Weekly Market Commentary

MoneyAfrica | Investment Research

Weekly Market Commentary

????? March 17, 2025

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 Oil Production Weakens to 1.67 Million Barrels Per Day in February 2025

Oil production in Nigeria reached a peak of 1.74 million barrels per day in January 2025, the highest since March 2021, but moderated by 4.0% to 1.67 million barrels per day in February 2025.

Weaker oil production is bad for government revenues and exports, which are needed to support the external reserves and exchange rates.?

Nigeria’s fragile fiscal and external situation is likely to worsen if demand for oil remains weak due to economic worries in the US, and OPEC+, the oil cartel of some of the biggest oil producers in the world, increases oil supply from April.

The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has set an oil production target of 2.1 million barrels per day for 2025, which is roughly the peak level prior to the crisis in the oil & gas industry in early 2020.?

Key Takeaway:

• Weaker oil production and prices will put more strain on the Nigerian economy and could reverse the stability and gains we have seen recently in the naira/dollar exchange rate.

FX Update?

Naira/USD Slightly Depreciates to N1517.93/$1

On March 14, 2025, the exchange rate closed at? N1,517.93/$1 on the official market, showing a 0.05% depreciation from 1,517.24/$1 in the previous week. While in the parallel market, it depreciated by 2.25% to N1,585/$1.?

Meanwhile, the CBN’s external reserves position remained unchanged from the previous week's $38.3 billion.

Key Takeaways:

• Weaker dollar supply and external reserves position, coupled with global economic concerns, will likely continue to add depreciation pressures on the exchange rate.

• Long-term investors are encouraged to invest in dollar-denominated assets.

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

Equities Update

All-Share Index decreased by 0.25%?

The Nigerian Exchange (NGX) All-Share Index (ASI) ended the week with a loss of 0.25%, reducing its year-to-date returns to 2.69%.

Across sectors during the week, there was widespread weakness as four out of five sectors recorded losses. The consumer sector lost 1.08%, industrial stocks lost 0.03%, oil and gas stocks fell 0.18% and banking stocks lost 0.19%. The only exception was insurance stocks, which gained 0.50%

Key Takeaways:?

• While the Nigerian stock market has performed well over the past five years, we remain cautious about its long-term prospects due to many unresolved economic issues.
• Stable exchange rates and a more robust economic growth are needed for the Nigerian stock market to have a chance of outperforming global peers on a dollar-adjusted basis..

Fixed Income Update

The CBN is actively conducting treasury bill auctions to manage liquidity and government borrowing. The recent auctions have shown very high subscription rates, with demand heavily weighted towards the 364-day bills.?

Treasury Bills Yield Movements

1. 91-day bills: yields dropped a bit from 17.46% to 17.43%.
2. 182-day bills yields dropped a bit 18.35% to 18.29%.
3. 364-day bills yields increased from? 20.96% to 23.88%.

Bond Market:?

• Bonds yields climbed slightly to an average of 18.39% from 18.37%.

Key Takeaways:

• Investing in treasury bills is still 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

Star-Spangled Banner Recap

S&P 500 Enters Correction Territory?

President Trump’s trade and foreign policies have been a source of concern both in the US and abroad. In the US, it has resulted in economic slowdown so far in 2025 and the stock market is feeling the impact, especially large stocks in the technology sector.

While stocks have faltered, Gold prices have surged to record highs, driven by economic uncertainty brought by President Trump’s policies, and reinforcing its status as a safe-haven asset.?

The S&P 500 has entered a market correction, signifying that it has fallen by more than 10% since its recent peak on February 19. Specifically the S&P 500 was down 2.3% for the week.

The Dow? Jones Industrial Average? dropped 3.1%, its worst weekly performance in two years. The Nasdaq shed 2.4% for the week.

Individual stocks performance as at March 14, 2025:

• Nvidia (NVDA) gained more than 5% on Friday.?
• Palantir Technologies (PLTR) Jumped 8.3% on Friday.
• Ulta Beauty (ULTA) shares surged 13.7%.
• Shanghai composite index rose by 1.60% on Friday.
• CAC 40 index ended the week 1.14% lower, settling at 8028.28.?
• Nikkei index closed at 37,053.10 points, an increase of 263.07 points. This translates to a gain of approximately +0.72%.?
• FTSE 100 index closed at? 1.1%, at 8,632.33.

Key Takeaways:

• It is important to remember that market corrections? are normal and don't always mean long-term trouble, but political and economic events strongly influence stock prices.?

• Investors should focus on long-term goals despite short-term fluctuations

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