US stocks closed lower on Friday, after Snap Inc. delivered disappointing earnings ahead of next week’s deluge of quarterly results from technology giants. The markets were lacklustre after a host of global preliminary July manufacturing and services sector that all signalled slowing business activity, notably a drop into contraction territory for the U.S. services sector as we await the Fed Reserve rate hike this week. Subsequently this is how the three major US stocks benchmarks performed, – Dow jones declined 0.4% to finish at 31,899.29, S&P 500 declined 1% to finish at 3,961.63 while Nasdaq 100 declined 1.9% to finish at 11,834.11. The 10-year yield Treasury dropped 12.7 basis points to 2.781%, its lowest yield since May 27. Gold price increased $14 to $1,727.40 per ounce while WTI crude oil declined 1.7% to $97.57 per barrel.
Russia’s war in Ukraine has entered its sixth month with Russia’s missile strike on the Black Sea port of Odesa on Saturday, coming after the day it signed an agreement to allow the safe transit of Ukrainian grain export, drawing a swift international condemnation. In economic developments, Russia’s Central Bank cut its key interest rate on Friday by a bigger-than-expected 1.5% to 8% and said it would study the need for more cuts as inflation slows and an economic contraction continues for longer than previously thought. Lower rates have eased the upside pressure on the ruble with USDRUB trading as high as 58.65 post announcement. The ruble trades just off the lows this morning with USDRUB up on the day 0.43% at 57.72 and EURRUB up 0.28% at 58.68. In her statement on Friday, the head of Central Bank, Nabiullina said, that the data suggests that “the economic decline will be more extended over time and, possibly, will become less deep”. The central bank’s revised forecasts showed that after growing 4.7% in 2021, the Russian economy is now on track to shrink 4-6% this year. Russian stock market is trading higher this morning with IMOEX up 0.52% at 2,108. Internet company Yandex is among the leaders with its shares up 2,44%, while a precious metals producer Polymetal lost the most dropping as much as 4.84%. Bond yields fall for a third consecutive day as the Central Bank cut rates more then expected with 10-year benchmark ruble bonds yields down 14 bps to 8.16%, the biggest drop since late June. In corporate news, Sibur said that coupon payment on 2025 bond has not been delivered yet due to additional compliance checks conducted by the paying agent.
Bunds open stronger retracing trend from Friday. The 10Y touched a high of 1.07% before dropping to 1.02%, 5bps down day-on-day. Peripherals mirrored the move on bunds with a relatively strong open;10Y BTPs yields went as high as 3.26% before retreating to 3.21%, 5 basis points firmer intraday. Stocks faltered over worries of a gloomy economic outlook and likelihood of a recession ahead of Feds rate decision slated for Wednesday. Consequently, the Stoxx 600, opened lower at 424.94 compared to previous session’s closing of 425.71. Meanwhile, EU energy minister’s emergency meeting takes place on Tuesday and Euro-area CPI is due Friday.
A mixed open to the space on Monday following a largely positive showing last week. GHANA (-0.125pts) lower at the open after a remarkable reversal on Friday from 7/8pts down to a single point down at the close after clarification of FX reserves figures. ANGOL (+0.125) continues firmer having posted a +11-pt outperformance last week.
Activity in the Nigerian local Secondary Market for Bonds was tepid amid a nagging feeble system liquidity. Mixed sentiments were witnessed as banks traded cautiously. Intraday, yields were down by an average of 2 bps across board. Consequently, FGN 26s closed at an offer rate of 11.32%, 2bps up from previous level of 11.30% while 37s closed at an offer rate of 12.75% down 5 basis points from previous level of 12.80%. Activity in the Secondary Market for Treasury bills was slow as money market liquidity weakness continued. Bearish sentiment was sustained across the curve. Intraday, yields were mostly unchanged across board. Consequently, discount rates on 16th of March 2023 NTB & 8th of June 2023 NTB were at 5.40% and 6.70% respectively. Finally, the exchange rate between the naira and the US dollar closed at N423.00/$1 at NAFEX compared to previous session’s level of N423.83/$1, an appreciation of circa 0.20%.