MPC outcome, inflation data to drive equities’ sentiment

Stock market analysts have indicated that trading this week would be driven by the outcome of the anticipated Monetary Policy Committee, MPC, meeting scheduled for today and tomorrow as well as investors’ continuing reaction to the inflation figures announced last week by the National Bureau of Statistics, NBS.

This comes at the backdrop of the sustained bearish trend in the market last week which caused investors to lose N52 billion during the week.

Breakdown of last week’s trading activities showed that the market capitalization fell by 0.11 percent to N55.508 trillion from N55.562 trillion following reaction to the April 2024 consumer price inflation report, which indicated that the headline and food inflation rose to 33.69 percent and 40.53 percent respectively in April.

Similarly, the benchmark All Share Index, ASI, depreciated to 98,125.75 points from 98,233.76 points, representing a 0.11 percent decline as profit taking intensified in the shares of some blue chip companies.

The negative performance during the week was driven by losses in Seplat Energy Plc, which depreciated by 10.0%, Transcorp Hotel (9.7%), and United Bank for Africa, UBA, (9.3%).

Sectoral performance reflected the overall market sentiment as four sectors recorded price decline, while the industrial goods sector remained unchanged.

The oil and gas sector led the decliners, dropping by 6.5 percent, followed by the banking sector (5.3%), insurance sector (4.0%) and the consumer goods sector (1.3%).

Trading activity was also weak as total traded volume and value decreased by 24.5 percent and 15.8 percent to 1.652 billion units and N42.677 billion respectively.

In their projection, analysts at Cowry Asset Management, said: “Looking ahead, the market is expected to maintain a weak sentiment as investors continue to digest the latest economic data from the statistics bureau.

“The anticipated outcome of the upcoming MPC meeting, likely to result in a modest 100 basis points rate hike, could further dampen market sentiment.”

Analysts at Cordros Capital also said: “We believe investors will focus on the outcome of the MPC meeting scheduled for next week to gain further clarity on yield movements in the fixed income market.

“Consequently, we anticipate a cautious trading from domestic investors in the short term.”