MoneyAfrica| Investment Research
Weekly Market Commentary
August 4th, 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
IMF Sees Brighter Outlook for Nigeria with Growth Raised to 3.4% in 2025
The IMF now expects the Nigerian economy to grow faster at 3.4% in 2025, up from their initial forecast of 3.0%. This upgrade reflects growing confidence in Nigeria’s reforms, such as the fuel subsidy removal, a cheap exchange rate that makes the naira less vulnerable, and the CBN’s decision to stop funding the FG.
The IMF believes these policies, combined with higher oil production and the launch of the Dangote refinery, will boost growth. Growth in non‑oil sectors, particularly ICT, trade, and services, is also expected to remain strong.
Despite the positive outlook, the IMF warned that growth is still too low to meaningfully improve standards of living, inflation remains elevated at over 22%, and fiscal buffers are weak. The IMF recommends that the FG should spend what it earns in taxes, improve tax collection, and spend subsidy savings on targeted cash transfers for the poor and infrastructure.
Key Takeaway:
- The IMF is optimistic that the Nigerian economy will grow faster in 2025 than it initially expected, but noted that inflation is still too high and the economy needs to grow faster to improve lives.
FX Update
Nigeria’s Reserves Rise Slightly as Naira Sees Mixed Movements Across Markets
The Nigerian naira moved slightly across different foreign exchange market segments, while the country’s external reserves recorded a slight increase.
Naira Exchange Rate Performance:
Between July 25 and August 1, 2025, the Nigerian naira’s performance was mixed. In the official market, the naira appreciated slightly by 0.06%, strengthening from ₦1,534.72 to ₦1,533.74 per US dollar. Conversely, in the parallel market, it depreciated marginally by 0.33%, weakening from ₦1,535 to ₦1,540 per dollar.
Nigeria’s external reserves increased by $0.5 billion (+1.29%), rising from $38.766 billion on July 25, 2025, to $39.266 billion as of August 1, 2025.
Despite this uptick, reserves remain $1.65 billion below the 2025 year‑high of $40.92 billion recorded in January.
Key Takeaway:
- This recent strengthening in the official market, though small, is a positive sign but it remains significantly weaker than the year’s high. The naira had previously reached a stronger position earlier in the year, such as its four-month high around N1,518/$ on July 14.
- The 1.29% gain in reserves is a positive signal, but sustaining this momentum will depend on increased foreign inflows from oil exports, remittances, and investments amid continuing macroeconomic pressures.
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Equities Update:
NGX Ends Week Strong, Led by Industrial Goods Outlier Performance
The Nigerian equities market closed the week ending August 1, 2025, on a strong note as the NGX All‑Share Index gained 5.07%, pushing its year‑to‑date return to 37.25%. Sector performance was mixed, but the standout was the Industrial Goods sector, which surged 10.12% for the week. This sharp move was driven by renewed investor interest in mid‑ and large‑cap industrial stocks, following the release of strong Q2 earnings results and expectations of attractive dividend payouts. Companies such as BUA Cement and Cutix posted impressive earnings growth, reinforcing confidence in the sector.
The Banking and Consumer Goods sectors also posted gains of 3.49% and 2.72%, respectively, supported by earnings releases that met or exceeded expectations. In contrast, the Insurance sector fell by 1.22%, while Oil and Gas declined 0.48%, reflecting cautious sentiment in those spaces amid weaker earnings and sector‑specific headwinds.
Earnings season remains a key driver of market activity, with investors selectively positioning in stocks showing robust fundamentals and dividend potential. If earnings momentum continues, industrial names could sustain their rally in the coming weeks. However, market sentiment will remain sensitive to macroeconomic indicators, particularly interest rate and inflation trends, which could influence investor rotation across sectors.
Key Takeaway:
- The strong industrial goods rally highlights how earnings surprises and dividend expectations can drive sharp sectoral moves. Investors should watch for further earnings announcements, as sectors with strong results are likely to continue attracting buying interest.
Fixed Income Update
CBN Keeps Rates Steady, But Market Yields Show Mixed Movements
Nigeria’s MPC maintained the Monetary Policy Rate at 27.5% for the third consecutive meeting, despite inflation easing slightly to 22.22%. While the policy stance remains tight, movements in money market rates suggest that investors are already positioning for possible monetary easing.
Between July 25 and August 1, 2025, the 90‑day T‑bill yield rose from 16.04% to 17.11%, an increase of 1.07 %. Similarly, the 180‑day T‑bill yield inched up from 17.81% to 17.97%. The most notable change was at the long end of the curve, where the 364‑day T‑bill yield spiked sharply from 17.95% to 27.30%, reflecting investors’ demand for significantly higher returns to lock in funds for a full year amid persistent inflation risks.
Bond yields also moved slightly higher, rising from 16.10% to 16.21%, showing stable sentiment in the longer‑term debt market.
This divergence highlights that while short‑tenor yields have moved only marginally, the dramatic jump in the 364‑day tenor suggests that the market is still cautious about inflation and policy direction.
Key Takeaway:
- The CBN’s unchanged stance keeps borrowing costs high, but the market is signaling early signs of adjustment. Short‑tenor yields remain relatively stable, while the spike in longer‑tenor T‑bill yields provides an opportunity for investors seeking higher returns, even as overall liquidity conditions improve.
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For long-term goals, naira-denominated fixed income instruments are not suitable due to inflation and currency risks .
Star-Spangled Banner Recap
New Tariffs Add to Inflation Risks and Could Slow Stock Market Gains
The postponement of US import tariffs ended on August 1, and President Trump has now imposed new tariffs of 10–50% on goods from more than 60 countries. These tariffs come as US inflation is already rising, with prices up 2.7% in June, compared to 2.5% in May. The new tariffs are likely to push prices even higher by increasing costs for businesses and consumers.
The Federal Reserve left interest rates unchanged at 4.25%–4.50%, saying it is not ready to cut rates while inflation is still high. The higher tariffs make it even less likely that the Fed will lower rates soon, despite political pressure to support growth.
Markets reacted cautiously. In the week ending August 1, 2025,
the S&P 500 decreased by 2.36% (YTD: +6.06%), the FTSE 100 decreased by 0.57% (YTD: +10.96%), the Nikkei 225 decreased by 0.48% (YTD: +2.27%), and the CAC 40 decreased by 3.33% (YTD: +4.80%). The MSCI World Index increased by 2.03%, cutting its YTD loss to 7.10%.
Key Takeaway:
- The new tariffs are a big risk for companies. They could push costs up, slow growth, and make it harder for the Fed to cut rates soon. After strong stock market gains since April, investors should expect more ups and downs in the coming weeks and consider keeping portfolios diversified and defensive.
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!