Taiwo Adekeye, FMVA

Research Analyst

Oil prices fell 2% on Friday, ending the week with significant losses. Weaker-than-expected U.S. jobs data for August overshadowed the support from OPEC+’s delay in increasing supply. Brent crude futures dropped by 2.24% to $71.06 per barrel, the lowest since December 2021 while U.S. West Texas Intermediate futures decreased by 2.14% to $67.67, their lowest since June 2023. For the week, Brent fell 10% and WTI dropped around 8%.

U.S. employment increased less than expected in August, but a drop in the jobless rate to 4.2% suggested the labor market was not falling off the cliff to warrant a half-point interest rate cut from the Federal Reserve this month.

There has been solid wage growth last month, which should help to support consumer spending and keep the economy out of recession for now. Nonetheless, labor market momentum has slowed, with 86,000 fewer jobs added in June and July than previously reported. Nonfarm payrolls increased by 142,000 jobs last month after a downwardly revised 89,000 rise in July, which was the smallest gain since an outright decline in December 2020. Employment gains last month were led by the construction sector, which added 34,000 jobs while But manufacturing employment dropped 24,000.

Canada’s unemployment rate edged up to 6.6% in August, a call for larger rate cuts from the central bank. The Bank of Canada last week trimmed its key policy rate by 25 basis points to 4.25%, its third such move in a row and Governor Tiff Macklem said that deeper rate cuts could be implemented if the economy needed support. However, The economy added a net 22,100 jobs in August, a rebound from a drop last month. The Canadian dollar weakened by 0.13% to C$1.3520 to the U.S. dollar, or 73.96 U.S. cents. Yields on the two-year government bond fell a basis point to 3.272%

The PMI increased to 50.2, signaling growth after 13 months of decline, driven by higher output, new orders, and raw material stocks. However, employment continued to decrease for the eighth month in a row. The services sector grew, particularly in motor vehicle repair, while transportation and warehousing contracted. Agriculture showed its first growth in months, though some subsectors remained weak. The industrial sector continued to struggle, with a PMI of 49.2.

To address forex market pressures, the Central Bank of Nigeria (CBN) has introduced a new policy to enhance forex liquidity. Under this policy, the CBN will sell $20,000 to Bureau De Change (BDC) operators at a fixed rate of N1,580 per dollar. BDCs must sell to eligible users with a margin not exceeding 1% above this rate. The policy aims to stabilize the naira, manage import costs, and reduce transaction expenses for end-users. By improving forex liquidity and stabilizing the currency, the CBN seeks to boost investor confidence, attract foreign investment, and support overall economic stability.

FBN Holdings Plc has announced a significant strategic move by deciding to sell its entire stake in FBNQuest Merchant Bank Limited to EverQuest Acquisition LLP. This divestment is part of a broader strategy to optimize the company’s portfolio and could have notable implications for the financial sector.