U.S. stocks declined on Thursday to give back some of the early-week rally ahead of today’s key September nonfarm payroll report. Inflation pressures that have forced central banks tightening monetary policy across the world remain a focus of the global markets and the equity markets rallied on optimism that appeared to emerge regarding a potential easing of the pace. However, U.S. Treasury yields rose which continue to be a major source of uneasiness for the market. Crude oil prices gained ground yesterday with the market digesting OPEC+ oil production cut to 2mmbpd. Also with labor report looming, jobless claims accelerated slightly more than expected.
Subsequently, Dow Jones declined 1.15% to finish at 29,926.94, S&P 500 declined 1.02% to finish at 3,744.52 while Nasdaq 100 declined 0.68% to finish at 11,073.31. The 10-year Treasury yield advanced 6.6 basis points to 3.823% from previous session of 3.757%. Gold spot price declined $2.50 to $1,718.30 per ounce while WTI crude oil increased $0.76 per barrel.
Russian rockets hit residential building in the southeastern Ukrainian city of Zaporizhzhia on Wednesday killing at least 7 people, according to the Ukrainian regional governor. The Russian military have not responded yet to these allegations. In the meantime, US President Biden has warned that the risk of nuclear “Armageddon” is at its highest since the Cuban missile crisis, stating that Russian President Putin is “not joking” about a potential use of nuclear weapons as his army struggles in Ukraine. Russian stock market fell for a third consecutive day, as commodity-tied stocks dropped among new developments to the war in Ukraine. IMOEX lost 1.58% to 1,998 and RTSI lost 2,41% to 1,019. Gazprom, Lukoil and Rosneft led the losses along with Sberbank and Yandex. Russian currency has weakened against US Dollar, Euro and Yuan for a fifth day closing at the lowest level in more than two weeks. This Friday morning USDRUB traded up 0.38% to 61.29 and EURRUB gained 0.48% to 59.57. The recent ruble weakness could be explained by temporary fading of risks that organized trading in USD and Euro could be halted in the event of Western sanctions, some analysts suggested. Russian bonds yields were up with 10-year benchmark Russian local bond yields trading 3 bps higher at 9.82%. In corporate news, Gazprom has issued local bonds to replace GBP-denominated Eurobonds with a maturity in April 2024. The tranche size is GBP 293.6 mln and coupon is 4.25%. Meanwhile, EU has confirmed a possibility of unfreezing Russian assets that belong to NSD following the announcement of the 8th package of sanctions against Russia.
European stocks finished lower on Thursday. In Europe, Credit Suisse AG climbed 2.5% after announcing a buyback of debt securities for cash, a show of financial strength after market volatility earlier this week on concerns about the bank’s solidity. Sentiment is also under pressure from signs of a weaker earnings- reporting season. Following a dour trading update from European oil major shell yesterday.
The French CAC 40 declined 0.82 to finish at 5,936.42, the FTSE 100 index fell 0.78% to finish at 6,997.27 and German Dax fell 0.37% to finish at 12,470.78.
The 10-year U.K. Gilt fell 3.35 basis points to 4.167% while German 10-year bund fell 0.029 basis points to 2.09%.
The whipsawing in SSA this week continues as the space opens tepid after Thursday’s firm showing. GHANA flat at the open as the government continues talks with the IMF over a bailout. The central bank also raised the country’s benchmark rate to 24.5% – the highest since 2017 – in a bid to stave off inflation which hit 33.9% in August.
The local FI market remained quiet. The bonds market saw little activity with yields across the curve with yields closing flat. There was a drop on the NGN 24s by 10bps.
There was also little activity in the Treasury Bills market as yields closed flat across the curve.