WEEKLY MARKET UPDATE (October 20 – October 27, 2017)

Global Economy
US data remains strong leading to Analyst first estimate of 3Q:2017 GDP growth at 3.0% q/q or 2.3% y/y reflecting improving fundamentals and hurricane related building efforts.
Last week Thursday, The United States’ Senate passed its 2018 budget which had a solid step toward a tax cut. While Trump didn’t propose cutting, as he famously promised during the 2016 campaign, the Republican budget indicated tax cut over 10 years.
United Kingdom Office for National Statistics during the week reported that inflation rate rose to 2.8% in September from 1.9% in January, 2017.
Following the inflation rate report, Bank of England (BoE) indicates mounting concern on the citizenry over rising inflation figure ahead of this week monetary policy meeting. The bank’s Monetary Policy Committee will likely raise rates since inflation rate figure remained above the Bank’s target.
As widely expected, the ECB announced a further extension of its quantitative easing program at the reduced rate of €30bn a month from January 2018 for nine month.
With the 19th party congress ongoing in China, data released indicate Chinese economic growth remain steady in Q3:2017 at 6.8% y/y.
This week, the Fed is expected to meet and are likely to leave interest rates on hold.
Crude Oil Market
Crude oil prices keep rising driven by lower exports from Iraq, which is taking barrels off the market. Likewise, declining rig counter and lower Saudi exports is helping to rebalance global oil inventories, which is helping prices remain elevated.
At the same time, strong expected heating demand in the U.S., reflected by colder than normal weather that is expected to drive up heating demand, is giving petroleum prices a lift.
At the end of the week, Brent crude oil price rose by 2.79% to $59.36pb from $57.75pb w-o-w while West Texas Intermediate (WTI) crude also appreciated by 2.21% to $52.61pb from $51.47pb w-o-w.
Nigeria Economy.
The Federal Executive Council (FEC) on Thursday approved the 2018 budget with a mutual agreement with the National Assembly setting expected date to receive the budget from the Presidency. Meanwhile, President Muhammadu Buhari will be presenting the budget on Tuesday, October 31st 2017.
Meanwhile, the Federation Account Allocation Committee (FAAC) shared N558 billion to the three arms of government as revenue for the month of September 2017. The gross statutory revenue of N423.961bn received for the month was lower than the N550.992bn received in the previous month by N127.023 billion. However, there was a significant increase in revenue from export sales of $176.4 million due to an increase in crude oil production by 4.12million barrels.
Meanwhile, Federal Executive Council (FEC) on Thursday approved a tax relief scheme to attract private sector involvement in the provision of federal road infrastructure across the entire country.
Foreign Exchange
The local currency, Naira, remains stable across its multiple exchange rates last week as Central Bank continues to intervene on the official market.
At the end of the week, Naira closed at the official market at N305/$1 while traded flat on the parallel market at N363/$ on a week-on-week basis.
The foreign reserves grew to US$33.62 billion as at 25th October, 2017 against US$32.90 billion in September, 2017. Rising reserves were due to combined effect of increase crude oil prices and production.
Nigerian Stock Market
The equity segment of the Nigerian Capital Market having rallied for 3 consecutive days between Monday and Wednesday, reversed its positive trend on Thursday, and then closed the week on a negative note on Friday dragged by profit taking in Nigerian Breweries Plc., International Breweries Plc. and Guaranty Trust Bank Plc which declined by 3.7%, 5.0% and 0.7% respectively.
W-o-W, The NSE ASI declined by 0.74% to close at 36,317.16 points after equities capitalization dropped by 0.20% to N12.57tn from N12.59tn.
With this, the market indices resulted in a year-to-date return of 35.14%.
Meanwhile, FBH Holdings Plc. reported Q3:2017 results ended 31st September, 2017 which shows 5.20% to N439.2billion growth in Gross Earnings and Profit after Tax rose by 7.8% to N45.84billion. The bank’s earnings showed positive improvement following a prolonged recession and spike in Non-Performing Loans (NPLs) which hit profitability.
In same vein, Dangote Cement Plc. released its Q3:2017 unaudited report which showed revenue grew by 36.53% to N603.58billion (Q3:2016, N442.09billion) as PAT rose by 44.65% to N193.14 billion (Q3:2016, N133.52billion).
This week, we expect a mix of bargain hunting and profit-taking activities by investors as corporate results continue to be released.
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