US Equities finished mixed, Bonds yields went northwards as some appearance of appetite for risk assets resurfaced but investors still concerned about global economic growth, surging commodity prices and monetary policy tightening. Consequently, the S & P 500 lost 0.39%% to close at 4.008.01, NASDAQ 100 declined 1.20% to close at 11,662.79 while DOW rose by 0.08% to 33,223.42. The yield on 10-year USTs rose 4pbs to 2.92%, at the same time Gold was little changed at $1,823.80 an ounce. Meanwhile, Brent crude fell 0.1% to $114.10 per barrel amid disruptions in flows due to ongoing war in Ukraine. Investors are worried that the Fed may be hard-pressed to step up the pace of tightening as inflationary pressures mount. Later this week, Philadelphia Fed President Patrick Harker is expected to speak on Wednesday.
Turkish President Erdogan said that he will not allow Sweden and Finland to join NATO, while Russian President Putin warned that Russia would respond if the Nordic countries moved forward with the membership. After months of bombardment, Ukraine’s military said it would end its combat mission in the southern port of Mariupol as evacuations of the last fighters at Azovstal began on Monday. Russian attacks continued in other parts of Ukraine with governor of Lviv saying that Russian forces shelled a military facility near border of Poland early Tuesday. Meanwhile, EU Foreign Ministers have not yet managed to agree on the sixth package of sanctions against Russia with the main stumbling issue of embargo on Russian oil. IMF has called for urgent support for Ukraine to prevent a “serious macro destabilization”. German officials said that Germany remains open to seizing Russian Central bank’s reserves to finance Ukraine’s reconstruction, while US has approved a $40-billion package of aid for Ukraine. Russian stock market moved higher for a third consecutive day with Russia’s equity benchmark jumping most this month on Monday. After jumping as much as 3.1% yesterday, MOEX continued climbing on Tuesday and gained 1.4% led by Gazprom, Rosneft and PhosAgro. It is currently trading just below 2400 mark. Supported by the currency restrictions, Russian ruble has also continued to strengthen with USDRUB briefly breaking 63 level. Ruble has climbed to the highest level in the nearly five years against the Euro with EURRUB down at 67.50. Russian sovereign bonds were also trading higher with Russia 28 up in mid 30s and Russia 47 up in mid-20.
Bunds open weaker following the trend from yesterday. The 10Y touched a high of 1.019% before dropping to 0.998%, 2bps down day-on-day. Peripherals mirrored the move on bunds with a relatively weak open; 10Y BTPs yields went as high as 2.840% before retreating to 2.810%, 3 basis points firmer intraday. Stocks opened higher as dip buyers made a comeback based on attractive valuations, easing of covid related lockdowns in Shanghai but bearing in mind concerns about stagflation. Consequently, the Stoxx 600, opened higher at 438.40 compared to previous session’s closing of 433.67.
Another lethargic open to the space as rates reverse yesterday’s rally. Monday saw KENINT push on with the earlier signs of firmness to close 0.50pts up with some short covering; it opens in the same vein up 0.25pts even as debt grew 14.5% YoY at the end of March. GHANA meanwhile reversed the recent uptick to close 0.50pts down as supply came through on short tenors late in the session; it opens flat.
Activity in the Nigerian local Secondary Market for Bonds was quiet as market participants waited for the outcome of the Bonds auction conducted earlier in the day. However, we saw improved offers across board with no firm buyers. Intraday, average yields were up by 5bps across the curve. Consequently, FGN 27s closed at an offer rate of 10.90%, up 10pbs from previous session’s level of 10.80% while 50s closed at an offer rate 12.86% up 6pbs from previous session’s level of 12.80%. later in the day, DMO released the auction result with the 25s, 32s and 42s printing at 10.00%, 12.45% and 13.00% respectively. Secondary Market for Treasury bills was muted despite a relatively stable system liquidity. Demand waned across the curve as market participants traded cautiously. Day-on-day, average discount rates were mostly unchanged across the curve. Consequently, discount rates on 8th August 2022 SPEB and 27th April 2023 NTB were at 3.30% and 4.60% respectively. The exchange rate between the naira and the US dollar closed at N416.61/$1 at NAFEX compared to previous session’s level of N416.25/$1, a depreciation of circa 0.09%.