Oil prices rose, US Stocks declined as traders considered the latest happenings in the Ukraine conflict with the west pushing for harsher sanctions on Russia due to reports that its army killed helpless civilians. Although US stock prices closed positive on Friday with S & P 500 up 0.34% to 4,545.86, DOW at 34,818.27, up 0.40% and NASDAQ 100 up by 0.29% to 14,261.00, futures which show likely opening levels for equities are currently negative with the S&P Futures down at 0.08% (4,535.50), DOW Futures 0.10% (34,682.00) while NASDAQ Futures at 14,843.50, down 0.14%. Brent crude rose 1.3% to $105.70 per barrel as traders deliberated on the threats to demand from Covid outbreak in China and moves to make use of reserves to enhance supply and manage high energy costs. The yield on 10-year UST’s rose 1pb to 2.39% on the possibility of sharp Fed interest-rate increases to control inflation while Gold rose 0.2% to $1,928.95 per ounce. The Fed minutes which is slated for Wednesday this week will give a clearer view on the chances of a 50bps rate increase in May and provide important details on how the central bank intends to reduce its balance sheet. St. Louis Fed’s James Bullard, Atlanta Fed’s Raphael Bostic, Chicago Fed’s Charles Evans are expected to speak at separate events on Thursday.
The EU is preparing to impose new sanctions on Russia after Ukraine has accused Russian forces of war crimes in the city of Buch near Kyiv. The EU will discuss new measures on the 6th of April. New sanctions may include an embargo on coal, oil and gas and are likely to affect Russian financial sector. After 10 days of strengthening, Russian rouble lost around 60 kopeks on Friday with USDRUB climbing from 83.35 to 83.95. In thin liquidity conditions and remaining short selling ban IMOEX has strengthened by 2% from 2703.51 to 2759.64 points. Russian Eurobonds continued to trade in green with Russia 28 up at 41 and Russia 47 up at 24. Corporate bonds have also increased in value with LUKOIL 30 up at 53 and GAZPRU trading around 43. Some of Russian issuers are still unable to pay coupon on their bonds with Severstal, Russia Railways, EuroChem and ChelPipehp added to the list. A new round of Russia and Ukraine negotiations will start today via a video link.
Profit-taking took centre stage on Friday as market sought to cash in on gains the space had made over the week. GHANA (-1.25) led losses with offers seen even on previously scarce short end bonds. NGERIA (-0.75) and ANGOL (-0.50) also moved lower, albeit with a rally on the latter’s 25s ahead of tender offer, as Brent traded lower. KENINT, the other major gainer from last week, traded flat. The space opens tilted towards the upside.
Bunds opened stronger retracing the trend from Friday. The 10Y touched a high of 0.548% before dropping to close at 0.504%, 1bp down day-on-day. Peripherals mirrored the move on bunds with a relatively strong open; 10Y BTPs yields went as high as 2.053% before retracing to close at 1.985%, 7 basis points firmer. Stocks opened higher; the Stoxx 600, opened higher at 458.91 compared to previous sessions closing of 458.34. Apart from the ongoing crisis in eastern Europe, attention will be on ECB’s minutes due Thursday this week.