The global economy continued to see modest recovery at the beginning of the fourth quarter relative to the end of the preceding quarter – as reflected in Purchasing Managers’ Indexes of major economies.
According to J.P. Morgan Global Composite Output Index, global business activities (manufacturing and services) expanded to 54.4 points in October, faster than 52.5 points in September.
Against the backdrop of weaker crude oil prices (Bonny Light fell m-o-m by 8.48% to USD36.37/bbl), Nigeria’s external reserves moderated m-o-m by 0.16% to USD35.69 billion in October. Nevertheless, Naira appreciated by 0.03% to N385.90/USD at the I&E FX window (NAFEX) as dollar supply from CBN rose by 1.15% m-o-m to USD0.44 billion in October. The Interbank rate stabilized at N381/USD; however, BDC and black-market rates rose by 2.22% and 1.26% to N455.65/USD and N461.45/USD respectively.
October PMI survey report by CBN showed that manufacturing and non-manufacturing activities declined slower amid improved new orders. Specifically, the manufacturing composite PMI printed a slower contraction to 49.4 points in (from 46.9 points in September) as new orders expanded to 51.2 points in (from 46.4 points in September) – the first expansion in eight months.
Also, the non-manufacturing sector recorded slower contraction as its composite PMI fell to 46.8 points in October (from 41.9 points in September) as a contraction in business activity and new orders slowed to 48.7 (from 43.7) and 47.8 (from 39.5) respectively.
Local institutional investors continued to trade relatively safe assets, thus dragging short term stop rates and yields further south. Investor demand for T-bills remained strong, pushing Nigerian Interbank Treasury Bills True Yields (NITTY) to record lows – in tandem with the spot rates at the primary market –, especially for 1 month, 3 months and 6 months maturities which traded below 0.30%.
The Nigerian stock market sustained its winning ways in October, mainly due to increased domestic participation amid expectation of positive corporate releases in the Q3 earnings season. The NSE ASI climbed by 13.8% m-o-m to 30,530.69 points while market capitalization rose by 13.8% to N15.96 trillion.