US stocks fall, oil rises on dashed hopes of peace talks
US Equities dropped; oil prices went northwards as hopes of a resolution of the ongoing conflict in Ukraine disappeared. Although US stock prices closed positive yesterday with S & P up 1.23% to 4,631.60, DOW at 35,294.19, up 0.97% and NASDAQ 100 increased by 1.84% to 14,61964, we opened with Futures on the S&P 500 falling 0.3% to 4,613.00, DOW Futures slipping 0.22% to 35,111.00 while NASDAQ Futures dropping 0.27% to 15,185.50. Energy and commodity prices rose as investors remained concerned about the possibility of a quick resolution to the war as NATO allies consider if Russia’s promise to pull back military operations in Ukraine marks a positive move or just a war gimmick. Consequently, Brent crude rose 2.1% to $112.49 per barrel. Philadelphia Fed Bank President Patrick Harker said he expects a series of intentional and well-organized rate hikes this year and that he is not opposed to a half-point move in May if near-term data shows more inflationary pressures. However, the yield on 10-year UST’s retreated 1pbs to 2.38% while Gold rose 0.3% to $1,925.59 an ounce as markets continue to monitor key indicators that are affected by the ongoing geopolitical tensions in eastern Europe.
Russia has suspended pumping gas through the Yamal-Europe pipeline. 31st of March is the deadline for Gazprom and the Central Bank of Russia to decide how to collect payments in roubles from the EU. Grain exporters from Russia may also start collecting payments in roubles. In the meantime, gas spot prices have jumped from $1160 to $1300 by TTF Netherlands. Despite the change in sentiment, Russian stock market has not moved much with IMOEX flat at 2500.News about Russia and Ukraine de-escalation have certainly eased market concerns and strengthened local currency and bonds. USDRUB was down at 85 from 89.5, RUSSIA 28 rose to 44, while RUSSIA 47 has strengthened to 23 level. At the same time, Ukrainian sovereign bonds have also appreciated with UKRAIN 7 ¾ 09/01/2022 up 10 points and UKRAIN 7.253 03/15/2033 reaching a level of 45. The Russian gold mining company Polyus Gold announced that it has redeemed the Polyus 4.699% Eurobond on 28th of March 2022 in the amount of $483 million, the bondholders received payments on time. Severstal PJSC continues looking for opportunities to pay a coupon and said it had applied to OFAC for a special license.
Bunds open weaker continuing the trend from yesterday which saw the 10Y touch a high of 0.723% before paring to close at 0.633%, 5.5bps up on the day. The midday selling came as reports came through of a pullback of Russian forces from Kyiv. Peripherals continuing to mirror the move on bunds with a weak open; 10Y BTPs surged as high as 2.16% before retracing to close 2.03%, just a basis point firmer. Stocks also opening lower after 5 sessions of gains; the Stoxx 600, which closed 1.74% firmer on Tuesday, was down 0.68% at 08.00GMT. On the data front, we have German March inflation out later with the market expecting the annual figure to hit 6.3% from 5.1% in February.
GHANA (+3.75) outperformed on Tuesday as passage of the e-levy only added to the buoyancy in the space. While the levy only passed at 1.5%, down from 1.75%, it stands to add about $1.9 billion ($-equivalent) to the country’s coffers every year. The rest of the space also moved firmer with oilers holding up even when Brent retraced on reports that the Russian military was moving away from Kyiv in Ukraine. ANGOL and NGERIA surged upwards of 2pts with the latter’s recent issue NGERIA 29 being bid as much as 90c above re-offer. The space opens yet firmer with KENINT (+.50) leading following approval of a $1.22 billion ($-equivalent) supplementary budget.