Global Markets Experience Worst
Weekly Drop Since 2020
Markets across the globe are reeling from the
aftershock of President Trump’s surprise tariff announcement, resulting in one
of the steepest weekly declines since the COVID-19 panic of March 2020.
Investors responded with a wave of risk-off
sentiment, swiftly offloading equities on fears that the new tariffs will
fuel inflation, disrupt global trade, and possibly tilt the global economy
toward recession. While the U.S. Federal Reserve echoed concerns,
the market is bracing for retaliatory action from major trade partners,
adding another layer of uncertainty.
- S&P 500 fell over 9%
- NASDAQ slid 10%
- Dow Jones Industrial Average dipped 8%
Why Are Markets Reacting This Way?
Markets fundamentally dislike uncertainty. When
investors can't properly price risk, they often default to safety—selling off
assets and seeking shelter in cash, gold, or fixed income. With geopolitical
and trade policy outlooks unclear, we expect continued downward pressure
on equities in the short term, until more policy clarity emerges.
Nigeria’s NGX Dips in a Shortened Trading Week
Back home, the Nigerian Exchange (NGX) All-Share
Index edged lower, closing 0.015% down week-on-week. The mood was
similarly cautious, with heavy selloffs in OANDO (-17.65%) and FBN
Holdings (-7.64%) weighing on overall performance.
This outweighed modest gains in:
- Transcorp Hotels (+7.13%)
- Zenith Bank (+1.91%)
- Fidelity Bank (+5.00%)
A key headline that shook investor confidence was the delisting
of Capital Oil, Goldlink Insurance, and Medview Airline due to failure to
comply with listing standards. This development signals a tightening regulatory
environment and reinforces the importance of governance and transparency in the
market.
Fixed Income: Calm in Bonds, Chaos in Eurobonds
Nigerian Bonds
The local bond market remained quiet but steady,
with most activity centered around mid-tenor instruments such as the Feb
2031 and May 2033 papers. Toward week’s end, there was growing
interest in the long-dated June 2053 bond, likely driven by yield-hungry
institutional players.
- Average bond yield edged up to 18.48% per annum,
a slight increase reflecting mild risk repricing.
Eurobonds
In stark contrast, Nigerian Eurobonds
experienced a turbulent week. The combination of:
- Escalating global trade tensions,
- Oil price weakness, and
- Trump’s “Liberation Day” tariffs,
sent shockwaves through global credit markets.
Investors fled emerging market debt, pushing Nigerian
Eurobond yields up by 118 basis points to close the week at an average
yield of 10.77% per annum.
Currency Market: Naira Wobbles Amid Pressure
The Nigerian Foreign Exchange Market (NFEM) saw
a spike in volatility:
- Early in the week, the naira traded relatively stable,
but mid-week demand surged.
- Coupled with declining oil prices—triggered by an
OPEC+ supply hike—the naira came under intense pressure.
By week’s end, the naira had depreciated by 1.97%,
closing at ₦1,567.02/USD.
Strategic Insight: What Should Investors Do?
The current landscape is dominated by uncertainty
and volatility. While unnerving, these periods also present valuable
opportunities—but only for the well-prepared.
Here’s what we recommend:
1. Stay
Diversified
Diversify across currencies (USD, EUR, stablecoins) and asset classes
(fixed income, commodities, equities).
2. Raise
Cash Reserves
Hold higher levels of liquid assets to enable quick response when
high-quality assets become undervalued.
3. Watch
Policy Developments Closely
Policy shifts from major central banks or retaliatory trade actions could
quickly change market dynamics.
4. Avoid
Panic Selling
While trimming risk exposure may be warranted, avoid emotional exits that could
lock in losses.
Final Thoughts
Uncertainty is the enemy of confidence, but it is also
the birthplace of long-term opportunities. Investors who approach this period
with prudence, patience, and preparedness will be best positioned to benefit
from the eventual rebound.