All Eyes on the MPC

Good morning and welcome to this week’s edition of 4 Customs street, our weekly newsletter on the stock market. How was your weekend? 

Green White Green Last Week 

Last week was a red one on the Nigerian Stock Exchange as the All-Share Index declined by 0.42%. The index is a basket that measures the average performance of stocks on the exchange, in terms of price gain or losses. Naturally, some stocks will do better than the index, while others will do worse than the index. 

Champion Breweries was the best-performing stock last week. It gained 44% to close at ?1.95. Investors may be taking a position in the stock following Heineken buying a huge chunk of shares through Raysun, its investment vehicle. Japaul Gold was the worst-performing stock last week. It declined by 37.50% to close at ?0.95. 

A couple of firms released their unaudited results during the week. The most prominent being Unilever, which released its unaudited full-year 2020 numbers. It made a higher gross profit in 2020 compared to 2019 (it doubled from ?6.6 billion in 2019 to ?13.7 billion in 2020), but the company still remains loss-making. It recorded a loss after tax of ?1.5 billion in 2020, compared to a loss after tax of ?4.2 billion in 2019. The biggest challenge was with expenses. Those are difficult to cut. 

Green White Green This Week 

The CBN’s Monetary Policy Committee (MPC) may be somewhat off the track, but it does have an effect on stocks. If the CBN raises the Monetary Policy Rate (MPR), there could be a slight sell-off in the market. An increase in the MPR is an indication of a higher interest rate on treasury bills and bonds, which makes stocks less attractive. 

Analysts have a mixed view. Some believe the CBN will leave the MPR unchanged. Others believe it will raise it by a few points. The decision will be made known on Tuesday afternoon. 

A number of firms will be releasing their quarterly or unaudited full-year results during the week. Airtel Africa will release its third-quarter results on Friday, and thereafter hold an investor call.

Star-Spangled Banner Last Week 

Last week was a great one for stocks. All 3 major indices closed in green. The Dow gained 0.59%. The S&P 500 gained 1.94% and the NASDAQ composite gained 4.19%. Part of the pop could be attributed to the bounce in stocks that came with the swearing-in of a new president as Joe Biden was sworn during the week. 

 Netflix released its Q4 2020 numbers. It made $6.64 billion in revenue and earnings per share of $1.19. The company also disclosed that it expects to break even in terms of cash flow this year, and would be considering share buybacks if it had excess cash. 

Star-Spangled Banner This Week 

This week is an extremely busy one in terms of earnings. Several companies will be releasing their quarterly earnings. Notable names include 3M, Eli Lilly, Microsoft, Facebook, Amazon, Tesla, and Chevron. 

The FATM stocks (Facebook, Amazon, Tesla, Microsoft) amount to nearly 30% of the Nasdaq 100 composite index. So that index will either close in the red or in the green depending on how the market reacts to those numbers. 

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Have a great week??