US equities gain over cheery corporate earnings and economic data

US stocks closed higher on Wednesday, after a bumpy beginning at the start of the month, with earnings reports continuing to pour in and economic data coming in a bit stronger than expected. In economic data, an ISM barometer of business conditions at companies in July rose to a three-month high of 56.7%, suggesting the economy continues to expand despite growing headwinds. Subsequently, Dow Jones increased 1.3% to finish at 32,812.50, S&P 500 increased 1.6% to finish at 4,155.17 while, Nasdaq 100 increased 2.6% to finish at 12,668.16. The 10-year yield Treasury rose from 2.730% to 2.747%. WTI crude price fell $3.76 to $90.66 per barrel while, gold spot price declined by $16.60 to $1,773.10 per ounce.

Russia continued a considerable military activity in the East, Northeast and South of Ukraine shelling a dozen towns in the northeast of Kharkov. Shelling was also carried out near the central town of Kramatorsk, which Russian forces hope to capture as they move south. In the meantime, US Senate ratified adding Sweden and Finland to the North Atlantic Treaty Organization in a move intended to bolster the military alliance after Russia’s invasion to Ukraine. Russian stock market fluctuated this Thursday morning with IMOEX slightly lower at 2,122 and RTS up 0.46% at 1,111. Yandex and Ozon were among the best performers after a newspaper reported that they had secured subsidized loans from the government to help them meet obligation to their Eurobond holders. Fertilizer producer Phosagro and online recruitment company HeadHunter also gained. Energy companies Gazprom, Novatek and Rosneft Oil retreated as European natural-gas prices declined with signs of extra supplies form the US offsetting concerns about shipments from Russia.  Russian ruble gained for a third session in a row against the yuan and euro and is set to erase yesterday’s loss against the US Dollar. The move to the upside was mostly contributed to conversions of gas payments into rubles. USDRUB is currently trading at 60.23 and EURRUB is just above 61. The main market’s driver in recent months has been cuts in the central bank’s key rate with the next meeting coming up 16th of September. 10-year benchmark ruble bond yields were 1 bp lower at 8.26%. In corporate news, Rusal, which is sanctioned by the West, has asked 2023 US denominated bond holders to agree on alternative payment for coupons due in August and November. Payments to noteholders with accounts in Russian depositories will be made in rubles, while the holders without accounts will be paid in accordance with original terms or directly in US dollars if they provide an application.

Bunds open with little change. The 10Y touched a high of 0.881% before dropping to 0.877%, below 1bp down day-on-day. Peripherals mirrored the move on bunds with a relatively flat open;10Y BTPs yields went as high as 2.848% before retreating to 2.847%, less than 1 basis point firmer intraday. Stocks advanced as investors evaluated direction of corporate earnings while focus shifted to BOE’s policy decision coming up later in the day. Consequently, the Stoxx 600, opened higher at 439.91 compared to previous session’s closing of 438.29.

Despite the lacklustre run we saw in the space yesterday, RM demand seemed to flow right across the space with little or no liquidity seen. The likes of GHANA (+.50) saw demand on the belly of the curve, IVYCST (+.50) saw strong demand right across its curve same with SENEGL (+.50). NGERIA (flat), although having a soft opening continued to see demand as well with little or no liquidity. We have seen quite a firm opening across the space with only GHANA looking unchanged/flat so far but with continued sustained demand seen at the short end of the curve.

Activity in the Nigerian local Secondary Market for Bonds was calm even though system liquidity improved. We still saw improved offers across the curve as Banks adjusted their rates northwards. Intraday, average yields were higher by 10bps across board.  Consequently, FGN 27s closed at an offer rate of 11.90%,15 basis points up from previous level of 11.75% while 42s closed at an offer rate of 13.73%, 2 basis point up from previous level of 13.71%. Activity in the Secondary Market for Treasury bills was tepid with more trades done today amid a relatively better money market liquidity level. Most of the activity hovered around SPEB maturities. Consequently, discount rates on 3rd of October 2022 SPEB & 28th of November 2022 SPEB were at 12.20% and 12.10% respectively.   Finally, the exchange rate between the naira and the US dollar closed at N428.00/$1 at NAFEX compared to previous session’s level of N427.17/$1, a depreciation of circa 0.20%.