U.S stocks ended mixed on Thursday, despite an early morning surge to their highest levels since May, after the July PPI fell 0.5%, compared with expectations for a 0.2% rise. Thursday’s optimistic inflation report followed a similarly cooler-than-expected reading of the U.S consumer-price growth released on Wednesday. Subsequently, Dow Jones increased 0.1% to finish at 33,336.67, S&P 500 declined 0.1% to finish at 4,207.27, while Nasdaq 100 declined 0.6% to finish at 12,779.91. The 10-year yield Treasury climbed to 2.886% from 2.786%. Gold spot price fell by $5.40 to $1,808.30 per ounce while WTI crude oil increased $3.9 to $92.84 per barrel.
Russian economy swung into a contraction in the second quarter of 2022 with data due this Friday to show gross domestic product shrank for the first time in over a year contracting 4.3%. The impact of international sanctions over the war affected industries like car manufacturing while consumer spending seized up. The response from the Bank of Russia ensured a softer landing for Russian economy, but even so it now predicts GDP will shrink 7% this quarter and possibly even more in the final three months of the year. This Friday Russian Central Bank will present its policy outlook for the next three years. Russian stock market was little changed this morning with all eyes on GDP release later today with both IMOEX and RTSI almost flat on the day and trading at 2,136 and 1,106 respectively. Precious-metals company Polymetal and fertilizer producer PhosAgro were among the worst performers, while Online recruitment service Headhunter rallied 6.5%. Russian ruble gained slightly against the US Dollar in yesterday’s session as next week’s tax period affected the flows with exporters buying ruble to pay the taxes. Both USDRUB and EURRUB are rangebound this morning at 60.84 and 62.57. 10-year benchmark ruble bond yields dropped 1 bps to 8.3%. Russian gas giant Gazprom PJSC sought to amend the terms of its Eurobonds to sidestep sanctions that hinder debt buyback and replace its bond trustee. The company wants to modify the rules governing $750 mln of notes due in 2027 to make it easier to cancel bonds it buys back. GAZPRU bonds traded higher along the curve with GAZPRU 3 06/29/2027 REGS Corp offered in low 60s.
Bunds open weaker following yesterday’s closing. The 10Y touched a high of 1.03% before dropping to 1.00%, 3bps down day-on-day. Peripherals mirrored the move on bunds with a relatively weak open;10Y BTPs yields went as high as 2.93% before retreating to 2.91%, 2 basis points firmer intraday. Stock prices advanced as investors mull over risk of an economic recession compared to the hope that inflation may have peaked. Consequently, the Stoxx 600, opened higher at 441.45 compared to previous session’s closing of 440.16.
We open weaker this morning with pockets of profit takers seen across the space creeping in, to take advantage of the strong rally since the start of the week. GHANA (flat) seems to be the only winner so far at opening without any relative change from closing levels from yesterday. KENYA (-.125) so far has followed the same trajectory as the rest of the space despite its tight contested Presidential elections which the nation awaits its results. Markets also seem to tilt towards an expected 50bps hike come September after the latest U.S inflation numbers released earlier in the week.
Bearish sentiments moderated in the Nigerian local Secondary Market for Bonds. We saw improved offers on the short and long end while the mid end of the curve remained stable. Intraday, average yields were higher by 4bps across board. Consequently, FGN 26s closed at an offer rate of 12.45% ,10 basis points up from previous level of 12.35% while 49s closed at an offer rate of 13.45%, 5 bps up from previous level of 13.40%. Activity in the Secondary Market for Treasury bills was mixed amid a relatively square system liquidity level. Most of the activity hovered around OMO and SPEB maturities. Consequently, discount rates on 28th of November 2022 SPEB & 13th of December 2022 OMO were at 12.15% and 11.50% respectively. Finally, the exchange rate between the naira and the US dollar closed at N424.83/$1 at NAFEX compared to previous session’s level of N428.75/$1, an appreciation of circa 0.91%.