U.S. stocks finished higher on Friday as the market sift through another heavy dose of earnings and economic data. Dow member Intel topped projections and announced $10 billion in cost reductions while Dow Jones component Chevron and Exxon trounced expectations. On the economic front, personal income and spending were upbeat, and consumer sentiment was revised modestly higher. Investors also absorbed Thursday’s ECB monetary policy tightening decision and the flood of earnings reports. Subsequently, Dow Jones advanced 2.59% to finish at 32,861.80, S&P 500 increased 2.46% to finish at 3,901.06 while Nasdaq 100 advanced 2.87% to finish at 3,901.06. The 10-year Treasury advanced to 4.0644%. Gold spot price declined $19.50 to $1,646.10 per ounce while WTI crude oil declined $0.92 to $88.19 per barrel.
Russia has launched a massive wave of missile attacks across Ukraine this Monday after accusing the Ukrainian army of strikes against its Black Sea Fleet and pulling out of grain-export deal. Missiles targeted the capital Kyiv, including essential civilian infrastructure, as well as Kharikiv, Zaporizhzhia, Kremenchuk and Vinnitsya regions among other. Ukraine has not yet confirmed it was responsible for attacks on Russian Black Sea fleet off Sevastopol in Crimea. Russian Central Bank held interest rates on Friday for the first time since the start of the invasion to Ukraine leaving the benchmark unchanged at 7.5% after six cuts in a row in line with expectations. As risks of higher inflation have intensified following Putin’s call up of reservists to fight in the war, Governor Nabiulina said that Russian Central Bank was sending a “neutral signal” and “further trajectory will be data-dependent”. The central bank improved its forecast for the economy this year and now sees a small contraction of 3-3.5%. Russian stock market retreated from a five-week high this morning as oil and natural gas prices fell and the military further escalated the war in Ukraine. IMOEX lost 0.19% to 2,163 and RTSI lost 0.75% to 1,105. Rosneft Oil, gas group Novatek and steelmaker Severstal were among the worst performers. Gold miner Polyus and oil operator Transneft rose. Russian ruble has not reacted significantly to the Russian Central Bank decision initially making small gains straight after the announcement both against US Dollar and the Euro. It has depreciated slightly today with USDRUB up 0.21% to 61.73 and EURRUB up 0.17% to 61.26. The yield on the Russian 10-year OFZ bond rose to 9.9%, the highest in over two weeks post the announcement. It is now trading 1 bps down on the day at 9.87%.
Europe stocks finished mostly lower on Friday. The Stoxx 600 declined 0.2%, FTSE 100 declined 0.5%, the German Dax fell 0.1% while French CAC 40 advanced 0.2%. The 10-year U.K. gilt rose 2.7% basis point to 3.505% while 10-year German bund rose 6.2% basis point to 2.165%. In Spain, Spanish CPI declined to 7.7.3% y/y in October from 8.9% in previous month, while the country’s economy expanded by 0.2% on quarter during the three months to September. The French economy grew 0.2% on quarter in the third quarter. In the U.K. homeowners will need to get used to paying more for their mortgages, with the higher cost potentially triggering a property price fall of up to 5% in 2023. The drop in house prices would erase the past 8 months of price gains from the average U.K. home, according to a report from property portal Zoopla. A recent rally in U.K. government bonds following Rishi Sunak’s appointment as U.K. prime minister has added some stability but Zoopla says home loan rates of 4% to 5% are set to become the new norm as the era of ultra-low borrowing costs ends.
A firm open to SSA ahead of the FOMC decision on Wednesday. The space managed to claw back opening losses on Friday even as rates sold off with the US 10Y back above 4%. GHANA (-.125) opens lower even as President Akufo-Addo said “There will be no “haircuts” …ignore the false rumors”.
The local FI market continued a quiet note.
The bonds market saw little activity with yields across the curve closing higher by 5bps.There was no activity in the Treasury Bills market, as yields closed flat across the curve.