in the previous month. Employment in manufacturing (+16,000) and healthcare (+13,000) continued to trend upwards, although the increase in healthcare employment was below its average monthly gain over the prior 12 months (+32,000). Meanwhile, employment in the Information sector declined by 23,000, while most other major sectors showed little change. Elsewhere, the unemployment rate was unchanged at 4.1% in August, while the labour force participation rate edged up by 20bps to 61.6%, indicating a modest increase in labour force engagement. Looking ahead, we expect the US labour market to remain resilient, supported by solid economic activity and relatively low layoffs. However, hiring is likely to remain selective as elevated uncertainty and higher labour costs encourage firms to exercise caution in expanding their workforce.
Eurozone headline inflation in August (3.3% y/y | July: 2.9% y/y) rose to its highest level since May 2026 (+3.2% y/y), in line with market expectations. The acceleration occured despite lower services inflation and steady food prices, as the higher energy prices pushed energy inflation to its highest level since January 2023 at +14.3% y/y (July: +10.3% y/y). We attribute the increase in energy prices to the ongoing conflict in the Middle East. Meanwhile, food inflation steadied at +1.2% y/y (July: +1.2% y/y), as lower processed food (+0.6% y/y vs July: +0.7% y/y) prices offset higher unprocessed food prices (+2.7% y/y vs July: +2.4% y/y). However, services inflation edged downwards to +3.0% y/y in August (July: +3.3% y/y), while non-energy industrial goods inflation rose to +1.2% y/y (July: +0.9% y/y). Elsewhere, core inflation, which excludes volatile food and energy components, slowed to +2.4% y/y (July: +2.5% y/y), suggesting that underlying price pressures remain modest. Looking ahead, we expect inflationary pressures to remain tilted to the upside as energy prices remain elevated amid renewed tensions in the Middle East. This could increase the likelihood of a more hawkish policy stance from the European Central Bank (ECB) at its 10 September meeting, as the Bank seeks to steer inflation back towards the 2.0% target. That said, subdued wage pressures, lower services inflation and the Eurozone’s still soft labour market may temper appetite for any consecutive rate hikes.
Global Markets
Global equities traded with mixed sentiments this week, as a resurgence in Middle East tensions lifted oil prices and reignited inflation concerns. During the week, Brent crude climbed to a six-week high above USD95.00/bbl following renewed US-Iran strikes around the Strait of Hormuz. The elevated oil prices reinforced inflation pressures, pushing global bond yields to multi-year highs. Market participants also assessed Eurozone inflation and US labour market releases. At the time of writing, major US indices (DJIA: +0.2%; S&P 500: +0.5%; NASDAQ: +0.7%) closed higher, supported by gains in Microsoft, Oracle and Goldman Sachs, as easing Treasury yields lifted sentiment across technology and financial stocks late in the week. Meanwhile, European equities were mixed, as rising bond yields and Eurozone inflation weighed on the STOXX Europe 600 (-0.9%), while the FTSE 100 (+0.1%) edged higher on gains in energy names. Elsewhere, Asian markets declined, as Japanese equities (Nikkei 225: -2.1%) were pressured by a stronger yen and technology weakness, while Chinese equities (SSE: -0.8%) were weighed down by softer manufacturing data. Finally, the Emerging Market (MSCI EM: -1.1%) index declined on losses in South Korea (-1.5%) and China (-0.9%), while the Frontier Market (MSCI FM: +0.1%) index advanced on gains in Kenya (+2.8%) and Vietnam (+0.8%).
Domestic Economy
According to the National Bureau of Statistics (NBS), Nigeria’s economy grew at its fastest pace since Q1-22 (+4.74%), expanding by 4.43% y/y in Q2-26 (Q1-26: 3.89% y/y). Breaking down the figures, the oil sector grew 7.31% y/y in Q2-26 (Q1-26: 2.57%), driven by higher crude oil production, which averaged 1.72mb/d, representing a 2.4% y/y growth. We attribute the improvement in crude output to stable operations across key producing assets and the absence of major pipeline outages, which likely supported production uptime and crude evacuation efficiency. At the same time, non-oil sector accelerated to 4.31% y/y (Q1-26: 3.94% y/y), driven by stronger growth in the agriculture (+4.39% y/y vs Q1-26: +3.15% y/y) and services (+4.60% y/y vs Q1-26: +4.31% y/y) sectors, alongside a slight moderation in manufacturing growth (+3.24% y/y vs Q1-26: +3.29% y/y). Nigeria’s economy is projected to maintain its current growth momentum over the short- to medium-term. Specifically, we expect the oil sector to grow by 8.36% y/y in Q3-26 (Q2-26: 7.31%), supported by stable production volumes amid improved pipeline security, continued private surveillance efforts to curb oil theft and vandalism, and recent upstream investments. Accordingly, we forecast crude oil output to average 1.68mb/d in 2026E (2025FY: 1.64mb/d), supporting sustained growth in the oil sector. At the same time, we expect the non-oil sector’s growth to strengthen to +4.41% y/y in Q3-26 (Q2-26: 4.31% y/y), primarily reflecting easing inflationary pressures, continued growth in digital activity, improved business confidence and sustained naira stability. On balance, we forecast real GDP growth of 4.55% y/y in Q3-26, with 2026E growth at 4.28% y/y (2025FY: +3.87% y/y).
According to data from the Central Bank of Nigeria (CBN), Credit to the Private Sector (CPS) increased modestly by 0.2% m/m to NGN83.42 trillion in July (June: NGN83.25 trillion). The moderate growth likely reflects the continued impact of the CBN’s tight monetary policy stance, with elevated interest rates weighing on credit demand and lending activity. At the same time, credit to the government declined by 15.3% m/m to NGN33.92 trillion (June: NGN40.03 trillion), despite the increased government borrowing from domestic banks to finance budget deficit. Currency in circulation declined by 2.5% m/m to NGN5.38 trillion (June: NGN5.52 trillion). Nevertheless, cash in circulation remains elevated, suggesting that cash based transactions remain prevalent, particularly across Nigeria’s informal sector. Overall, broad money supply (M3) rose by 4.1% m/m to NGN138.78 trillion (June: NGN133.25 trillion), reflecting an increase in quasi money (+7.4% m/m to NGN95.09 trillion) amid a decline in narrow money (-2.3% m/m to NGN43.68 trillion). On a year-on-year basis, credit to private sector rose by 8.7% (July 2025: NGN76.72 trillion). In the near term, private sector credit growth is likely to remain subdued as the MPC maintains a cautious policy stance, keeping financing conditions tight and constraining businesses’ access to credit. Consequently, subdued credit growth is likely to weigh on private sector investment.
Capital Markets
Equities
The Nigerian domestic market closed the week on a positive note, as gains in MTNN (+5.0%), SEPLAT (+10.0%), ZENITHBANK (+6.3%) and FIRSTHOLDCO (+3.4%) moved the All-Share Index higher by 2.4% w/w to 246,992.44 points. As a result, the month-to-date return moderated to 1.1%, while the year-to-date return settled at +58.7%. On market activity, trading volume and value declined by 37.3% w/w and 43.1% w/w, respectively. Sectoral performance was broadly positive, as the Oil & Gas (+9.1%), Insurance (+3.8), Banking (+3.6%) and Consumer Goods (+3.5%) indices closed higher, while the Industrial Goods (-0.3%) index closed lower for the week.
Next week, we expect investor risk appetite to remain positive, with buying interest likely to remain concentrated in fundamentally sound stocks recently granted Frontier Market eligibility by FTSE Russell. Sentiment should remain supported as investors position ahead of Nigeria’s formal reclassification from “Unclassified” to “Frontier Market” status, effective from market open on 21 September 2026.
Money Market and Fixed Income
Money Market
The OVN rate contracted by 8bps w/w to 22.1%, driven by stronger end-of-week system liquidity amid robust SDF placements, which rose to NGN4.46 trillion from NGN3.42 trillion previously. This came despite OMO (NGN2.88 trillion) and net NTB (NGN130.91 billion) PMA debits partially offsetting inflows from OMO (NGN2.25 trillion) maturities. Nonetheless, average system liquidity increased to a net long position of NGN4.52 trillion, up from NGN4.26 trillion previously.
Barring CBN intervention, system liquidity should remain supportive next week, underpinned by NGN2.94 trillion in OMO maturities. However, additional OMO issuances could absorb part of the liquidity surplus, keeping money market rates broadly around current levels, while more aggressive sterilization could exert upside pressure on rates.
Treasury Bills
The Treasury bills secondary market traded on a bullish note as the average yield across all instruments contracted by 1bp to 19.3%. By segment, average NTB secondary market yields contracted by 5bps to 18.9%, as sizeable unmet bids at Wednesday’s NTB primary market auction (PMA) filtered into the secondary market. In contrast, average OMO secondary market yields expanded by 22bps to 20.6%, as investors unwound positions to participate in Tuesday’s OMO PMA. At Wednesday’s NTB PMA, the DMO offered NGN700.00 billion across tenors, with total demand reaching NGN3.35 trillion, ultimately allotting NGN865.71 billion. Stop rates contracted by 31bps to 16.84% for the 364-day tenor, while the 91- and 182-day tenors remained unchanged at 16.30% and 16.50%, respectively. At the OMO PMA on Tuesday, the CBN offered NGN600.00 billion in bills, attracting NGN5.50 trillion in demand, and ultimately allotted NGN2.88 trillion. Stop rates settled at 19.59%, 18.99% and 18.99% for the 91-, 147- and 154-day tenors, respectively.
Next week, we expect the Treasury bills secondary market to retain a broadly bullish bias, supported by resilient domestic demand and ample system liquidity. However, NTB secondary market yields could face intermittent upward pressure as investors trim existing positions to participate in the NTB PMA scheduled for Wednesday, 09 September, with NGN500.00 billion on offer. This upward pressure could be further amplified by investors’ preference for the relatively higher yields available on OMO bills.
Bonds
The FGN bond secondary market traded on a bullish note, as the average yield across instruments contracted by 12bps to 16.7%, driven by demand from both local and offshore investors. Across the benchmark curve, the average yield contracted at the short (-1bp), mid(-10bps) and long (-26bps) segments due to demand for the MAR-2027 (-16bps), JAN-2035(-32bps) and JUN-2038 (-59bps) bonds, respectively.
Over the medium term, we expect yields to remain relatively elevated, with the government’s sizeable borrowing requirements likely to keep pressure on market pricing, although improving offshore and local demand could provide some support in the near term.
Foreign Exchange
The naira appreciated by 1.3% w/w to NGN1,320.64/USD supported by offshore supply stemming from participation in the week’s OMO and NTB auctions. Meanwhile, gross external reserves increased by USD773.40 million to USD54.08 billion (03 September 2026). In the forwards market, the naira appreciated across the 1-month (+1.4% to NGN1,343.44USD), 3-month (+1.3% to NGN1,380.20/USD), 6-month (+1.3% to NGN1,432.54/USD) and 1-year (+1.0% to NGN1,541.29/USD) contracts.
We expect the naira to remain broadly stable around its current level in the near term, supported by resilient portfolio inflows, relatively firm investor sentiment and a widening current account surplus.