MoneyAfrica| Investment Research
Weekly Market Commentary
September 28, 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 Cuts Interest Rate by 3.5 Percentage Points in Largest Rate Cut on Record
The Monetary Policy Committee cut the Monetary Policy Rate (MPR) by 350 basis points to 23% from 26.5%, the largest rate cut on record, in a decision that surprised most analysts both in direction and size. The CBN also narrowed the corridor around the MPR to +50/-300 basis points from +50/-450, reducing the rate banks earn on deposits with the CBN to 20% from 22%, and their borrowing cost to 23.5% from 27%. This effectively eases monetary conditions by 200 basis points.
The CBN described the move as a “recalibration” rather than an easing of policy, saying it was aligning the MPR with the Nigeria Overnight Financing Rate (NOFR), which has held at 22% since April 2026. In practice, this brings the CBN’s official rate closer to where interbank lending already trades, driven largely by how much liquidity the CBN chooses to leave in the banking system. System liquidity has indeed remained high in the weeks since, and Treasury bill rates fell sharply at the first auction following the cut, a development covered in full in this week’s Fixed Income section.
The real test of this decision is whether it filters through to lending rates for businesses and households, which have historically stayed sticky even when the CBN’s benchmark rate moves. If liquidity stays abundant and money market rates keep falling in step with the MPR, borrowing costs across the economy could start to ease meaningfully in the coming months. If the CBN instead keeps liquidity tighter than the rate cut implies, the benefit may stop at the money markets without reaching real economic activity.
Key Takeaway:
- The CBN’s rate cut is being framed as a technical adjustment rather than a policy easing, but the effect narrows the corridor and lowers what banks earn and pay the CBN. With 364-day Treasury bills still around 19.7% against August inflation of 15.4%, and external reserves at $54.8 billion covering 11 months of imports, naira returns remain attractive for now but that could shift if the CBN allows money market rates to drift down further with the new MPR.
FX Update
Naira Strengthens Slightly as Reserves Cross $55 Billion, New 18-Year High
The naira strengthened marginally in the official market last week to ₦1,329.51/, an appreciation of ₦1.69 from ₦1,331.20/ the previous week. In the parallel market, the naira also gained ₦10 to ₦1,375/$ from ₦1,385/$.
The parallel market premium narrowed to ₦45.49 (3.42%), down from ₦53.80 (4.04%) the previous week, extending the improving trend and pointing to continued containment of informal dollar demand.
External reserves rose to $54.857 billion as of September 24, a fresh 18-year high, up from $54.694 billion the previous week. The buildup continues to be supported by stronger current account surpluses, and portfolio inflows tied to Nigeria’s inclusion in the FTSE Russell Frontier Market index.
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 Hits Fresh Record as FTSE Russell Reclassification Takes Effect
The NGX All-Share Index rose 0.92% last week, closing at 252,113.41 points from 249,804.56 the previous week, a fresh record high. Year-to-date return climbed to 62.01% from 60.53%. Market capitalisation rose to ₦163.66 trillion.
Banking led sector gains, rising 5.36% for the week, now up 79.56% year-to-date. Oil and Gas gained 3.50%, now up 133.83% year-to-date. Insurance rose 0.63%, narrowing its year-to-date loss to -8.04%. Consumer Goods gained 0.25%, now up 2.98% year-to-date.
The rally was driven by Nigeria’s official return to FTSE Russell’s Frontier Market classification on September 21, ending a three-year “Unclassified” status. This triggered fresh institutional and foreign inflows into heavyweight names, with Banking as the standout beneficiary.
Key Takeaway:
- The NGX closed at a fresh record last week as Nigeria’s return to FTSE Russell’s Frontier Market index drove sustained foreign and institutional buying, with Banking leading gains.
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Fixed Income update
CBN’s Rate Cut Triggers Sharp Fall in Auction Stop Rates
The DMO’s Treasury bill auction on September 23 offered ₦500 billion, down from ₦750 billion at the previous auction on September 9. Subscriptions rose to ₦3.63 trillion, up from ₦2.64 trillion, while allotment fell to ₦497.59 billion from ₦1.054 trillion as the DMO held back supply. Stop rates fell sharply across all tenors following the CBN’s 350bps MPR cut to 23%: the 91-day rate dropped to 15.50% from 16.30%, the 182-day to 15.80% from 16.50%, and the 364-day to 15.89% from 16.62%.
The CBN’s OMO auction on September 24 offered ₦900 billion across new 152-day and 180-day tenors, a shift from the previous week’s 69-day, 90-day, and 153-day structure. Subscriptions totalled ₦5.74 trillion, and allotment came to ₦2.26 trillion. Stop rates fell sharply on a comparable basis: the 180-day tenor cleared at 16.99%, down from 18.39% on the closest comparable tenor (153-day) the previous week, while the 152-day cleared at 17.29%.
In the secondary market, T-bill yields were mixed to lower. The 90-day yield eased slightly to 18.41% from 18.47% the previous week. The 180-day yield eased to 18.64% from 18.70%. The 364-day yield fell sharply to 18.27% from 19.76%, the segment most affected by the rate cut.
The average benchmark bond yield fell to 15.65% from 16.30% the previous week, a 65 basis point decline, as investors moved to buy older, higher-yielding bonds now that primary rates have fallen below them.
OMO bill yields also eased: the October 2026 paper fell to 20.71% from 20.79%, the November 2026 paper to 19.65% from 19.99%, and the January 2027 paper to 19.58% from 19.75%.
Key Takeaway:
- The CBN’s rate cut is now transmitting clearly into the fixed income market, with auction stop rates falling by 70-80 basis points across T-bill tenors and secondary market yields following, most sharply at the long end. Investors are moving quickly to lock in still-attractive yields before rates fall further, and the direction of travel for Nigerian rates is now firmly downward.
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Star-Spangled Banner
US Bond Yields Hit Multi-Decade Highs as Inflation Fears Deepen, Stocks Rally on AI Demand
US bond yields surged to their highest levels in years last week, driven largely by inflation concerns tied to oil prices. Brent crude rose above $106 a barrel midweek, a level that stokes fears of higher inflation and pushes bond yields up as investors demand more compensation for that risk. The 10-year Treasury yield jumped to 5.23% on Wednesday, its highest since 2007, and the 30-year yield broke past 5.50%, a 22-year high.
Yields eased somewhat by Friday after reports of US–Iran talks aimed at reopening the Strait of Hormuz lifted hopes for lower oil supply risk. Brent fell to $94-$97 on the news, and the 10-year yield closed the week at 5.18%. Markets are now pricing in roughly a 64% chance of another Fed rate hike in October, a key event to watch in the coming weeks.
Despite higher yields, stocks rallied on strong demand for AI-related investments. US equity funds saw $37.6 billion in inflows, the largest since June, while global equity funds attracted $44.1 billion.
The Nasdaq led gains, rising 2.06% for the week, now up 16.46% for the year. The S&P 500 gained 1.21%, now up 13.12% for the year. The Dow Jones rose 0.28%, now up 7.83% for the year. The MSCI World Index fell 0.40%, now up 11.54% for the year.
Other markets were mixed. Japan’s Nikkei gained 3.82%, now up 31.83% for the year. The FTSE 100 rose 0.34%, now up 7.69% for the year, while France’s CAC 40 fell 0.75%, now down 0.88% for the year.
Key Takeaway:
- Bond yields hit their highest levels in decades last week, but stocks still rallied on strong AI-driven demand. This unusual mix, rising rates and rising stocks, shows investors are betting AI growth can outweigh inflation risks for now. With markets pricing a strong chance of another Fed hike in October, that bet will soon be tested.
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We hope you find this edition insightful, and as always, stay focused on your financial goals!