Akintunde Oyedokun
Research Analyst
Oil prices hit a one-week low on Wednesday as the market weighed the impact of U.S. President Trump’s proposed tariffs on global growth and energy demand. Brent futures fell by 0.4%, settling at $79.00 a barrel, and U.S. WTI dropped by 0.5%, closing at $75.44. Both benchmarks saw their lowest levels since January 9. Analysts are concerned about potential tariffs on Canada, Mexico, and China, while the oil market shifts focus from Russia sanctions to trade policy. U.S. crude stocks are expected to have fallen by 1.6 million barrels last week, marking the ninth consecutive drawdown.
China to Limit Executive Pay at State-Owned Financial Institutions
China will cap annual incomes at 1 million yuan ($137,309) for staff at central government-owned financial firms, sources reveal. The move, affecting 27 major institutions, includes halving pay for some senior managers and reducing bonuses. Part of the “common prosperity” initiative to address income inequality, the plan may impact talent retention as private firms offer more competitive packages. Subsidiary executives face a 3 million yuan cap, down from current levels of up to 5 million yuan. The initiative coincides with broader reforms to align financial sector wages with civil service pay, despite concerns over economic recovery efforts.
UK Budget Deficit Surges in December Amid Rising Debt Costs and Military Housing Purchase
Britain’s budget deficit rose to £17.8 billion in December, exceeding economists’ forecast of £14.1 billion, driven by higher debt interest costs and a one-off military housing purchase, according to the Office for National Statistics. Despite fiscal challenges, Finance Minister Rachel Reeves expressed commitment to meeting fiscal rules, including balancing day-to-day spending by decade’s end. Market borrowing costs have eased recently, positioning UK bonds among the top performers in the G7 this year.
South Africa’s Inflation Edges Higher, Rate Cut Expected
South Africa’s inflation rate rose to 3.0% in December from 2.9% in November, driven by housing and food costs, but remained below the forecasted 3.2%, according to Statistics South Africa.
Economists expect the South African Reserve Bank to announce another 25 basis-point rate cut on January 30, following similar cuts in September and November. Core inflation, excluding food and energy, stood at 3.6%, reflecting modest price pressures.
Analysts cite the stronger rand and subdued inflation as reasons for continued monetary easing. Inflation is projected to stay below 4.5% through 2025 despite potential pressures from food and fuel prices.
Nigeria’s Debt Service Costs Rise To N3.57tr In Q3 2024
Nigeria’s debt service costs reached N3.57 trillion in Q3 2024, a 1.71% increase from Q2, driven by higher external obligations and naira depreciation. External debt servicing rose to $1.34 billion (N2.14 trillion), up 29.7% in naira terms, mainly due to increased payments to multilateral and bilateral creditors, including China’s Exim Bank. Domestic debt servicing fell to N1.43 trillion, with a notable rise in interest payments on Nigerian Treasury Bills. The increase in debt service highlights the need for better fiscal management and sustainable revenue generation strategies.