U.S. equities continued its downward trend to begin the new week, following Friday’s hotter-than- expected inflation report. Yesterday’s weakness brought the S&P 500 to bear market to join Nasdaq 100. Further, investors are worried about a possible recession in part due to the expectation of more aggressive Fed monetary policy later this week. Subsequently the S&P 500 declined 3.9% to finish at 3,749.63, Nasdaq 100 declined 4.7% to end at 10,809.23 while Dow Jones declined 2.8% to finish at 30,516.74. Gold price is down by $44.3 to $1,831.20 per once, while WTI crude declined $3.12 to $117.55 per barrel.
As Russia continued shelling Sievierodonetsk in the East of Ukraine, two major US Banks JPMorgan Chase & Co. and Goldman Sachs Group Inc. have withdrawn from handling trades in Russian debt after a surprise ban of US investors from buying Russian bonds on the 6th of June. Russian sovereign bonds which have been trading at around 20-30% since March had a muted reaction and held on to the same levels. Russia 28 is still offered in mid 30s and Russia 47 in mid 20s. Russian stock market has dropped this Tuesday morning after market reopened after a state holiday. IMOEX has since recovered and is trading now up 0.3% at 2,292. Norilsk Nikel and Lukoil, as well as Sberbank and aluminum producer Rusal have lost the most, while Gazprom gained more that 2%. As Moscow exchanges have opened after holiday, Russian ruble has weakened against the dollar with USDRUB up 0.6% at 57.44. EURRUB remained mostly flat at around 60. From today Moscow Exchange will be suspending trading in Swiss francs due to difficulties with settlements. Fulfillment of previous obligations will continue as usual.
SSA opens with a bounce from yesterday’s selling. Monday saw the space trade much weaker as the spectre of sticky inflation took centre stage. NGERIA (-4.75pts) the underperformer in the space with no real support save some late demand on 47s as local Nigeria was on holiday. GHANA (-1.625pts) fared comparatively better having held at the open amid the syndicated loan news. Both open 0.25pts up. ZAMBIN (-1.00pts) held best in the space and opens flat ahead of Thursday’s debt restructuring meeting with creditors.