US equities rise following decrease in july inflation figure

U.S stocks closed at their highest since May after headline CPI of July showed reduction in inflation from 9.1% to 8.5%, due largely to lower energy prices and potentially easing the burden on the FED Reserve monetary policy. In the report, closely watched core measure of inflation that omits volatile food and energy prices rose 0.3% in July, a slower pace than a 0.7% gain in the prior month. The 12-month rate remained steady at 5.9%. Subsequently, Dow Jones increased by 1.6% to finish at 33,309.51, S&P 500 increased 2.1% to finish at 4,210.24, while Nasdaq 100 increased 2.9% to finish at 12,854.80. The 10-year Treasury fell from 2.802% to 2.797%. Gold spot price increased by $4.80 to $1,817.10 per ounce while WTI crude oil declined $1.84 to $88.66.

Russia resumed its oil flows through a pipeline to Central Europe after Hungary’s sole refiner stepped in to resolve a fight over the payment of a transit fee, easing fears of a supply crunch in the region. The transit fee payment agreement covers only flows to Slovakia and Hungary, not the Czech Republic. In the meantime, US Defence Secretary Austin reinforced a pledge that Washington and its allies will continue supplying military aid to Ukraine to help it repel Russia’s invasion “for a long as it takes”. Russian forces “lost” nine combat aircrafts in Crimea and one more in the Zaporizhzhia region as stated by Ukrainian President Zelensky on Wednesday in his nightly video address. Russian stock market rose for a fourth consecutive day this Thursday as European gas prices rose, and investors worldwide got into risk-on mode after signs of US cooling inflation. IMOEX traded 0.16% higher to 2,154 with precious metal producers Polymetal and Polyus leading the gains along with Internet company Yandex. The shares of a social media operator, VK Co., fell as much as 7.8% after it announced a fall in its Q2 EBITDA by 37%. Russian ruble was mostly unchanged this morning with USDRUB at 60.71 and EURRUB at 62.65. Improved market sentiment and balance of trade figures from the Bank of Russia supported the ruble during yesterday’s session. 10-year ruble bond yields were 1 bp lower at 8.25%. In economic news, Russian deflation from the 23rd of July to the 1st of August was 0.14%. A shock of international sanctions’ introduction initially led inflation to quadruple the central bank’s 4% target, but annual price growth peaked in April and slipped to 15.3% in July.

Bunds open slightly weaker retracing yesterday’s closing. The 10Y touched a high of 0.93% before dropping to 0.91%, 2bps down day-on-day. However, Peripherals were little changed.10Y BTPs yields went as high as 2.84% before retreating to 2.81%, 3 basis points firmer intraday. Stock prices advanced as investors become hopeful that signals of US inflation reaching its peak could make the Federal Reserve rethink its interest rate hike campaign. Consequently, the Stoxx 600, opened higher at 440.93 compared to previous session’s closing of 439.88.

Bunds open slightly weaker retracing yesterday’s closing. The 10Y touched a high of 0.93% before dropping to 0.91%, 2bps down day-on-day. However, Peripherals were little changed.10Y BTPs yields went as high as 2.84% before retreating to 2.81%, 3 basis points firmer intraday. Stock prices advanced as investors become hopeful that signals of US inflation reaching its peak could make the Federal Reserve rethink its interest rate hike campaign. Consequently, the Stoxx 600, opened higher at 440.93 compared to previous session’s closing of 439.88.

Bearish sentiments persisted in the Nigerian local Secondary Market for Bonds. We still saw improved offers on the short to mid end while the long end of the curve remained steady. Intraday, average yields were higher by 9bps across board.  Consequently, FGN 26s closed at an offer rate of 12.35% ,7 basis points up from previous level of 12.25% while 50s closed flat at 13.45%. Activity in the Secondary Market for Treasury bills was bearish ahead of outcome of stop rates at the NTB auction conducted yesterday. Most of the activity hovered around OMO and SPEB maturities.  Consequently, discount rates on 13th of December 2022 OMO & 13th of September 2022 OMO were at 12.00% and 12.30% respectively. Meanwhile, stop rates at the Auction printed at 3.50%(previous:2.80%), 4.50%(previous:4.10%) & 7.45%(previous:7.00%) for 91,182- & 364-day tenors respectively. Finally, the exchange rate between the naira and the US dollar closed at N428.75/$1 at NAFEX compared to previous session’s level of N426.67/$1, a depreciation of circa 0.49%.