US stocks finished higher friday; crude oil price increased

US stocks ended higher on Friday as investors digested data showing U.S retail sales rose by 1% in June, a slightly stronger number than economist had expected. Although some of the increase was tied to higher prices of gasoline and food, the market appeared encourage that the all-important consumer hasn’t succumbed to the strongest inflation in four decades which is at 9.1%. Subsequently Dow Jones increased 2.1% to finish at 31,288.26, the S&P 500 increased 1.9% to finish at 3,863.16 while Nasdaq 100 increased 1.8% to finish at 11,452.42. The 10-year yield Treasury declined 2.8 basis points to 2.929%. Gold price slipped 0.1% to $1,703.60 per ounce while WTI crude oil increased $2.42 to $98.20 per barrel.

The EU foreign policy chief said that he was hopeful Russia and Ukraine could agree on a deal this week to help export grain from the beleaguered country and alleviate a growing global food crisis. Turkish President Erdogan has sought to broker this deal to facilitate shipments of Ukrainian grain through the Black Sea and should meet Russian President Putin on Tuesday. In the meantime, the EU on Friday proposed a new slate of penalties targeting Russia and actions to tighten existing sanctions packages. The block is also working to boost EU nations’ powers to seize criminal assets, including those of sanctioned Russian individuals and entities. Russian stock market gained this morning, as oil and European natural gas prices rose, and global market has opened in a risk on mood with investors scaling bets on how aggressively Fed will hike the rates. IMOEX advanced 0.5% before dropping again 0.5% to 2,098. Best performers included energy giants Lukoil, Gazprom as well as Internet company Yandex.  Russian currency was also higher this Monday as local companies have started preparing for tax payments with both USDRUB and EURRUB trading down. USDRUB lost around 0.43% to 56.74 and EURRUB around 0.72% to 57.24. Russia’s state foreign debt has declined by $9.2 Billion year to date and stood at $472.9 as of July 1, 2022. Russia has continued being regarded as being in default on certain sovereign bonds, which is denied by Russian government officials. Russia 28 and Russia 47 have been steadily gaining value and are now offered in low 40s and mid- high 30s respectively.

Bunds open weaker following trend from Friday. The 10Y touched a high of 1.20% before dropping to 1.18%, 2bps down day-on-day. Peripherals mirrored the move on bunds with a relatively weak open;10Y BTPs yields went as high as 3.31% before retreating to 3.24%, 7 basis points firmer intraday. Stocks advanced as investors put aside the likelihood of an aggressive fed interest rate hike. Consequently, the Stoxx 600, opened higher at 419.78 compared to previous session’s closing of 413.78. Meanwhile, UK Chancellor Nadhim Zahawi and Bank of England Governor Andrew Bailey are expected to speak at an event on Tuesday.

SSA kicks off the week stronger continuing Friday’s late surge that saw most names close in the green. ANGOL (+0.375pts) up after a heavy session last week as Brent touched lows of $95/bbl. Fitch upgraded outlook on ANGOL to positive while affirming rating at B- citing expectations of a larger fiscal surplus from higher oil prices.

Activity in the Nigerian local Secondary Market for Bonds was calm amid a weak system liquidity. Bearish undertone was sustained with improved offers seen across board.  Intraday, average yields were mostly higher across board.  Consequently, FGN 25s closed at an offer rate of 10.02%, same as previous while 28s closed at an offer rate of 11.25%, up 30bps from previous level of 10.95%. There will be a Bonds auction this week. On offer will be N75bn each of FGN 25s, 32s and 42s.Money Market liquidity is expected to get a boost as Bonds coupons hit the system. Activity in the Secondary Market for Treasury bills was mixed as frailty in money market liquidity persisted. Day-on-day, average discount rates were mostly unchanged across board. Consequently, discount rates on 13th of October 2022 NTB & 14th of February 2023 OMO were at 9.00% and 8.02% respectively. Finally, the exchange rate between the naira and the US dollar closed at N422.20/$1 at NAFEX compared to previous session’s level of N426.50/$1, an appreciation of circa 1.00%.