US equities rise on China’s easing of covid lockdown measures
US Stocks finished higher as news from China pertaining to easing of covid lockdown measures gave some ray of hope regarding global economic recovery. Consequently, the S & P 500 gained 2.47%% to close at 4,158.24, NASDAQ 100 rose 3.33% to close at 12,131.13 while DOW increased by 1.76% to close at 33,212.96. Brent crude rose 0.3% to $119.83 per barrel amid toning down of Chinese covid lockdowns and the EU’s intent to ban importation of Russian crude. Treasury yields were stable with the 10-year UST at 2.74% while Gold rose 0.5% to $1,863.69 an ounce. Investors will be on the look-out on clues on Fed’s monetary tightening direction in combating inflation as the US payroll numbers come out later this week. Also, the Fed is ready to start reducing its balance sheet of circa $8.9 trillion from Wednesday. In other news, the Federal reserve releases its Beige Book report on regional economic conditions on Wednesday, New York Fed President John Williams, St. Louis Fed President James Bullard are expected to speak at separate events on Wednesday as well and US May employment report is due Friday.
Russia will prepare a system allowing it to settle its Eurobonds investors without a license from the US Office of Foreign Assets Control. As announced by the finance minister Anton Siluanov, the system would be ready before the next coupon payments on dollar bonds due June 23. Russia will pay on US Dollar denominated Eurobonds in rubles, which then can be converted into another currency. Eurobonds denominated in euros will be paid in euros, as EU has not restricted euro payments. Russian sovereign bonds continued trading flat Monday morning with Russia 28 remaining in mid 20s and Russia 47 in high teens. In corporate stories, OZON has warned of a possible default on its $750 Mln convertible bonds. OZON 26 has had a muted reaction and stayed just below the level of 30. Russian stock markets were up this morning with IMOEX gaining 1% at 2,400. Elevated commodity prices and lack of progress in EU oil embargo negotiations have helped the Russian equities. Gazprom and Lukoil were among the leaders. Russian ruble has strengthened today snapping a three-day uptrend in USDRUB. Both USDRUB and EURRUB are lower now with USDRUB trading around 63.70 and EURUB at 65.80. Today EU officials will continue talks in Brussels to try and agree an embargo on Russian oil imports. So far Hungary has been refusing to back the proposal despite some compromises made by the EU to ensure oil supplies. Brent was up this morning and trades at over $118 per barrel.
Bunds open weaker retracing the trend from Friday. The 10Y touched a high of 1.04% before dropping to 1.038%, less than 1bp down day-on-day. Peripherals mirrored the move on bunds with a relatively weak open; 10Y BTPs yields went as high as 2.94% before retreating to 2.93%, 1 basis points firmer intraday. Stocks opened higher as China eased covid lockdown controls which in turn spurred risk-on sentiments. Consequently, the Stoxx 600, opened higher at 446.86 compared to previous session’s closing of 443.93. On the data front, EU leaders are set to have a 2-day special meeting in Brussels starting today and focus will be on the war in Ukraine, inflation, energy, food security and defence.
Bunds open weaker retracing the trend from Friday. The 10Y touched a high of 1.04% before dropping to 1.038%, less than 1bp down day-on-day. Peripherals mirrored the move on bunds with a relatively weak open; 10Y BTPs yields went as high as 2.94% before retreating to 2.93%, 1 basis points firmer intraday. Stocks opened higher as China eased covid lockdown controls which in turn spurred risk-on sentiments. Consequently, the Stoxx 600, opened higher at 446.86 compared to previous session’s closing of 443.93. On the data front, EU leaders are set to have a 2-day special meeting in Brussels starting today and focus will be on the war in Ukraine, inflation, energy, food security and defence.
Activity in the Nigerian local Secondary Market for Bonds was moderate amid a relatively improved system liquidity. We saw demand come into the system as traders’ cherry picked some securities. Intraday, average yields were down 10bps across the curve. Consequently, FGN 26s closed at an offer rate of 10.70%, down 35pbs from previous session’s level of 11.05% while 49s closed at an offer rate of 13.05% down 5bps from previous session’s closing of 13.10%. Activity in the Secondary Market for Treasury bills was modest with Money Market liquidity at over N223bn. We saw some demand trickle in across the curve with bearish sentiments still persistent. Day-on-day, average discount rates were mostly unchanged. Consequently, discount rate on 6th June 2022 SPEB was stable at 3.00 while 12th of December 2022 OMO bill closed at 3.71%, down 9 bps from previous level of 3.80%. We may see renewed demand for bills in the short run if system liquidity improves further with the expectation of FAAC allocation. The exchange rate between the naira and the US dollar closed at N418.77/$1 at NAFEX compared to previous session’s level of N418.08/$1, a depreciation of circa 0.17%.