Earnings season kicked into full gear this week in the U.S. market lifting sentiments for equities, and driving major indices to all-time highs. On the monetary scene, the central bank chairman noted that inflationary pressures are likely to last well into 2022. He, however, reiterated that the central bank is on track to commence the tapering of asset purchases. Investors, however, focused on the robust corporate earnings leading major market indexes to close with gains.
Taking a look at other markets, performance was mixed amid strong corporate earnings and weak economic indicators in the Euro area. The recently released Purchasing Managers’ Index further confirmed the gradual slowdown in business activities in the Euro area as Output Index declined to 54.3pts in October 2021, from 56.2pts in September.
Elsewhere, supply-chain disruptions, caused by the lingering spread of the Covid-19 delta variant, power shortages, regulatory crackdowns across sectors amongst others weighed on China’s economy resulting in a lower-than-expected GDP growth in Q3 compared to Q2- 2021. Accordingly, investors priced the unimpressive update into stock prices, leaving the the Shanghai Composite Index, China’s major stock market index, closing in red territory this week (-0.98%).
On the domestic front,
The Nigerian equities market, yet again, maintained its five-week winning streak, extending the bull run for the month of October. The market’s year to date return settled higher at 4.39%, from 3.71% the previous week. Across sectors, performance tilted to the bullish region as three sectors closed with wins, leaving two sectors reeling in losses. Market breadth, which measures the market’s strength, printed at 0.9x (34 gainers, 36 losers), weaker than 3.2x in the previous week.
At the fixed income primary market, investors maintained intense participation on the 364-day note, despite the decline in rates to 6.99% (7.25% at the previous auction). At the fixed income secondary market, it was a mix of mood as investors picked up more notes, leaving average yield on bonds to decline to 10.67% from 10.78% the previous week. Average yield on treasury bills, however, inched higher to 5.29% from 5.26% the previous week. Yields move in opposite direction with prices.