US Stocks and commodities went southwards over concerns of China’s covid resurgence which is likely to have a huge impact on the world’s second-largest economy, coupled with fears caused by faster aggressive rates hikes by the fed. Investors are worried that a wider lockdown in Beijing may bring about supply-chain disruptions amid rising inflation. The S & P 500 shed 2.77% to close at 4,271.78, Nasdaq 100 decreased by 2.55% to 12,839.29 while DOW declined 2.82% to close at 33,811.40. WTI fell to $98.30 per barrel as Beijing covid outbreak threatens demand. The yield on 10-year USTs declined to 2.83% while Gold lost 0.73% to $1,920.010 an ounce. Inflation remains a major concern as it continues to affect market sentiments. Later this week, U.S. 1Q GDP, weekly jobless claims is expected on Thursday.
US Secretary of State, Antony Blinken, and Défense Secretary, Lloyd Austin had a weekend meeting in Kyiv with Ukrainian president Volodymyr Zelensky, where US pledged more than $700 million in financial assistance to Ukraine and its allies. These were the highest-level talks between US and Ukraine since the start of the Russian invasion. Following a report in the Times that EU will soon present a sanctions package that may include Russian oil, as well as negative developments in Chinese pandemic situation. Russia’s main equity index, MOEX, fell more than 2.5% this morning extending its losses for this year to 42%. Lukoil, Rosneft, Gazprom, Yandex and Sberbank were the main losers. New EU restrictions could include a partial embargo on Russian oil imports, as well a new list of Russian banks to be cut from the SWIFT. Meanwhile, Russian bonds remained mostly flat with Russia 28 trading at around 26 and Russia 47 at 19.5. Russian rouble continued to strengthen with USDRUB losing 3% to 73.22. This is the longest streak of rouble advances since 31st of March. Russian Central Bank is widely expected to cut interest rates this Friday with a 1.5% cut now being priced in. This would bring Russia’s interest rates from 17% down to 15.5%.
Bunds open weaker following the trend from last session. The 10Y touched a high of 0.954% before dropping to 0.901%, down 5bps day-on-day. Peripherals mirrored the move on bunds with a weak open; 10Y BTPs yields went as high as 2.56% before retreating to 2.55%, 1 basis point firmer. Stocks were weaker over concerns of more aggressive fed and fresh lockdowns in China due to resurgence of covid. Consequently, the Stoxx 600, opened at 443.77.92 compared to previous sessions closing of 453.31. On the data front, ECB publishes its economic bulletin on Thursday.
NGERIA (-0.50) picking off from where it left on Friday following reports of further Eurobond issuance; it led losses Friday sliding 1.25pts cash. The rest of the space was similarly weaker even as rates reversed the early selling as session wore on; KENINT the second weakest in the session down 0.875. The space kicks off the week in selling mode as risk sentiment remains negative with KENINT (-1.375) leading the slide.
Activity in the local Secondary Market for Bonds was mixed amid a relatively frail system liquidity. We saw demand trickle in across the curve as market participants cherry picked securities of interest whilst trading cautiously ahead of the upcoming Bonds Auction. DMO will be offering a total of N75bn each of FGN 25s(re-opening), 32s (new issue) and 42s(re-opening) on Monday 25th of April 2022. Intraday, average yields declined marginally by 1pb across the curve. Consequently, FGN 35s closed at an offer rate of 12.25%, up 5pbs from previous day’s level of 12.20% while 49s closed at an offer rate 12.90%, down 2bps from previous days level of 12.92%. Secondary Market for Treasury bills was mostly tepid across the curve barring some interest seen across the short to mid end of the curve amid a few bearish undertones on the long end. Day-on-day, average discount rates were mostly unchanged across the securities traded. Hence, discount rate on 9th March NTB & 23rd of February 2023 NTB were steady at 4.45% and 4.15% respectively. The exchange rate between the naira and the US dollar closed at N416.08/$1 at the official I&E window compared to previous sessions level of N418.33/$1.