U.S. stocks closed higher Thursday despite concerns about a potential sharp economic downturn as the Fed Reserve gets more aggressive in tightening monetary policy. Fed Chair Jerome Powell reiterated that he doesn’t think a recession is inevitable, but he also has an “unconditional” commitment to fight inflation, on his second day of testimony to Congress on interest-rate policy. Subsequently the S&P 500 increased 1% to finish at 3,795.73, Nasdaq 100 increased 1.6% to finish at 11,232.19, while Dow Jones increased 0.6% to finish at 30,677.36. The 10-year yield Treasury declined to 3.068%. Meanwhile, Gold price closed at $1,842.80 per ounce, while WTI crude oil shed 1.8% to 104.27 per barrel. On the data front, US University of Michigan consumer sentiment report is due later today.
Bunds open stronger following the trend from yesterday. The 10Y touched a high of 1.46% before dropping to 1.37%, 9bps down day-on-day. Peripherals mirrored the move on bunds with a relatively strong open;10Y BTPs yields went as high as 3.36% before retreating to 3.28%, 8 basis points firmer intraday. Stocks open higher as dip buyers resurfaced, attracted by lower valuations as drop in Bonds yields made investors shift focus to equities. Consequently, the Stoxx 600, opened higher at 404.66 compared to previous session’s closing of 402.40.
A largely firm open to SSA to end what’s been a dreary trading week. ANGOL (-0.875pts) underperformed on Thursday with fellow oilers NGERIA (-0.75pts) and GHANA (-0.625pts) just faring slightly better; all open on a firmer note today as Brent steadies after the sell-off earlier in the week.
Activity in the Nigerian local Secondary Market for Bonds was moderate as system liquidity squeeze lingered. There was mixed sentiment across board as demand for the mid tenured maturities waned. Intraday, average yields were down by 2 basis points across the curve. Consequently, FGN 28s closed at an offer rate of 10.75%, 2 basis points down from previous level of 10.77% while 50s closed at an offer rate of 12.92%, same as previous trading session. Activity in the Secondary Market for Treasury bills was mixed with some bearish sentiments amid a feeble Money Market liquidity. However, we saw some cherry picking across the mid to long end of the curve. Day-on-day, average discount rates were mostly up across board. Consequently, discount rates on 11th of July 2022 SPEB and 3rd of October 2023 SPEB were at 5.65%(previous:5.60%) and 5.55%(previous:5.40%) respectively. Bearish sentiments may persist until next week when FAAC inflows come in. The exchange rate between the naira and the US dollar closed at N419.17/$1 at NAFEX compared to previous session’s level of N418.75/$1, a depreciation of circa 0.10%.