Global liquidity still runs through the dollar, and Nigeria cannot ignore this. Higher U.S. yields make it difficult for emerging markets to attract short-term capital. They also strengthen the dollar, which feeds directly into imported inflation and complicates exchange rate management.

For an economy that depends heavily on oil exports priced in dollars, the relationship is more complex. Stronger oil prices help Nigeria’s external reserves, however, if global dollar liquidity gets tougher at the same time, those improvements can be offset by capital outflows or currency instability.

At the same time, global oil markets are pricing in supply risk. Brent crude has climbed to around $72–$73 per barrel, its highest in about seven months, as geopolitical stresses escalate in the Middle East. 

Meanwhile, equity indices have shown intermittent volatility but are still resilient. The S&P 500 hovered close to the 6,900 area in late February. 

Taken together, these developments show how markets are balancing monetary conditions, spending patterns, and energy risk in early 2026.

Liquidity: Tougher Than in the Past, But Not Restrictive

A balance sheet of roughly $6.61 trillion confirms that policy is no longer in emergency mode, but still large by longer‑term historical standards. 

Interest rates are higher than a few years ago, and the Federal Reserve has been gradually reducing the amount of securities it holds. But that reduction has slowed, and the level of reserves in the system has not fallen far enough to scrape out market liquidity entirely.

Investors are still willing to take risks. Credit spreads have not blown out, and volatility measures like VIX have stayed below crisis levels. Even assets that trade with higher risk premia, such as cryptocurrencies, have seen renewed institutional interest recently.

This dynamic points to a market that seems comfortable with current monetary conditions, even if official policy rates are still restrictive. Expectations of future rate cuts are part of the reason, with markets usually pricing in expected easing well before central banks act.

A huge risk is if inflation proves stickier than expected, the monetary easing investors currently price in may be delayed or even reversed. That would raise yields further and tighten financial conditions more than most anticipate.

Technology Investment: Strong Now, But Not Broad‑Based

Corporate investment in technology infrastructure, especially for advanced computing and data processing, is still a major driver of market and sector performance.

A small group of large technology companies are at the centre of this trend. Their capital expenditure plans, particularly in areas tied to machine learning and cloud infrastructure, have supported earnings growth and aggregate market valuation.

The concentration of earnings in a handful of large firms has lifted headline equity indices. This creates a situation where market performance depends heavily on a narrow segment of the economy.

Outside those core technology firms, earnings growth has been more muted. That is of concern because when valuations are concentrated at the top, any disappointment from those leading firms can ripple quickly across markets.

There is also a link between technology investments and energy consumption. Large data centres require significant power. With tech capex increasing, so is demand for reliable energy supply, connecting the narrative directly to trends in energy markets.

Oil Prices: The Risk That Could Shift the Macro Balance

Globally, prices of oil have increased to levels not seen for months. Brent crude climbing into the low $70s per barrel shows supply risk priced into markets due to geopolitical tensions in the Gulf region. 

Recent military action involving the United States and Israel has boosted concerns about supply disruption through the Strait of Hormuz, a critical artery for global oil flows. Markets responded, pushing prices higher on the expectation of risk rather than actual physical cuts to supply. 

Reports have even suggested that if firm disruptions occur, Brent could rise towards $80 per barrel, although this is far from certain. 

Higher oil prices feed into consumer and producer cost structures. Transport is expensive, fertiliser and agricultural input prices are high and that can keep inflation elevated even when core goods are subdued. Central banks, monitoring inflation closely, will respond to these challenges.

For oil‑exporting nations, stronger prices support foreign exchange revenues and fiscal positions. For oil importers, the opposite is true, energy costs can squeeze budgets and slow growth.

How These Forces Interact

These three forces, liquidity situations, concentrated technology investment, and expensive energy prices, are not independent.

• If prices of oil continue to increase and push inflation expectations higher, bond yields could increase too. Higher yields tighten monetary requirements even without changes in central bank policy.
• If tech investment slows or earnings disappoint, markets that rely on a narrow base of corporate profits could see more weakness.
• If financial situations get tougher unexpectedly, credit spreads could widen, reducing risk appetite.

Market stability today depends on these forces staying in relative balance. A shift in one can ensure movements in the others.

What to Watch This Week

As we begin March, these indicators are essential:

• Official inflation data from major economies
• Treasury auction results and changes in bond yields
• Weekly oil inventory reports and OPEC+ announcements
• Corporate earnings guidance on capex spending
• Credit market stress indicators such as high‑yield spreads

Small changes in these indicators can influence market expectations.

Liquidity is tougher than in the years following the pandemic, but it has not withdrawn. Technology investment is supporting markets, albeit in a concentrated manner. Oil prices are growing as geopolitical risk premiums increase.

None of these forces alone ends a bull market or derails growth projections. But together, they influence the conditions that markets are currently pricing.

The important focus this Monday is not whether markets will rise or fall, but how these three forces, liquidity, AI and Oil, interact going forward.

Washington has slapped 14% tariffs on the country’s exports, but Nigeria’s government has decided to stand down on any retaliation.

It remains to be seen whether this was a strategic move to prevent further tariffs from the United States. Nevertheless, these tariffs may impact growth given how Nigeria’s exports to the US have ranged between $5-6 billion annually.

One could argue that Nigeria is somewhat insulated given how over 90% of exports are comprised of crude oil and gas products.

Nevertheless, growing concerns around Trump’s trade war tipping the global economy into a recession is a major risk for emerging markets.

Beyond trade developments, Nigeria remains exposed to volatile oil prices. Last week, Brent and WTI both recently logged their steepest weekly losses in over a year.

Oil prices remain pressured by deepening trade tensions and OPEC+ announcing an unexpectedly large supply boost.

Crude oil has shed over 13% this month, dragging year-to-date losses closer to 15%. Such a development may complicate the government’s ability to implement the 2025 budget based on oil prices at $75 a barrel.

The sharp selloff in oil could mean more pain for the Naira which is among the worst performing emerging market currencies. Naira has shed 4% year-to-date versus the dollar and may extend losses if lower oil translates to falling foreign exchange reserves.

On the data front, Nigeria will reveal its latest inflation figures in mid-April. Back in February, the annual inflation rate dropped to 23.2% to its lowest level since June 2023 while food inflation also cooled to 23.5% – its lowest rate since September 2022.

While the decline in CPI has been attributed to a technical adjustment, further signs of cooling price pressures could spark discussions around potential CBN rate cuts in the second half of 2025.

In Nigeria, the All-Share Index flashed green – lifted by gains in Conoil Plc, Pharma-Deko & Learn Africa among others. Despite the relatively quiet economic calendar in Nigeria, this could be another eventful week for the local markets due to external forces.

Recapping last week, OPEC+ agreed to hike output in July and August by a larger-than-expected amount as geopolitical tensions roiled global energy markets.

The cartel decided to increase production by 648,000 barrels per day in both July and August.

Given how oil prices remain at multi-year highs and demand is expected to increase due to the US & European summer driving season, this development is good news for oil producers. However, according to data from Bloomberg – Nigeria is pumping roughly 1.3 to 1.5 mbpd.

This is below the new target of 1.772 Mbps for June set by OPEC+ and well under the maximum crude production capacity of 2.5 mbpd.

In the United Kingdom, UK Prime Minister Boris Johnson was flung into the spotlight after enough Conservative MPs triggered a vote of no-confidence in his leadership.

The British pound immediately hijacked our attention following this development as investors were already concerned over the UK’s worsening economic outlook and post-Brexit tensions.

With political uncertainty adding to the toxic mix, one would have expected the pound to collapse like a house of cards – buckling under the strain of negative themes.

So far, this news has not had a significant impact on risk appetite with sterling appreciating against the dollar and other G10 currencies! The Prime minister’s fate will now be decided by a simple secret ballot of MPs, taking place between 6 pm – 8 pm BST on Monday evening.

It may be worth keeping an eye on the US inflation report on Friday which is expected to show consumer prices unchanged at 8.3% in May, matching the figure seen in April. If the report meets or falls below expectations, this may suggest that US inflation may have peaked.

Such a development could fuel speculation around the Fed taking a step back from its ultra-aggressive stance – weakening the dollar. A weaker greenback could provide emerging market currencies some breathing room.

Speaking of currencies, the Naira opened at N416 against the dollar on Monday after closing around N415.50 on Sunday.

On the parallel exchange, the Naira traded at around N605 against the dollar. With inflationary pressures making a return and prices expected to rise ahead of the general elections in 2023, this could translate to Naira ‘s weakness.

Reference: FXTM