US equities rise, oil drops as us considers release of crude

Stock prices rose, oil declined on information that the US government is considering releasing a huge supply of crude from its reserves to control inflationary pressures. Although US stock prices closed negative yesterday with S & P down 0.63% to 4,602.45, DOW at 35,228.81.19, down 0.19% and NASDAQ 100 down by 1.21% to 14,442, we opened with Futures on the S&P 500 up 0.29% to 4,610.00, DOW Futures up 0.18% to 35,180.00 while NASDAQ Futures were up 0.64% to 15,168.00. Washington’s plan to release about a million barrels of oil per day sent crude oil prices southwards ahead of an OPEC+ supply meeting slated for later today, where it is expected to stick with its strategy of a low output boost in May. Consequently, Brent crude fell 3.7% to $109.21 per barrel.  The intention of the US government to release its reserves would help ease investor worries over riding prices. Although market now sees a higher chance of the Federal Reserve lifting rates by 50bps at its May meeting, the yield on 10-year Treasuries declined 3pbs to 2.31% while Gold fell 0.2% to $1,929.51 an ounce.

The Central Bank of Russia has lifted a short selling ban for OFZ’s and stocks on MICEX. So far only clearing members have been allowed to short sell, but not the underlying clients.  Reports that Russian military have been moving away from Kyiv supported Russian assets. Rouble gained around 190 kopeks from 85.25 to 83.35, while IMOEX added 4.3% to 2513. However, Russian sovereign bonds have moved lower with Russia 28 down at 41, while the benchmark Russia 47 has stayed flat at 22. German Chancellor, Olaf Scholz, stressed that G7 countries would only pay in euros or US Dollars for the Russian gas, as it was specified in the agreements. Today is the deadline for Gazprom to provide a draft agreement to EU on the payments in roubles. Meanwhile, Chinese Foreign Ministry did not exclude transactions with settlements in yuan and rouble between two countries. The sanctions-hit nation has also been reported to offer India oil at a record discount. The price was as low as $35 a barrel.  As suggested by a Ukrainian negotiator, officials from Russia and Ukraine are set to continue talks on Friday via a video link.

Bunds opened stronger retracing the trend from yesterday. The 10Y touched a high of 0.646% before dropping to close at 0.622%, 2bps down day-on-day. Peripherals mirrored the move on bunds with a relatively strong open; 10Y BTPs yields went as high as 2.04% before retracing to close 2.03%, just a basis point firmer. Stocks opened lower; the Stoxx 600, opened lower at 460 compared to previous sessions closing of 460.19. On the data front, German March inflation came out at 7.30% up from forecast of 6.30% and previous level of 5.1%.

GHANA’s (+2.00) firm tone continued Wednesday even as we saw a general pullback in risk sentiment that weighed on some of the SSA names. The curve opens on the same strong foot but with early demand skewed towards the belly (29s – 34s) as the curve attempts to normalise. SENEGL (+1.25) also found demand with EUR issues being particularly bid. NGERIA (-.25) was the major blip in the space having shed early momentum to move lower but is firmer at the open.  The space opens on a mostly firm note.