The leaders of Iran, Russia and Turkey are set to hold talks in Tehran this Tuesday with Putin and Erdogan attempting to reach a deal on unblocking exports of millions of tons of Ukrainian grain from Black Sea ports. Meanwhile, Gazprom PJSC declared force majeure on several European natural-gas buyers, a move that may signal it intends to keep the gas supplies capped. The EU’s foreign policy chief, Josep Borrell, said that EU must be prepared to deal with a total cutoff of Russian gas. The European Union, which boosted military financing for Ukraine on Monday, has been preparing to approve some additional sanctions measures, including a ban on Russian gold. Russian stock market fell for a second day with IMOEX down 1.52% at 2, 064, as several companies began trading without dividend rights and gas supply risks persisted. Oil groups Surgutneftegas and Transneft, as well as Rostelecom all went ex-dividends. Detsky Mir gained 3.6% after children’s clothing retailer reported a 12% increase in gross merchandise value. Russia’s currency advanced both against the US Dollar and Euro, heading for its highest close in a week as exporters prepared for monthly tax payments. Ruble gained 0.88% against the Dollar to 55.47 and 0.56% against the Euro to 56.59. Some analysts predict that Russian currency may move even higher to 55/$ by the end of this week, as deadlines for taxes and dividend payments approach. 10-year benchmark ruble bonds yield for bonds trading inside Russia were little changed at 8.44%. A cut in the key interest rate by the Central Bank on Friday of only 50 bps is widely expected and would be neutral for OFZ market.
Bunds open slightly weaker following trend from yesterday. The 10Y touched a high of 1.24% before dropping to 1.23%, 1bp down day-on-day. Peripherals mirrored the move on bunds with a relatively weak open;10Y BTPs yields went as high as 3.23% before retreating to 3.22%, 1 basis point firmer intraday. Stocks declined as worries over a slowdown in global economy due to ongoing energy crisis and hawkish central banks continued to affect investor sentiments. Consequently, the Stoxx 600, opened lower at 415.69 compared to previous session’s closing of 417.63. Meanwhile, European Central Bank rate decisions come up on Thursday.
A comparatively muted open to SSA following yesterday’s strong open to the week. Most names surged north of 1pt as risk sentiment improved following a paring of best for a 100bps Fed hike in July. KENINT (+0.25pts) as the IMF finally approved a $236 million disbursement that will be used for budget support.
Activity in the Nigerian local Secondary Market for Bonds was quiet as traders focused on the auction conducted earlier today. Bearish sentiments were sustained with improved offers seen across most of the curve. Intraday, average yields were mostly higher by 6 bps across board. Consequently, FGN 25s closed at an offer rate of 10.50%, 15bps up from previous level of 10.35% while 42s closed at an offer rate of 13.35%, 7bps up from previous level of 13.28%. Meanwhile, stop rates at the Bonds auction released after trading hours printed at 11.00%(previous:10.10%) for FGN 25s, 13.00% (previous: 12.50%) for 32s and 13.749%(previous:13.15%) for 42s.Activity in the Secondary Market for Treasury bills was toned down amid a relatively feeble system liquidity level. Day-on-day, average discount rates were mostly unchanged the across curve. Consequently, discount rates on 29th of August 2022 SPEB & 10th of January 2023 OMO were at 11.00%% and 10.50% respectively. Market is expected to remain largely bearish pending expected inflows from Bond coupon payments. Finally, the exchange rate between the naira and the US dollar closed at N423.17/$1 at NAFEX compared to previous session’s level of N422.20/$1, a depreciation of circa 0.23%.