The Dow closed higher as the Bank of England’s intervention calmed investor worries, triggering a slump in U.S. The 10-year Treasury yield slumped to 6.5% to 3.73 level, pulling back from 15-year highs. The move put pressure on U.K. government bond yields, which trade inversely to prices, dragging other sovereign bonds including U.S. Treasury yields lower.
At the same time S&P 500 rose at 1.97% to 3719.04, the Dow Jones gained 1.88%, or 547 points to 29683.74, and the Nasdaq was up 2.05% to 11051.64 points.
Technology stocks climbed, but lagged the broader market’s move higher despite the fall in Treasury yields as a 2% slump in Apple weighed on the sector.
Apple came under pressure on reports the company is abandoning plans to boost new iPhone production.
The European Union has started talks on the eighth package of sanctions against Russia following Russia’s invasion to Ukraine in February. Proposals from Commission Chief Ursula von der Leyen include a “sweeping” new import ban on Russian products, as well as prohibiting the sale of key technologies that could benefit Russia’s military. The package would also move toward a price cap for Russian oil sold to third countries. Meanwhile, Russia has declared landslide victories in “referendums” it held in the territories currently occupied by its forces in Ukraine and prepared to absorb them within days. Russian equity market gained for a third day, trimming this month’s losses, as investors disregarded the threat of new sanctions and took the advantage of the cheapest valuations on record. Both IMOEX and RTSI traded higher this morning gaining 0.93% to 1,982 and 2% to 1,074 respectively. Energy companies Gazprom and Lukoil were among the best performers along with supermarket operator Magnit and internet company Yandex. Russian rouble fell this Thursday both against US Dollar and Euro, as the tax period end removed a strong support factor for Russian currency. USDRUB rose 0.54% to 58.08 and EURRUB gained 0.47% to 55.94. High prices on gas in Europe due to the incidents on the Nord Stream pipelines and gains in oil on expectations of an OPEC+ output cut remain supportive for the rouble. Russian local bond yields remained mostly unchanged after a spike in volatility following a recent escalation in Russia-Ukraine conflict with Russia calling a partial mobilization. The 10-year benchmark bonds yields currently trade just below 10%. The OFZ market situation has rapidly deteriorated under pressure from the Central Bank of Russia’s pause in monetary policy easing and the increasing fiscal risks.After a military mobilization and escalation in Russia-Ukraine conflict triggered a sharp sell off in Russia stocks, local investors have switched into fixed income contributing to the move.
The Bank of England announced emergency bond purchases to support the gilt market which fell along with the pound after the new UK government announced significant tax cuts, likely through large loans. The British currency jumped the most since June as a result while GBP/USD grew up at 0.9% to 1.088 on Wednesday.
Europe’s STOXX 600 index fell on Thursday, led by declines in shares of Swedish group H&M after dismal earnings, with investors awaiting a reading on German inflation data for clues on interest rate hikes by the European Central Bank. Germany’s DAX index fell 0.9% to 12183.28 points ahead of a preliminary reading on the country’s inflation data due later in the day.
Several ECB policymakers are backing another large rate hike–of as much as 75 basis points–in October to combat surging price pressures.
SSA opens tilted towards the downside as the late rally on Wednesday fails to find footing. ANGOL (-.375) opens lower after a remarkable 4-pt turnaround from session lows yesterday as rates rallied and Brent likewise surged – closing 3.5% up. Ghana’s finance ministry said it will protect the domestic financial sector amid ongoing restructuring talks and aims to make meaningful progress in time for budget presentation in November; GHANA opens flat.