US stocks recorded their biggest declines in more than a week on Monday, as investors evaluated China’s crackdown on a new COVID-19 subvariant and braced for the likelihood of another hot U.S CPI report tomorrow. Forecasters are expecting the headline of increase in inflation from 8.6% in May to 8.8% in June report. Subsequently the Dow Jones declined 0.5% to finish at 31,173.84 while S&P 500 declined 1.2% to finish at 3,854.43 and Nasdaq 100 declined 2.3% to finish at 11,372.60. The 10-year yield Treasury also declined 11 basis points to 2.99%. Gold futures price declined 0.6% to 1,730 per ounce with WTI crude oil declining 0.7% to 104.09 per barrel.
Despite the Western sanctions, an increase in the rate of export duty charged on crude shipped out of Russia in July has helped the country to shrug off a 15% drop in crude shipments in the first week of July with revenues edging down just by 2%. At the same time, a senior US Treasure official said a proposal is being explored by world’s leading economies to cap the prices of Russian oil exports to prevent a global price spike beyond $140 a barrel. As oil prices have declined and global economic sentiment remained negative on recession fears, Russia’s equity market fell for a third consecutive day with IMOEX losing 1.66% to 2,126. Energy giants Gazprom, Novatek, Rosneft and Lukoil were among the worst performers along with Norilsk Nikel. Petropavlovsk, a gold mining company based in London, but with most of its operations in Russia, was heavily hit by Western sanctions and has requested for its shares to be suspended on the LSE after filing an administration order. Petropavlovsk has struggled to repay $201 million in loans to Gazprombank and has requested to suspend its shares on the Moscow Stock Exchange as well. The company was also unable to meet obligations to note and bond holders, which are owed US$300Mln+ combined. Russian ruble refreshed a weekly high of 59 rubles against US Dollar despite of G7 eyeing price caps on Russian oil. With EURUSD almost at parity EURRUB traded for the first time below USDRUB. Both pairs currently trade around 59.20.
SSA opens weaker as risk sentiment remains negative ahead of US CPI data on Wednesday. GHANA (-0.375pts) continues weaker with ongoing IMF talks prompting a postponement of the mid-term budget review. The review which was scheduled for Wednesday will now be presented later in the month post the initial IMF talks.