U.S. equities rise on China’s impending stimulus package amid Fed chair’s upcoming speech

U.S. stocks climbed higher on Wednesday as investors await to hear from the Fed Reserve Chairman Friday at the Jackson Hole summit. Worries about a hawkish turn from the Fed Reserve have weighed on markets this week, although the three major benchmarks gained yesterday. Subsequently, Dow Jones increased 0.2% to finish at 32,431.53, S&P 500 increased 0.3% to finish at 4,140.77 while Nasdaq 100 increased 0.4% to finish at 12,431.53. The 10-year yield Treasury increased 5 basis point to 3.105%. Gold futures for December rose 30 cents to $1,761.50 per ounce while WTI crude oil futures for October rose 1.1% to $94.33.

Bunds open stronger retracing trend from yesterday. The 10Y touched a high of 1.39% before dropping to 1.34%, 5bps down day-on-day. Peripherals mirrored the move on bunds with a relatively strong open;10Y BTPs yields went as high as 3.68% before retreating to 3.61%, 7 basis points firmer intraday. Stocks rose on positive news from China regarding its stimulus package and optimistic data from Germany as investors await Federal Reserve Chair Jerome Powell’s upcoming speech. Consequently, the Stoxx 600, opened higher at 435.09 compared to previous session’s closing of 432.05.

Yet another firm open for SSA in the build up to Powell’s anticipated Jackson Hole address. ANGOL (+1.25) off to a firm start as the ruling MPLA takes a 60% lead a third of the votes counted as at Thursday morning. Elections have done little to dent the recent uptick in demand for bonds with ANGOL having consistently outperformed this week.

Activity in the Nigerian local Secondary Market for Bonds was mixed amid a persistently feeble system   liquidity level. We saw offer yields on the short to mid end of the curve trend upwards while the long end had reduced offers. Intraday, average yields were down 2bps across board.  Consequently, FGN 26s closed at an offer rate of 13.00%,15basis points up from previous level of 12.85% while 42s closed at an offer rate of 14.05%, 5 bps down from previous level of 14.10%. Activity in the Secondary Market for Treasury bills had mixed sentiments as traders waited for the outcome of the NTB Auction. Stop rates were released after trading hours with the 91 -,182- and 364-day tenors printing at 4.00% (previous: 3.50%), 5.00%(previous:4.50%) and 8.50%(previous:7.45%) respectively.  Most of the activity hovered around OMO and SPEB maturities.  Consequently, discount rates on 28th of November 2022 SPEB & 10th January 2023 OMO were at 12.35% and 12.00% 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 N427.33/$1, a depreciation of circa 0.16%.