Financial market update

15 June 2012, Sweetcrude, Lagos – Local and international financial market update.
NIGERIA: The NSE in a bid to further deepen the nation’s stock market was further boosted Wednesday when the Exchange signed a MoU with Lotus Capital for the development and management of a certified Shari’ah compliant Index. The bold initiative would increase the variety of investment classes in Nigeria as the Islamic Equity Index joins the family of indices of the NSE. “The Islamic Equity Index will be known as the “NSE Lotus Islamic Index” and will consist of companies that are in conformity with the principles of Shari’ah.

US: U.S. stocks rose and the dollar weakened as reports on American inflation and jobless claims fuelled speculation the Federal Reserve may loosen monetary policy to spur growth. The Standard & Poor’s 500 Index added 0.9 percent at 1:07 p.m. in New York yesterday. The dollar weakened against 15 of 16 major peers, with the euro increasing 0.3 percent to $1.2598. Speculation grew that the Fed will discuss stimulus efforts at its meeting next week after reports showed jobless claims unexpectedly climbed by 6,000 to 386,000 and the cost of living fell by the most in more than three years.

UK: Chancellor of the Exchequer George Osborne softened the recommendations of the Independent Commission on Banking on how much capital lenders must hold, prompting criticism from the report’s author. In the government’s first detailed response to the proposals made by former Bank of England Chief Economist John Vickers, the Treasury said that banks will only have to hold 3 percent of capital against total assets in line with Basel III requirements rather than the 4.06 percent recommended in the ICB’s September report. That will make it less costly for banks.

INDIA: Indian inflation quickened more than estimated in May as food and fuel prices surged, an acceleration that may fail to prevent an interest-rate cut next week to shore up slowing growth. The benchmark wholesale-price index rose 7.55% from a year earlier, after climbing 7.23% in April, the commerce ministry said in Delhi yesterday.

Bonds – Light demand feeding into the markets on Thursday, yields inching down though only slightly initially but trending back up to close flat across the curve.

Bills – Continued volatility in markets yesterday, bearish sentiments pushed rates up with most of the focus on the long dated maturities. Rates went up an average 20bps on the long dates as offshore investors continue to exit in addition to local investors worried about rising inflation. sell off.

Money Market – OBB and unsecured O/N rates up to 14.50% & 15.50%. Liquidity levels still relatively low.

FX
Hi           Low            Close           Prev.Close
USD/NGN 163.21/31  162.60/70   162.80/90    162.80/90