Stocks declined, treasury yields slip, gas prices surged
U.S stocks closed sharply lower on Thursday, more than erasing the bounce seen the previous session following the Fed Reserve’s largest rate hike since 1994, as worries about the economic outlook moved centre stage. Subsequently the S&P 500 declined 3.3% to finish at 3,666.77, Nasdaq 100 declined 4.1% to finish at 10,646.10, while Dow Jones declined 2.4% to finish at 29,927.07. The 10-year yield Treasury was down by 8.6 basis point at 3.303%. Meanwhile Gold futures increased 1.7% to settle at $1,849.90 per once, while WTI crude is at $117.58 per barrel.
French President Macron, German Chancellor Scholz and Italian Prime Minister Draghi arrived at Ukraine’s capital Kyiv to show their solidarity with the besieged nation. Among the topics of discussions were the supply of weapons and the possibilities of Ukraine joining the EU. At the same time Russia has continued bombardment in the Ukrainian Eastern city of Sievierodonetsk and has also targeted the neighboring city of Lysychansk. As European gas prices gyrated with benchmark futures jumping as much as 24%, Russian equity market headed for its biggest weekly gain in 7 weeks. This morning IMOEX rose 0.4% to 2,358 extending its weekly gain to 4.1%. Internet company Yandex was among the best performers this Friday together with precious metal producers Petropavlovsk and Polymetal. The biggest gainers for this week have been a gas company Novatek and an oil giant Lukoil. Because of the US sanctions, Russia has been struggling to make $100 million in debt payments. The grace period on these payments will be expiring next Sunday, 26th of June. At this moment, Russia plans to pay foreign creditors via unsanctioned banks and still intends to deliver dollar and euro payments to bondholders. With NSD blacklisted, it is not clear yet when and how these payments will reach the investors. Russian sovereign bonds stayed mostly unchanged with Russia 28 trading in mid 30s and Russia 47 in mid 20s. Russian ruble remained strong and gained another 2.33% against US Dollar in the week ending 17th of June. This morning it was slightly off with USDRUB up at 56.80 and EURRUB at 59.60.
SA opens on a sluggish note even as the BOJ maintained its easing narrative. Concerns that the long-time dovish central bank would drop the easing mantra had roiled markets on Thursday, more so after the long-time dovish Swiss National Bank unexpectedly hiked its rate by 50bps. ANGOL (-0.625pts) staged a late reversal having underperformed for most of the session while NGERIA (-1.00pts) ultimately led the slide with recent issues well offered. GHANA(-0.25pts) fared comparatively better in the short end versus KENINT (-0.375pts) which fared better on belly to long tenors.