U.S. stocks ended the day with one of its biggest gains in more than three months on Monday, as investors factored in the possibility that the Fed Reserve might be forced to back away from aggressively tighter monetary policy. The markets are rebounding as Treasury yields fall from recent spikes that have come from aggressive Fed interest rate hike that has boosted bond yields and the U.S. dollar. The greenback is also coming off the boil as the British pound is rising after the U.K. government reversed a decision to cut taxes for high income earners. U.S. stocks seemed to benefit from the bad-news-is-good-news dynamic that has occasionally buoyed equities.
Subsequently, Dow Jones increased 2.66% to finish at 29,490.89, S&P 500 advanced 2.59% to finish at 3,678.43 while Nasdaq 100 advanced 2.27% to finish at 10,815.43. The 10-year yield Treasury declined 15.2 basis points to 3.65%.
Oil and gas companies surged on the back of higher oil prices following reports the OPEC+ would consider a large production cut at a meeting this week. WTI crude oil added $3.50 to $82.99 per barrel, while gold spot price added $26.40 to $1,698.40 per ounce.
European countries edged closer to a deal on a new sanctions package against Russia following the illegal annexation by Russia of the four occupied regions in Ukraine with the main point remaining the agreement on the details of a price cap on Russian oil sales to third countries. Member states are expected to formally agree the deal early this Tuesday. In the meantime, Ukrainian army pressed with renewed counteroffensive in the southern Kherson region making significant inroads along the northern reaches of the Dnipro river’s Western Bank. While Russia has escalated its nuclear threats with Russian officials calling Putin to use smaller weapons, so far, US and European officials have said there was no sign of any preparations and threats remained purely rhetorical. Russian stock market had a volatile start this Tuesday Morning with IMOEX initially gaining over 1.4% and now trading 0.85% lower to 2,025. RTSI is currently down 0.62% to 1,084. The elevated metals prices contributed to mining companies’ shares’ strength with Norilsk Nickel and Polyus among the best performers. Polymetal shares jumped as much as 6% adding to Monday’s 18% rally triggered after the gold miner said it was seeing to spin off its Russian assets. The newspapers later reported that the company was working to redomicile from Jersey to somewhere “more friendly”. Russian ruble has opened October with gains against the US Dollar and Euro adding to two months of advances, as Russian companies sold currency on fears that overseas accounts might be frozen. USDRUB is currently flat on the day at 58.78 and EURRUB is up 2.46% to 56.06. After hitting a five-month high of 11.6% on September 26 the yield on the Russian 10-year local bonds have stabilized just under 10% level, currently at 9.76%.
European stocks jumped by the most in three weeks as bond yields dipped on optimism that weaker-than-expected data will keep the ECB from being overly hawkish. Swiss banking giant Credit Suisse rebounded, after slumping yesterday following a memo from Chief Executive Officer Ulrich Koerner that didn’t reassure investors about uncertainties surrounding the bank. Also in Europe, risk demand has been subdued recently by a severe energy crisis and political turmoil in the U.K. Chancellor of Exchequer, Kwasi Kwarteng is now due to bring forward the announcement of his medium- term fiscal plan as he seeks to reassure financial markets about his economic strategy.
German Dax increased 2.23% to finish at 12,480.30, FTSE 100 increased 1.42% to finish at 7007.60 and French CAC 40 increased 2.70% to finish at 5,948.77.
The 10-year U.K gilt yield declined 8 basis points to 3.85% while the Germany’s 10-year bund declined 6 basis points to 1.82%.
SSA opens firmer as risk sentiment turns positive with Brent heading towards $90/bbl and 10Y USTs trading sub 3.60% having topped 4% last week. ANGOL (+.875) leading at the open while NGERIA (+.75) likewise opens strong. GHANA (+.50) also moves firmer having ended strong in Monday’s muted session despite Moody’s downgrade to Caa2.
There was a public holiday to mark the 62nd independence anniversary of the country.