Equities Market –
The equity market continues to push higher as earnings begin to trickle in. Investors remain bullish on expectation of a strong quarter and keep bidding up stocks. The benchmark index rose by 0.54% to end the session at 33,695.83 points while the year-to-date gain expanded to 25.38%.
Sector performance was bullish as all but the insurance index posted gains. The insurance index lost 0.25%, weighed down by NEM (-2.42%). On a positive note, the industrial index rallied by 2.19% as the market took interest in WAPCO (5%) and DANGCEM (0.48%). The banking index added 0.52% off the back of gains in SKYEBANK (9.52%), DIAMONDBNK (2.40%), STERLNBANK (1.98%), ETI (1.90%), GUARANTY (1.08%), FCMB (0.81%), UBA (0.56%) and ZENITHBANK (0.32%). The consumer goods index was up 0.46%, boosted by the likes of DANGFLOUR (4.95%), CADBURY (3.53%), FLOURMILL (2.31%), NESTLE (1.83%) and DANGSUGAR (0.22%). The oil and gas index inched up by 0.06% as OANDO jumped by 3.92% but MOBIL and TOTAL fell by 2.12% and 1.31% respectively.
General market breadth was positive as the session registered 29 gainers and 19 losers. The top three gainers were NEIMETH (9.52%), SKYEBANK (9.52%) and WAPCO (5%) while the top three losers were 7UP (-4.99%), VITAFOAM (-4.83%) and AGLEVENT (-4%). Investors traded 191.43 million shares worth ₦2.18 billion.
Lafarge Africa (WAPCO) released its H1-2017 earnings which showed a material jump in profit which was driven by base effect of significant impairments booked a year ago. Revenue jumped 44.23% y/y to ₦154.84 billion, cost of sales was up 19.70% y/y to ₦110.39 billion while gross profit spiked 194% y/y to ₦44.45 billion. OPEX was up 52% y/y to ₦18.58 billion while net finance charged rose by 118% y/y to ₦9.96 billion. Profit after tax surged 165% y/y to ₦19.73 billion.
The improvement in WAPCO’s gross margin is a continuation of the trend seen in the industrial and consumer goods sectors as companies raise prices. WAPCO’s numbers should be enough to keep the bulls happy and this should support the market going into the weekend.
Money Market & Fixed Income –
The banking system opened with a balance of ₦278.25 billion, down from ₦323.60 billion. That said, there was an OMO maturity worth ₦160.44 billion today which should boost tomorrow’s opening balance. Off the back of better liquidity, the average inter-bank repo rate dropped by 175bps to 7%.
The FGN debt market was also bullish as trading benefited from improved liquidity. The average T-Bill yield contracted by 27bps to 19.51% as yields dropped across board, especially at the short-end of the yield curve. The CBN rolled over ₦204.96 billion worth of T-Bills yesterday—the Bank sold: ₦32.40 billion worth of 91-day bills at a yield of 13.89%, ₦26.60 billion worth of 182-day bills at a yield of 19.05% and ₦145.96 billion worth of 364-day bills at a yield of 22.76%. The average bond yield fell by 11bps to 16.62% as traders were bullish on short-dated notes—prices across the rest of the yield curve were largely unchanged.
Foreign Currency –
The Naira depreciated by 0.15% against the US Dollar at the inter-bank market to ₦305.80/$. The CBN’s May economic report showed that the bank sold $2.64 billion in the month, 70.80% and 106.10% higher than amounts sold a month ago and a year ago respectively. Of the aggregate sale, forward contracts disbursed at maturity stood at $1.85 billion (70.10% of total sale), inter-bank sales amounted to $650 million (24.70% of total sale) while BDC sales amounted to $140 million (5.20% of total sale). In the Q1 report also released, the CBN stated that aggregate FX inflow for the first quarter stood at $15 billion, 9.20% down from Q4-2016.
The Naira appreciated by 0.25% against the US Dollar at the I & E window to ₦366.67/$ and was up 0.27% against the US Dollar at the parallel market to ₦366/$.