US equities mixed ahead of july jobs report

US stocks closed mostly lower on Thursday as investors weighed another batch of corporate earnings and looked ahead to July employment report slated for later today for insights on the health of the labour market and the economy. Stocks drifted lower after data showed first-time claims for U.S. jobless benefits rose by 6,000 to 260,000 in the week ended July 30. Subsequently, Dow Jones declined 0.3% to finish at 32,726.82, S&P 500 declined 0.1% to finish at 4,151.94, while Nasdaq 100 increased 0.4% to finish at 12,720.58. The 10-year Treasury declined from 2.747% to 2.674%. WTI crude oil futures price for September declined by 2.3% to $88.54 per barrel while gold futures price for December increased $30.50 to $1,806.90 per ounce.

A week after Ukraine and Russia reached an agreement for safe transit of grain vessels, Kyiv sent three more ships this Friday carrying corn to Ireland, the UK and Turkey. In the meantime, to circumvent Western sanctions, Russia has started turning to Turkey and other potential trading partners with trading initiatives. According to report shared with the Washington Post, this week Russia proposed to buy stakes in Turkish oil refineries, oil terminals and reservoirs, and asked Turkey to allow Turkish state-owned banks to set up correspondent accounts for Russia’s biggest banks, which are currently sanctioned by the West. There is no indication, yet that Turkey would support these arrangements. Russian stock market fell for a fifth consecutive day on Friday as most of the energy stocks fell amid intensifying signs of global economic slowdown affecting demand for oil. Both IMOEX and RTSI were down this morning by around 2.8% and traded at 2,057 and 1,074 respectively. Oil company Transnet and fertilizer producer PhosAgro were among the worst performers, along with Sberbank and Yandex, Lukoil and Gazprom. Online recruitment service Headhunter surged as much as 7.9%, adding to a 36% jump the previous day. Russian ruble made small gains snapping two days of losses.  Both USDRUB and EURRUB traded slightly lower today at 60.33 and 61.43 respectively. 10-year benchmark ruble bond yields dropped 2 bps to 8.28%. The monthly inflation report due next week is not expected to show any break in the deflationary trend.  Based on this, some analysts expect the Central Bank of Russia to lower the key interest rate to as low as 6.5% by year end. In corporate news, Sovcombank, sanctioned by the West, sold $600 million of dollar-denominated bonds in the domestic market with coupons to be made in rubles.

Bunds open slightly weaker in comparison to yesterday’s closing. The 10Y touched a high of 0.83% before dropping to 0.82%, 1bp down day-on-day. Peripherals mirrored the move on bunds with a relatively weak open;10Y BTPs yields went as high as 2.78% before retreating to 2.76%,2 basis point firmer intraday. Stock prices were little changed as investors await the outcome of US Jobs report due later today. Consequently, the Stoxx 600, opened marginally higher at 439.17 compared to previous session’s closing of 439.06.

The space opens this morning relatively firm, the likes of ZAMBIN (+.50) looking like the major gainer this week, obviously buoyed from its recent news about its progress in restructuring its debt with IMF and the Zambian Finance Ministry expectation of signing a memorandum of understanding with Official Creditors Committee and negotiations for bilateral deals which could likely begin by the end of 2022. To put into the context, at the start of August when the news first broke out of talks with IMF having some potential progress, prices in the shortest tenored sovereign paper (ZAMBIN 5 ⅜ 09/20/2022) have notched up at least c.3pts. Decent demand seems to continue the front foot with the oilers (NGERIA, GHANA, ANGOL) despite thin liquidity witnessed since the start of the week. Attention today will be focused on the US employment data while the situation between U.S, China & Taiwan reverberates in the background.

Activity in the Nigerian local Secondary Market for Bonds was mixed with a bearish bias amid a relatively stable system liquidity. We still saw improved offers across the short to mid end while the long end of the curve had dampened offers. Intraday, average yields were higher by 3bps across board.  Consequently, FGN 27s closed at an offer rate of 12.00%,10 basis points up from previous level of 11.90% while 50s closed at an offer rate of 13.35%, 4 basis points down from previous level of 13.39%. Activity in the Secondary Market for Treasury bills was somewhat dull with few trades executed. Most of the activity hovered around OMO maturities. Consequently, discount rates on 21st of February 2023 OMO & 28th of November 2022 SPEB were both at 10.00%.  Finally, the exchange rate between the naira and the US dollar closed at N426.20/$1 at NAFEX compared to previous session’s level of N427.17/$1, an appreciation of circa 0.23%.