MoneyAfrica| Investment Research
Weekly Market Commentary
May 25, 2026.
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.
Macro Update
CBN Holds Interest Rate at 26.50% to Anchor Inflation Expectations
At its 305th meeting on May 19 and 20, 2026, the Central Bank of Nigeria’s Monetary Policy Committee (MPC) voted to hold the benchmark Monetary Policy Rate (MPR) steady at 26.50%. The MPR influences other interest rate measures in the economy, including borrowing rates and saving rates.
The decision to maintain the MPR follows a consecutive two-month climb in headline inflation to 15.7% in April, which reversed an 11-month disinflationary trend. As this is the first meeting since the US-Iran conflict, Governor Olayemi Cardoso emphasised a cautious stance to safeguard macroeconomic stability.
The committee retained all other key parameters to allow past tightening measures to work. The asymmetric corridor remains at +50/-450 bps, the Cash Reserve Ratio (CRR) stays at 45% for commercial banks (16% for merchant banks), and the liquidity ratio is held at 30%.
While the MPC expects inflation to fall in the near term, members warned that looming fiscal and election spending present significant inflationary risks.
Key Takeaway:
By holding the MPR at 26.50%, the CBN is pausing to assess the impact of its previous hikes while keeping a tight grip on liquidity. The apex bank is playing defense against recent inflation spikes and global geopolitical risks without choking off economic growth.
FX Update
Naira Holds Firm at ₦1,375/$ as External Reserves Build Buffer
The exchange rate remained stable in the week ended May 22, 2026, supported by deep market liquidity. In the official market (NFEM), the naira slipped marginally by 0.32% on a weekly basis to close at ₦1,375.45/$1. In the parallel market, the currency closed at ₦1,390.00/$1, leaving the parallel market premium at a tight ₦14.55 (1.06%), which continues to neutralise speculative black-market arbitrage.
Nigeria’s gross external reserves climbed to $48.89 billion as of May 21. This increase is driven by improved oil revenues from higher crude output and prices and steady foreign portfolio inflows due to high domestic interest rates.
Key Takeaway:
- Rising foreign reserves and a stable naira near ₦1,375 show that steady, natural dollar inflows are successfully meeting market demand now that currency speculation has been eliminated.
Remember to save dollar-based goals in dollars, which can be done with apps like Ladda. Visit www.getladda.com to download. You can earn up to 8% for dollar savings and 20% by investing in naira savings.
Equities Update
NGX Pulls Back from Record Highs
The historic bull run on the Nigerian Exchange (NGX) paused in the week ended May 22, 2026, as the All-Share Index (ASI) pulled back by 0.25% to close at 249,712.40 points. Year-to-date (YTD) return cooled slightly to 60.47%, while total market capitalization settled at ₦160.07 trillion. This minor correction reflects widespread profit-taking following the Q1 earnings season.
Sector performance reversed last week’s trends. The Banking sector rose 1.11% (up 59.43% this year), driven by massive trading in Fidelity Bank, which saw 198 million shares move on Friday alone. Conversely, the Industrial Goods sector fell 1.24% because BUA Cement’s share price was lowered to account for its ₦10.00 dividend payout.
Consumer Goods (-0.84%) and Insurance (-1.77%) also lost ground as investors sold off risky stocks, causing recent high-flyers like Berger Paints to drop 12.64%. Meanwhile, the Oil and Gas sector stayed flat with a 0.07% gain, holding onto its massive 118.40% return for the year.
Key Takeaway:
- The drop from a 2.27% weekly surge to a 0.25% pullback shows the market taking a necessary breather after hitting historical highs. With the MPC maintaining a rigid 26.50% interest rate and corporate action ex-dividend dates passing, institutional players are temporarily locking in profits ahead of major structural shifts like the upcoming T+1 settlement cycle and the mid-year Dangote Refinery IPO.
Fixed Income Update
Treasury Bill Auction: Government Rejects Demands for Higher Rates
Following the decision to hold the MPR at 26.5%, the Central Bank of Nigeria (CBN) held treasury bill stop rates effectively flat at Wednesday’s primary auction, firmly resisting investor demands for higher yields.
There was a massive ₦1.99 trillion subscription concentrated on the 1-year paper. To mop up this excess banking system liquidity, the apex bank over-allotted ₦829.32 billion against its initial ₦650 billion offer, leaving the 91-day rate practically unchanged at 15.95% (up from 15.949%), the 182-day rate completely static at 16.14%, and the 364-day rate marginally lower by a single basis point at 16.149% (down from 16.15%).
In the secondary market where existing bills are traded, big investors continued to ignore shorter-term options due to low inflation-adjusted returns, choosing instead to pour funds into the 1-year paper to lock in its high actual yield. This sustained buying pressure successfully pushed short- and mid-term secondary market yields down compared to the previous week, with the 90-day yield dropping to 16.27% (from 16.34%) and the 180-day yield falling to 17.35% (from 17.53%). Meanwhile, the 364-day yield edged slightly higher to 18.80% (up from 18.77%).
The government is borrowing aggressively, having already raised a record ₦3.6 trillion through bonds so far this year to fund the budget deficit. However, at the latest bonds primary auction on May 18, investor demand plummeted by over 45%. To convince investors to hand over their cash for the long term, the government was forced to hike its 10-year auction rate to 17.00% (up from 16.59% in April).
Meanwhile, in the secondary trading market, the 10-year benchmark bond yield edged up to 16.03% (up from last week’s 15.77%) as investors demanded higher returns following the central bank’s decision to hold the main policy rate at 26.50%.
Key Takeaway:
- Investors are playing hardball. While they are willing to park cash in short-term treasury bills, they are shunning long-term government bonds. By forcing the government to raise its primary bond interest rate to 17.00%, investors are signalling that they want much higher premiums to protect their money against rising inflation.
You can invest in treasury bills for short-term goals rent, school fees, and more through Ladda. Visit www.getladda.com to download the app and start earning today. For long-term goals, naira-denominated fixed income is not suitable due to inflation and currency risks.
Markets Rebound as Rate Fears Ease, But Stagflation Risks Linger
The global economic outlook shifted as the US Federal Reserve signalled that interest rates will stay “higher for longer,” and even hinted at future rate hikes to fight stubborn energy inflation. This hawkish stance was reinforced during a week when Kevin Warsh was officially sworn in as the new Federal Reserve Chair.
Consequently, investors quickly dropped their hopes for near-term rate cuts, causing government bond yields to skyrocket with the US 30-year yield hitting a 19-year high of 5.19%. This surge has intensified fears of stagflation, where high energy costs trigger rising prices even as consumer growth slows down.
Major global stock markets made a strong comeback this week, completely reversing the sharp losses from the previous week’s inflation-driven sell-off. In the United States, Wall Street bounced back strongly: the Dow Jones led the recovery by jumping 2.13% for the week (bringing its total gains this year to 5.24%) after dropping 0.08% last week. The S&P 500 grew by 0.88% for the week (up 9.17% this year) compared to a tiny 0.19% gain the week before, while the tech-heavy Nasdaq rose 0.45% for the week (up 13.35% this year) following a completely flat 0.02% finish.
Outside the US, the recovery was even more noticeable when compared to last week’s sharp drop. The MSCI World Index, which tracks global stocks, climbed 1.29% for the week (up 8.01% this year), successfully wiping out its previous 1.27% slide. In Europe, the UK’s FTSE 100 advanced 2.66% for the week (up 5.39% this year) and France’s CAC 40 gained 1.61% for the week (down 0.41% this year), a sharp turnaround from their respective losses of 0.37% and 1.29% a week ago. Meanwhile, in Asia, Japan’s Nikkei 225 led the global bounce with a massive 4.15% weekly surge (up an impressive 25.82% this year), aggressively overturning its previous 1.62% drop.
Key Takeaway:
- The global stock market’s quick bounce back into the green shows that strong company profits and the big boom in AI are temporarily protecting stocks from broader economic pain. However, because the Federal Reserve refuses to lower interest rates and long-term government bond rates have crossed above 5%, stock market gains will face a hard ceiling until central banks successfully bring long-term inflation under control.
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!