US stocks finished higher on Friday in the final trading session of the month of July, marking the best monthly gain for the S&P 500 and Dow Jones since November 2020. Big-tech earnings reports helped lift equities while investors shrugged off another sign of high inflation for the Fed Reserve’s preferred gauge. Subsequently, Dow Jones increased 1.0% to finish at 32,845, S&P 500 increased 1.4% to finish at 4,130.29 while Nasdaq 100 increased 1.9% to finish at 12,391. However, the 10-year yield Treasury fell 4 basis points to 2.60%. Gold price increased $9.20 to $1,778.40 per ounce while WTI crude oil price increased $2.20 to $98.62 per barrel.
Russia’s Gazprom PJSC halted supplies to Latvia on Saturday, saying that the country had “violated the conditions” of its purchases. This added to growing concerns over further cuts of Russian gas supplies to Europe. Natural gas prices in the region rose again this morning after posting last week the biggest weekly gain in more than a month. In the meantime, Ukraine has made its first shipment of grain since Russia’s invasion with the cargo ship Razoni loaded with 26,000 tons of corn leaving for the port in Lebanon this Monday morning. The Razoni represents a milestone achievement under the July 22 deal to create safe shipping corridors through three of Ukrainian ports. Russian stock market fluctuated at the start of the week as oil prices declined and investors assessed Europe’s efforts to reduce the region’s dependence on Russian gas. Both IMOEX and RTSI benchmarks were down 1-2% on the day and currently trade at 2,181 and 1099 respectively. Metals producers Norilsk Nikel and Polyus were among the best performers, along with Novolipetsk Steel and energy company Surgutneftegas. Energy giants Gazprom and Lukoil retreated, as did Sberbank. After being the best performer this year, ruble turned to the worst performing EM currency in July losing 16% of its value during the month. As the strong rubles hit the country’s exporters, Russian Central bank slashed the interest rates and brought the currency down. At the same time Western sanctions prompted Russia to shift to other currencies and exports to China have increasingly been paid in Yuan. Ruble is down again this Monday with USDRUB and EURRUB up around 1% and trading at 62.36 and 63.59 respectively. More Russian companies may soon join Rusal selling yuan-denominated bonds on the local market. The second largest Aluminium producer Rusal, which was sanctioned by the West, placed two tranches for 4 Bln yuan in total last week yielding 3.94% to a 2-year put with demand more than double offer size. Russian manufacturing PMI came out at 50.3 today down from June’s 50.9 and showed only small improvements of Russian manufacturing sector.
Bunds open weaker following trend from Friday. The 10Y touched a high of 0.87% before dropping to 0.85%, 2bps down day-on-day. Peripherals mirrored the move on bunds with a relatively weak open;10Y BTPs yields went as high as 2.96% before retreating to 2.95%, 1 basis point firmer intraday. Stocks advanced as optimistic corporate earnings continued to aid investor sentiments while markets evaluate central banks’ position on hiking rates to curb inflation. Consequently, the Stoxx 600, opened higher at 439.03 compared to previous session’s closing of 438.29.
SSA opens mostly firmer to kick off the month with ZAMBIN (+0.625) leading at the open. The China- and France-led official creditors committee agreed to provide debt relief over the weekend; the announcement followed the cancellation of $2 billion in yet to be disbursed loans on Friday by the finance ministry.
Activity in the Nigerian local Secondary Market for Bonds was relatively slow amid a lingering feeble system liquidity. We saw improved offers across the curve. Intraday, average yields were higher by 1bp across board. Consequently, FGN 26s closed at an offer rate of 11.50%,5 basis points up from previous level of 11.45% while 42s closed at an offer rate of 13.70%, 1 basis point up from previous level of 13.69%. Activity in the Secondary Market for Treasury bills was mixed with few trades done as frailty in money market liquidity persisted. We saw slight demand on the SPEBs especially 28th November 2022 at the beginning of trading, but interest fizzled out towards midday. Consequently, discount rates on 11th of August 2022 SPEB & 28th of November 2022 SPEB were at 14.00% and 11.95% respectively. Finally, the exchange rate between the naira and the US dollar closed at N427.17/$1 at NAFEX compared to previous session’s level of N426.83/$1, a depreciation of circa 0.08%.