U.S. Stocks declined on Friday with major indexes posting their lowest finishes since 2020 as investors grew more fearful that aggressive interest rate hikes by the Fed Reserve will drive the economy into a downturn to quell inflation. Again, investors on Friday digested a reading from the personal consumption expenditure (PCE) inflation index for August, which showed that core consumer prices climbed by 0.6% last month. Investors were also keeping an eye on mega cap tech stocks.
Subsequently, Dow Jones declined 1.71% to finish at 28,725.51, S&P 500 declined 1.51% to finish at 3,585.62 while Nasdaq 100 declined 1.51% to finish at 10,575.62. The 10-year yield Treasury declined 0.046% to 3.7825%.
Gold spot price advanced 0.1% to $1,660.61per ounce while WTI crude fell to $79.49 per barrel.
A new operational defeat for Russian forces in the strategic Ukrainian town of Lyman has brought further doubts in the longevity of annexation of four occupied regions by President Putin. Several thousand Russian troops withdrew from Lyman in Donetsk province over the weekend. Hundreds of thousands of draft-age Russian men are believed to have fled the country since Russian government called up 300,000 reservists two weeks ago. On Friday US and European Union denounced Russia’s move to annex four occupied regions in Ukraine introducing a new package of sanctions, including sanctions against central bank head Elvira Nabiullina and Deputy Prime Minister Alexander Novak. Russian stock market showed some recovery this Monday morning as oil rose and cheap valuations outweighed setbacks on the battlefield in Ukraine. IMOEX was up 2.03% at 1,997 and RTSI was up 4.19% to 1,099. Lukoil and Rosneft Oil were among the best performers as crude rallied on indications that the OPEC+ is considering productions cuts. Gazprom underperformed trading little changed as the price of European gas has declined. Russian ruble initially fell against the US Dollar after Putin announced the annexation, but since then gained some ground back trading higher this morning both against US Dollar and Euro. USDRUB lost 1.23% to 57.22 and EURRUB lost 1.63% to 55.07. Bank of Russia has prepared additional procedures to set FX rates to reflect the situation more accurately on the markets, including using additional data sources, such as bank reports and digital OTC trading platforms. The yields on the Russian 10-year local bonds fell sharply to below 10% from the five-month high of 11.6% hit on September 26, as the plunge in Russian equities drove investors to reallocate to safer debt. As the stock market has showed some signs of recovery, yields moved slightly higher and now trade around 10%.
European stocks finished higher on Friday with German Dax adding 1.16% to finish at 12,114.36, FTSE 100 rose 0.18% to finish at 6,893.81 and French CAC 40 gained 1.51% to finish at 5,762.34.
The 10-year U.K gilt yield rose 0.04 basis points to 4.140% whiles the German 10-year bund rose 0.031 basis points to 2.11%.
Meanwhile in U.K, the chancellor Kwasi Kwarteng just announced the first big U-turn, scrapping the plan to abolish the 45% income tax rate. Responding to this controversial decision, the PM Liz Truss said to remove the highest rate of UK income tax was taken by Chancellor Kwesi Kwarteng and that her government is sticking with it despite market chaos.
A mixed open to SSA to kick off the month as Brent and rates tread steady after the UK government scrapped plans to abolish the 45p income tax rate. NGERIA (+.125) firmer among the oilers with demand skewed to longer tenors while KENINT (+.25) continues its uptick from Friday.
The local FI market continued a quiet note as players remained cautious. The bonds market saw some activity with yields rising by an average of 45bps across the curve. NGN 37s was the most actively traded. There was little activity in the Treasury Bills market as yields closed flat.