US stocks declined, and oil prices rose as investors pondered over the ramifications of cuts in gas supplies from Russia and the expectation of faltering economic growth. The S & P 500 lost 2.81% to close at 4,175.20, Nasdaq 100 dropped by 3.95% to 12,490.74 while DOW dipped 2.38% to close at 33,240.18. Brent crude rose 1.1% to $106.12 per barrel as Russia cut off gas supplies to Poland and Bulgaria, establishing a threat to halt flows to countries that decline payment for the fuel in rubles. The yield on 10-year USTs was at 2.77% while Gold fell 0.4% to $1,897.30 an ounce. Investors continue to contend with impact of inflationary pressures on markets fuelled by commodity supply disruptions coupled with other geopolitical tensions around the globe.

Russia stopped natural gas flows to Poland and Bulgaria on Wednesday, as both countries refused to pay for Russian gas in roubles. European gas prices jumped 20% on the move and the euro fell to a 5-year low. GAZPRU 34 was down on the news and is trading around 25.75. At the same time, German Economy Minister Robert Habeck said Germany has already cut its reliance on Russian oil enough to make a full oil embargo “manageable”. The share of Russian oil in German imports has now fallen to 12%.  Russia continued its offensive and sent missiles to hit the bridge across the Dniester estuary west of Odesa trying to cut off Odesa region.  The Russian equity benchmark climbed for a second consecutive day on rising commodity prices. MOEX Russia was up 2.8% this morning paring losses for the year down to 37%. Gazprom, Lukoil, Rosneft and Sberbank were the biggest outperformers with Gazprom up 3%. Russian rouble has also advanced and was up 0.6% with USDRUB trading now at around 72.7025. 10-year Benchmark rouble bond yields were down 9 bps to 10.12%. Russian Sovereign Bonds prices were flat with Russia 28 trading at 26 and Russia 47 at 19.25.

Bunds open stronger retracing the trend from last session. The 10Y touched a high of 0.851% before dropping to 0.804%, down 5bps day-on-day. Peripherals mirrored the move on bunds with a relatively strong open; 10Y BTPs yields went as high as 2.51% before retreating to 2.47%, 4 basis points firmer. Stocks wavered as investors evaluated the effect of cuts in gas supplies from Russia on the economy. Consequently, the Stoxx 600 got to a high of 442.75, dropping to 441.73, down 105 points intraday.

Market opens on a flat to weaker tone having failed to get out of the blocks on Tuesday despite a firm start. More selling into the close pushed the space lower with only KENINT (+1.00) closing firm as dollar-rationing concerns were dispelled following a press release by the Kenya Bankers Association. GHANA’s finance ministry said 2021 debt ratio stood at 76.6% on the back of outperformance in Q4 growth.

Activity in the local Secondary Market for Bonds was mixed. Money market liquidity was relatively strong as coupon payments of N160bn hit the system. There was renewed interest for long dated maturities while the short to mid end had improved offers but no serious takers. Intraday, yields were up by an average of 6pbs across the curve. Consequently, FGN 35s closed at an offer rate of 12.35%, up 2pbs from previous day’s level of 12.33% while 49s closed at an offer rate 12.83%, down 2bps from previous days level of 12.85%. Secondary Market for Treasury bills was relatively active across the short to mid end of the curve with trickles of demand sipping in. However, day-on-day, average discount rates were mostly unchanged across the curve. Hence, discount rate on 8th August 2022 SPEB & 24th of November 2022 NTB remained stable at 3.10% and 3.50% respectively. The exchange rate between the naira and the US dollar closed at N417.18/$1 at NAFEX compared to previous sessions level of N416.33/$1, a depreciation of circa 0.20%.