Weekly Market Commentary

Good morning, readers, and welcome to this week’s edition of our stock market newsletter!

As always, our newsletter is divided into two sections: Green White Green, covering the Nigerian stock market, and the Star-Spangled Banner, focusing on the US market.

Green White Green Recap

Macro Update

Nigeria’s inflation rate rose to 33.88% in October 2024, marking a 1.18% increase from September and a 7.64% rise compared to October 2023.

The primary drivers are transportation costs and rising food prices.

Food inflation alone grew 6.55% from last year, hitting 39.16%.

Urban inflation now stands at 36.38%, while rural inflation is at 31.59%, showing widespread pressures across the country.

Key takeaways:

• Individuals and businesses should consider inflation-proof investments and closely managed budgets.
• With rising costs, diversifying into foreign currency assets could help maintain purchasing power.

Equities Update:

The Nigeria Exchange (NGX) All-Share Index (ASI) saw a 0.5% increase last week, bringing year-to-date market returns to +30.7% in naira. Adjusted to dollars, however, the NGX shows a -51.22% loss year-to-date.

Sector performance varied, with gains in banking (+2.32%) and consumer goods (+0.6%), while oil and gas (-0.29%) and industrial goods (-0.2%) declined.

Key takeaways:

• Long-term investors may benefit from US exposure, particularly the S&P 500, which has delivered a 24.06% year-to-date dollar return.
• Until Nigeria’s macroeconomic conditions stabilise, diversifying into US markets may be advantageous.

Fixed Income Update:

Mixed results in the money market, as yields on short-term treasury bills slightly decreased:

The yield on the 91-day treasury bill decreased to 24.24% from 24.37%.

The yield on the 182-day treasury bill also decreased to 25.06% from 25.14%.

The 365-day treasury bill yield increased to 24.44% from 24.57%.

Bond yields rose to an 18.95% average.

Key takeaways:

• Treasury bill yields remain high, a good option for short-term savings goals.
• You can invest in treasury bills to save for your short-term goal on rent, schools, fees, etc. through Ladda, a fintech app that helps you save at high returns.

For your long-term goals, we do not recommend naira treasury bills and bonds.?

Foreign Exchange Update:

The naira gained 0.63% in the official market, with CBN reserves reaching $40.24 billion in external reserves, their highest since 2021. The naira closed at N1,661.35.

Key takeaway:?

• For those relying on imports, this is a positive development as rising general reserves could help keep the naira stable.

Remember to save dollar-based goals in dollars, which can be done with apps like Ladda.

Star-Spangled Banner Recap

Last week, global markets received mixed signals. Federal Reserve Chair, Jerome Powell, hinted at a slower rate-cut pace, highlighting steady growth, strong job numbers, and inflation above the Fed's target.

This has reduced the odds of a December rate cut to below 60%, causing US treasury yields to rise and Wall Street to cool off.

Sentiment was further tempered by President-elect Donald Trump’s appointment of vaccine skeptic Robert F. Kennedy Jr. to lead Health and Human Services, sparking concerns about potential changes in health policy.

US markets showed caution:

• S&P 500 fell 1.48% after a 4.26% gain the prior week.
• FTSE 100 dropped 0.93%.
• MSCI World Index declined by 1.02%.

Key takeaways:?

• While the US market has shown resilience, expect near-term volatility due to slower rate cuts and potential policy shifts.
• Diversifying your investments can help weather these uncertainties and support long-term growth.

Remember to always save for your dollar goals in dollars. You can do this with us on Ladda—a fintech app that helps you save at high returns.

We hope you find this edition insightful, and as always, stay focused on your financial goals!