Equities fall, haven assets rise on nuclear power plant shelling
During the second round of negotiations, Ukraine and Russia reached an agreement to open humanitarian corridors to let civilians leave the zone of conflict. RUBUSD was up on the news from 117 to 104-106 levels. MICEX remains closed today and has not opened since the beginning of the invasion. After a conversation with Putin on Thursday, Emmanuel Macron said that military operations were set to continue and would get worse. Putin appears to be determined to invade the entire country. In the meantime, S&P has downgraded country’s sovereign credit rating to “junk” from “BB+”, less than a week after dropping Russia from investment grade. S&P said its latest downgrade was a result of new restrictions imposed on Russia in response to its military offensive in Ukraine.
The attack by Russian troops on a major nuclear power plant in Ukraine sent stock prices southward spurring appetite for haven assets. The S&P 500 fell 0.5% to 4,363.49 and Nasdaq 100 fell 1.5% to 13,537.94. The demand for 10-year USTs made yields decline to 1.79% down 5pbs while gold was stable at $1,937.13 an ounce. Costs of energy, metals and grain have continued to rise as traders steer clear of Russia’s oil and other resources. Consequently, oil prices rose with WTI crude increasing by 1.4% to $109.17 per barrel. Meanwhile in the US, traders are gauging the monetary policy outlook and waiting for the monthly U.S. employment report. Chair Jerome Powell on Thursday reiterated that the FED is ready to begin a series of interest-rate increases to curb inflation, while stating that it will act cautiously taking into consideration inflationary risks.
A rather bearish kick off tone seen in the SSA sovereign space as the region continues to feel the strong impact reverberating from the tensions in Russia & Ukraine. As suspected GHANA keeps looking worse off in these moments as prices open c1.75pts down on the curve. The main oilers (NGERIA & ANGOL) do not get left out in the selloffs despite holding steadier (both NGERIA & ANGOL down by an average of c.0.75pts) when compared to GHANA. Major news from Angola seems to focus on if the nation would still go ahead with its planned issue which is due to take place before the end of Q1. It’s been gathered that the banks who have been helping arrange the $2.8bn issue have been probing investors and market appetite to know if it is still a favourable climate to have a successful issue. The country’s Finance Minister Vera Daves de Sousa has said that “the nation will always seek to advance at the lowest possible price and that when ready and feel that there is an appetite, we will move forward”.