US equities stable, oil rises on likelihood of stronger sanctions on Russia
US stocks were stable while oil prices rose as investors gauged the expectation of harsher sanctions against Russia for the reported war crimes carried out in Ukraine. The S&P 500 was at 4,582.64, up 0.81%, Nasdaq 100, up 1.90% at 14,532.55 while Dow closed 0.30% higher at 34,921.88. Brent crude rose 1.2% to $108.87 per barrel as disruptions to commodity supplies persisted because of the ongoing crisis in eastern Europe. Treasury yields went northwards with the 10-year UST advancing 3pbs to 2.42% while Gold considered a haven asset fell 0.1% to $1,930.79 an ounce. Moves in the Market continue to be determined by the nature of outcome of the conflict and fed’s monetary tightening stance as raw-material costs put more pressure on inflation. Also, investors are worried about the effect on the global economy the resurgence of Covid-19 in Europe, Asia, and renewed lockdowns in China.
US Treasury has blocked payments on Russian sovereign bonds through American banks. It has been reported that JPMorgan had been stopped by the Treasury from processing payments including a $552.4 million principal payment on Russia 22 and $84 Million coupon payment on Russia 42. Russian Sovereign bonds have plummeted on the news with Russia 28 down from 40 to 28 and Russia 47 down from 24 to 18. IMOEX closed at 2,782.69 on Monday, gaining 15% over the past 4 days. Russian rouble has weakened against the dollar to 83 and rose against the euro to 92.66. The fifth round of EU sanctions against Russia, which is being discussed by EU officials this week, may affect aircraft leasing, import and export of aviation fuel and some steel products. France and Germany announced yesterday an expulsion of Russian diplomats. Meanwhile, Asian countries from the CIS space have been performing relatively stable. Fitch has affirmed Uzbekistan’s rating at ‘BB-‘ with a ‘Stable’ outlook. Uzbek 31 was flat at 88. S&P has affirmed Kazakhstan’s sovereign rating at ‘BBB-‘ with a ‘Stable’ outlook. Kazaks 45 rose from 115.6 to 116.6 on the news.
A lacklustre open to the space this morning on the back of Monday’s tame showing. ZAMBIN (+0.875) was a clear outperformer as restructuring talks head to conclusion; the rest of the space was comparatively subdued with IVYCST (+0.375) the next best performer as EUR issues were bid. ANGOL’s demand appears to have faded as the bonds up for tender – the 25s and the 28s – are now trading higher than tender purchase prices.
Bunds opened weaker retracing the trend from yesterday. The 10Y touched a high of 0.557% before dropping to close at 0.533%, 2bp down day-on-day. Peripherals mirrored the move on bunds with a relatively weak open; 10Y BTPs yields went as high as 2.06% before retracing to close at 2.04%, 2 basis points firmer. Stocks opened higher; the Stoxx 600, opened higher at 463.38 compared to previous sessions closing of 462.19. Focus remains on the ongoing crisis in eastern Europe.