MoneyAfrica| Investment Research
Weekly Market Commentary
September 21, 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
Nigeria’s Headline Inflation Eases to 15.39% in August 2026
Nigeria’s headline inflation rate fell to 15.39% year-on-year in August 2026, down from 15.43% in July, the third consecutive monthly drop. This is significantly lower than the 23.14% recorded in August 2025. The more impressive figure is the collapse in month-on-month headline inflation to 0.71% from 1.57% in July, showing that the pace of price increases slowed meaningfully.
The improvement this month was driven by a dramatic reversal in food prices. Food inflation month-on-month fell to 1.02% from a concerning 5.56% in July, as prices of palm oil, pepper, onions, cassava flour, beef, and yam flour eased. Year-on-year food inflation also moderated to 19.57% from 20.31% in July.
Core inflation, which strips out food and energy, continued its sharp deceleration, falling to 13.29% year-on-year from 14.97% in July. On a month-on-month basis, core inflation turned negative at -0.06%, compared to 0.15% in July. This confirms that the CBN’s tight monetary policy and liquidity withdrawal through OMO and T-bill auctions are effectively anchoring non-food, non-energy prices.
Key Takeaway:
- August’s inflation data tells a more encouraging story than July’s. Food inflation’s sharp monthly deceleration from 5.56% to 1.02% was the dominant positive surprise, and core inflation turning negative month-on-month confirms the CBN’s policy is working. However, with year-on-year food inflation still at 19.57% and global energy prices rising, the CBN is unlikely to ease rates at its September 21-22 MPC meeting.
FX Update
Naira Slips Slightly Despite 18-Year High Reserves of $54.69 Billion
The naira weakened marginally in the official market last week to ₦1,331.20/$, a depreciation of ₦4.69 from ₦1,326.51/$ the previous week. In the parallel market, the naira held steady at ₦1,385/$, unchanged from the previous week.
The parallel market premium narrowed to ₦53.80 (4.04%), down from ₦58.49 (4.41%) the previous week. This is a sign that informal dollar demand remained contained.
External reserves climbed to $54.694 billion as of September 17, an 18-year high, up from $54.410 billion the previous week. The reserve buildup reflects Nigeria’s current account surplus, which grew 67.9% to $7.54 billion in Q2 2026, supported by higher crude oil receipts, improved non-oil exports, and rising diaspora remittances. Foreign portfolio inflows following Nigeria’s return to FTSE Russell’s Frontier Market index have also contributed significantly to the reserve position.
Key Takeaway:
- Reserves at an 18-year high and the parallel market premium narrowing to 4.04% are both positive signals. The official rate’s marginal weakening is not a concern at this stage; the broader FX environment remains stable and well-supported by strong inflows from multiple sources.
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Equities Update
NGX Rallies 2.78% to Record Market Capitalisation as FTSE Russell Date Approaches.
The NGX All-Share Index gained 2.78% last week, closing at 249,804.56 points from 243,052.74 the previous week. Year-to-date return climbed to 60.53% from 56.48%. Market capitalisation rose to a record ₦162.16 trillion surpassing the previous all-time high of ₦161.8 trillion set on May 13, 2026.
Every sector closed higher last week, reversing the prior week’s broad decline. Banking led gains, rising 4.43%, now up 74.22% for the year. Oil and Gas gained 3.71%, now up 125.94% for the year. Insurance rose 3.79%, narrowing its year-to-date loss to -7.57%. Industrial Goods gained 3.12%, now up 81.57% for the year. Consumer Goods rose 0.52%, now up 2.36% for the year.
Two catalysts drove the rally. The Dangote Petroleum Refinery IPO attracted net-new retail capital through digital onboarding rather than drawing on existing stock portfolios, adding over ₦1.1 trillion to market capitalisation over three days. Separately, institutional buying ahead of Nigeria’s return to the FTSE Russell Frontier Market Index effective September 21 drove strong demand in heavyweight banking stocks and MTN Nigeria as global index-tracking funds began positioning.
Key Takeaway:
- The NGX hit a record market capitalisation last week, with the Dangote IPO and FTSE Russell reclassification working as complementary rather than competing forces. The more important question is whether the foreign inflows triggered by the September 21 reclassification sustain this momentum or trigger profit-taking once the positioning is complete..
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Fixed Income update
J.P. Morgan Returns Nigeria to Bond Index as CBN Mops Up ₦2.5 Trillion
The DMO held an FGN bond auction on September 14, raising ₦748.64 billion. Demand was concentrated on the newly issued 10-year paper (FGN September 2036), which drew ₦546.90 billion in bids against a ₦400 billion offer and cleared at a marginal rate of 16.79%, down from 17.15% at the closest prior 10-year benchmark auction in August. The reopened 15-year bond cleared at 16.85%.
The CBN held an OMO auction on September 16, offering ₦1 trillion and receiving ₦3.03 trillion in subscriptions, down from ₦6.31 trillion at the previous OMO auction on September 8. The CBN allotted ₦3.29 trillion, also lower than the ₦4.40 trillion allotted the week before. Stop rates were largely flat to modestly higher: the closest comparable tenor (153-day vs. 154-day) held nearly steady at 18.39%, down 2 basis points from 18.41%, while the 90-day tenor rose to 19.05% from 18.49% (147-day) and the 69-day tenor rose to 19.25% from 19.14% (84-day) the previous week.
The week’s most significant development was J.P. Morgan returning Nigeria to its local government bond index after an 11-year absence. Index inclusion obligates international funds tracking the J.P. Morgan index to hold Nigerian bonds creating structural, sustained demand for longer-dated paper.
In the secondary market, T-bill yields eased across most tenors last week. The 90-day yield fell to 18.47% from 18.77% the previous week. The 180-day yield declined to 18.70% from 19.72%. The 364-day yield eased to 19.76% from 19.91%.
The average benchmark bond yield held steady at 16.30%, with yields ranging from 14.67% to 16.87%. The stability in the average yield despite J.P. Morgan’s reinstatement reflects offsetting forces stronger demand for long-dated bonds pulled longer-tenor yields lower, while shorter-tenor yields held firm amid continued CBN tightening. OMO bills yielded between 19.75% on the June 2027 paper and 20.79% on the October 2026 paper.
Key Takeaway:
- J.P. Morgan’s return of Nigeria to its bond index is a structural vote of confidence in Nigerian fixed income. It creates mandatory, recurring demand for Nigerian government bonds from global funds, a different quality of inflow from the yield-chasing portfolio money that has dominated so far. Combined with a well-received bond auction at lower marginal rates, the direction for long-term bond yields is downward.
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Star-Spangled Banner
Fed Hikes Rates for the First Time in Three Years as 10-Year Yield Breaches 5%
The Federal Reserve raised interest rates on Wednesday, September 16, its first hike in three years, delivering on the near-certainty markets had priced in following last week’s hot inflation data. Treasury yields surged in response.
The 10-year yield breached the psychological 5% mark on Monday, its highest level since 2007. The 2-year yield, more sensitive to near-term rate moves, hit an intraday high of 4.744% on Friday, its highest level since July 2024.
Energy remained a live risk alongside the rate decision. Brent crude stayed elevated near $100-$110 a barrel following disruptions caused by the US-Iran war, keeping inflationary pressure from energy costs in view.
The Fed hike and elevated yields weighed on equities, though the picture was mixed by week’s end. The Dow Jones fell 1.69% for the week, now up 7.53% year-to-date, its steepest weekly decline in months. The S&P 500 slipped 0.08%, now up 11.76% year-to-date, while the Nasdaq eked out a 0.72% gain, now up 14.11% year-to-date, as late-week recoveries helped offset earlier losses. The MSCI World Index was roughly flat, up 0.07% for the week and now up 10.55% year-to-date.
International markets were mixed. Japan’s Nikkei gained 2.40% for the week, now up 29.16% year-to-date. The FTSE 100 edged up 0.08%, now up 7.33% year-to-date, while France’s CAC 40 fell 0.65%, now down 1.04% year-to-date.
Key Takeaway:
- The Fed’s first rate hike in three years, combined with the 10-year Treasury yield breaching 5% for the first time since 2007, marked a decisive shift in the market’s rate environment last week. Equities were mixed rather than uniformly lower, with the Dow bearing the brunt of the move while the Nasdaq managed a small gain.
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We hope you find this edition insightful, and as always, stay focused on your financial goals!