MoneyAfrica| Investment Research
Weekly Market Commentary
October 20, 2025.
Good morning, readers, and welcome to this week’s edition of our stock market newsletter!
As always, our newsletter is divided into two sections: Green White Green, covering the Nigerian stock market, and the Star-Spangled Banner, focusing on the US market.
Green White Green Recap
Macro Update
Nigeria’s Inflation Rate Is Cooling but the Momentum Is Uneven
Nigeria’s inflation rate slowed to 18.02% in September, down from 20.12% in August, the biggest drop in six months. This means prices are still rising, but at a slower pace than before. The decline was helped by three things: prices increased more slowly month to month, the high inflation last year made the comparison easier (the base effect), and food inflation dropped sharply.
Food inflation fell to 16.87% in September from 21.87% in August. Better harvests and more food supply even caused a small drop in food prices on a month-to-month basis. The naira also stayed relatively stable, and fuel prices didn’t change much, which reduced transport and import costs.
Still, not all price pressures have eased. When we remove food and fuel costs, core inflation is still around 19.5%, meaning the prices of other goods and services continue to rise quickly.
The naira’s stability is also not based on strong economic confidence yet. It mostly depends on the CBN’s support. If that support slows down, the naira could weaken again and push prices higher.
For investors, the outlook is mixed. If inflation keeps slowing, the CBN might cut interest rates, which could help the stock market. But if inflation picks up again, rates may stay high, making it harder for money to flow into the market.
Key Takeaway:
- Inflation is easing, but the foundation is still weak. Until Nigeria fixes deeper problems like poor power supply, weak infrastructure, and governance issues, the recovery will stay fragile—better numbers, but not yet better living conditions.
FX Update
Nigeria’s Reserves Hit $43 Billion – A Sign of Strength, But Can It Last?
Nigeria’s foreign reserves have risen to $43.4 billion, the highest in five years. This increase came from better oil earnings, the clearing of FX backlogs, and tighter policies that helped rebuild trust in the foreign exchange market. At this level, the reserves can cover about 11 months of imports, based on recent trade data.
The naira has also become more stable. In the official market, it trades between ₦1,470 and ₦1,520 per dollar, while in the parallel market, it stays around ₦1,530 to ₦1,550. The small gap between both rates shows that dollar supply has improved and confidence is slowly returning. The stronger reserves are helping the CBN support the naira and reduce sharp movements in the exchange rate.
However, not all of this growth is coming from strong exports. A big part of the increase came from short-term inflows through OMO sales—investors buying local bonds to take advantage of high yields. These funds can leave quickly if global conditions change, making the gains less stable.
Looking ahead, the picture is mixed. On the positive side, lower global interest rates, stable oil prices, and steady oil production could help the reserves grow further. But there are still risks, if oil prices or production fall, or if foreign investors pull out, the reserves could drop again.
For investors, the higher reserves are a good sign. They lower the risk of a sharp fall in the naira and support confidence in both the bond and stock markets. But lasting stability will only come if Nigeria grows its exports, increases energy output, and keeps government spending under control, not just from short-term capital inflows.
Key Takeaway:
- Nigeria’s reserves are in a stronger position, but real strength will come when the growth is driven by steady export earnings, not temporary foreign investments.
Equities Update
NGX Gains 1.35% as Insurance and Industrial Stocks Lead the Market
The Nigerian Exchange (NGX) rose by 1.35% to close at 148,977.64 points, bringing the year-to-date return to nearly 40%.
The growth was mainly driven by the Insurance and Industrial sectors. Insurance companies gained more attention because their share prices are still low compared to their earnings outlook. The Industrial sector also rose as cement and manufacturing companies continued to perform well. The Power sector stayed strong, too, extending its positive trend from last week.
However, Banking stocks fell slightly by 0.13% as investors took profits, while Consumer Goods stocks were flat since high inflation is still affecting household spending.
Falling interest rates and a more stable naira are helping investor confidence and could continue to support stock prices in the coming weeks.
Key takeaway:
- The ₦465 billion gain shows investors are becoming more confident again. But for this growth to last, more sectors need to join the rally, and government policies must stay consistent to keep the market stable.
Fixed Income Update
Yields on treasury bills fell again this week. The 91-day bill dropped to 16.38% from 16.44%, The 182-day bill rose to 17.37% from 17.31%, and the 364-day bill declined to 18.12% from 18.20%. Bond yields also reduced slightly to about 15.71%, showing that more investors are buying government securities.
Yields are dropping mainly because inflation is easing and there’s more money in the system. As prices rise more slowly, the CBN does not need to keep interest rates high. This encourages more investors to buy treasury bills and bonds, which increases demand and pushes yields down further.
For investors, this is a good time to lock in the current returns before they fall even more. Waiting too long could mean getting lower yields later.
Key takeaway:
- Yields are falling because inflation is slowing and investor demand is strong. It’s a good time to lock in current rates while they last.
You can invest in treasury bills to save for your short-term goal on rent, schools, fees, etc. through Ladda—a fintech app that helps you save at high returns.
For long-term goals, naira-denominated fixed income instruments are not suitable due to inflation and currency risks .
Star-Spangled Banner Recap
The Fed’s Pivot: Rate Cut Expected, But the Path Isn’t Risk-Free
The US Federal Reserve is expected to cut interest rates again by 0.25% at its October meeting, bringing the benchmark rate to around 4.00%–4.25%. This will be the second cut in two months, after keeping rates high for almost two years.
Inflation in the US has now slowed to 2.7%, and job growth and consumer spending are losing pace. This has given the Fed room to shift its focus, from fighting inflation to supporting economic growth. However, cutting rates too quickly could bring back price pressures later, so the Fed is expected to move carefully.
Markets are already reacting. Bond yields are falling, stocks are near record highs, and investors are moving more funds into growth sectors like technology and consumer goods.
Global markets were mixed this week. The S&P 500 rose 0.53%, the FTSE 100 fell 0.47%, the CAC 40 slipped 0.32%, and Germany’s DAX eased 0.28%. In Asia, Japan’s Nikkei 225 fell 0.64%, while the MSCI World Index inched up 0.10%, showing that investor sentiment remains cautious even with optimism about lower rates.
What this means for investors:
Lower rates could support stock prices and make borrowing cheaper, but risks remain if inflation picks up again. Investors should stay balanced, focus on quality assets, hold enough cash, and keep portfolios diversified to manage any surprises.
Remember to always save for your dollar goals in dollars. You can do this with us on Ladda—a fintech app that helps you save at high returns.
We hope you find this edition insightful, and as always, stay focused on your financial goals!