Global Markets

The United States reported a real GDP growth of 2.50% for FY 2023, up from 1.90% in FY 2022. The growth was fueled by the rise in consumer spending, alongside increase in non-residential fixed investment, state and local government spending, exports and federal government spending.

On inflation, the Country’s inflation rate remained high in Q1 2024, reaching 3.50% in March 2024. As a result, the Fed maintained high interest rates for the quarter.

In China, GDP growth improved by 5.30% in Q1 2024, setting the economy off to a strong start in 2024.

Domestic Economy

The Nigerian economy grew by 2.74% year-on-year in FY 2023, a decline from the 3.10% growth reported in FY 2022. Notably, the oil sector GDP improved to -2.22% in FY 2023 from -19.22% in FY 2022, while the non-oil sector GDP growth moderated to 3.04% from 4.84% in FY 2022. 


Inflationary pressures remained high in Q1 2024 (January : 29.90%; February: 31.70%; March : 33.20%) due to the direct and indirect knock-on effect of Naira depreciation, insecurity affecting food production, and escalating energy costs affecting transportation and production. The latest report released by National Bureau of Statistics (NBS) shows that as of March 2024, Food Inflation stands at 40.01%, while Core Inflation stands at 25.90%.

Fixed Income Market

In Q1 2024, the money market and fixed income market saw spikes in interest rate. Specifically, treasury bills 364-days yield rose from 9.17% in its first auction for the year to 26.78% at the end of the quarter. Furthermore, the CBN continued the issuance of OMO bill in Q1 2024, and had a total of 3 auctions.

Equities market

The equities market started the quarter with a bullish performance (January 2024 ASI: +35.28%), then retracted in February 2024 (February 2024 ASI: – 1.16%). This however reversed in March 2024, as ASI returned +4.58%. Overall, the ASI returned +39.84% in Q1 2024, delivering N18.20trn to investors. All sectors within our coverage posted positive return in Q1 2024. 

Foreign Exchange Market

The Naira touched a record of N1,665/$ at the NAFEM market and N1,880/$ in the parallel market in February 2024, from a year-start of N907/$ in the NAFEM market, and N1,215/$ in the parallel market.

During the last month of the quarter, the monetary authorities intensified its effort to improve FX liquidity. The measures taken proved effective as there was a spike in foreign inflow into the economy. Overall, the Naira strengthened to N1,309/$ in the NAFEM market and N1,316/$ in the parallel market at the end of Q1 2024. 



We expect slow economic growth in Q1 2024, due to various factors which includes high cost of capital for businesses and financial pressure on household budget caused by high inflation. Also, the significant Naira depreciation experienced during the quarter, and increase in electricity tariff is poised to have ripple effect on businesses across various sectors. 

Fixed Income Market

With the Monetary Policy Rate (MPR) raised by 600bps, there is anticipation for an upward but slow jump in fixed income yields in the short term. Investors are expected to seek higher rates on risk-free instruments to align with the prevailing yield environment. While the anticipation looks promising, it’s essential to note that the rate increment is not indefinite, therefore, there will be periodic fluctuations in yield movements, influenced by factors such as system liquidity levels, investors’ demand, and the necessity to moderate government borrowing costs.

Equities Market

The equities market exhibited robust performance in Q1 2024, surpassing expectations and instilling high hopes among investors. However, the recent downturn speaks to a rather bubble burst. Nevertheless, we advocate for a cautious approach, acknowledging potential upside while remaining vigilant. There are potentials for capital reallocation by investors to the fixed income space in the wake of possible rate hikes in Q2 2024.

N:B: The bank recapitalisation remains a wildcard for the banking sector.

FX Market

There are expectations for the Naira to remain strengthened in Q2 2024 as the CBN maintains and implement efforts to promote transparency in the foreign exchange market. Furthermore, as the monetary authorities continue their hawkish stance in Q2 2024, the anticipated reduction in the Country’s negative real return is poised to sustain and attract more foreign investor, thereby increasing FX liquidity.

Please follow the link “Hawkish Stance Maintained as Apex Banks Combat Inflationary Pressures” to view the report.

Thank you.

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