U.S. equities advanced despite flurry of hawkish Fed Reserve’s talk

U.S. stocks finished higher on Wednesday, as investors assessed remarks by Fed Reserve Vice Chair Lael Brainard, while digesting the central bank’s latest compilation of economic anecdotes. Brainard said on Wednesday that the Fed will need to raise the policy rate further and keep rates at high levels for some time to “provide confidence that inflation is moving down to target”. Subsequently, Dow Jones advanced 1.4% to finish at 31,581.28, S&P 500 advanced 1.8% to finish at 3,979.87 while Nasdaq 100 increased 2.1% to finish at 11,791.90. The 10-year yield Treasury declined 13.3 basis point to 3.328%. Meanwhile, Gold spot price declined 0.5% to $1,702.14 per ounce while WTI crude oil futures rose 0.9% to $88.79 per barrel.

U.S. President Biden will hold a video call this Thursday with allies including leaders of G7 nations, NATO and EU. The talks will focus on the next steps to support Ukraine against Russia’s invasion with Pentagon sending most accurate artillery shell, the GPS-guided Excalibur. At the same time on the Eastern Economic Forum in Vladivostok Russia’s president Putin said Russia would emerge stronger from his invasion of Ukraine “strengthening” its “sovereignty”. Putin threatened to halt all energy shipments to Europe, if EU goes ahead with a proposal to cap the price of Russian gas. Meanwhile, Ukrainian President Zelenskiy reported “good news” from the front near Kharkiv in the east, saying some settlements have been recaptured as both sides reported heavy fighting in the region. Russian stock market has opened to the downside this Thursday morning, as oil and gas prices retreated, but steadied later with both IMOEX and RTSI currently mostly flat at 2,403 and 1,242 respectively. Energy giants Gazprom, Lukoil, Novatek and Rosneft were among the losers, while Sberbank and metals producers Poluys and Norilsk Nikel gained. Russian ruble continued a five-day losing streak against the US Dollar and Euro with USDRUB up 0.15% at 60.98 and EURRUB up 0.3% at 60.78. The recent pressure on ruble was partially offset by Central Bank’s decision to quickly restrict access by unqualified investors to securities of unfriendly countries from October 1. 10-year benchmark ruble bond yields were 1 bps lower at 8.35%. The most sustainable components of inflation in Russia have started showing signs of elevated price pressure in Russia, despite falling annual CPI numbers, which stands at 10.24% year-today. The next Russia Central Bank meeting in Russia is due on the 16th of September with most analysts expecting that the Central Bank would keep the interest rates unchanged at 8%.

SSA opens firmer as rates firm up with 10Y UST yields trading some 15bps lower than Wednesday’s peak. Oilers also firmer at the open even as Brent traded sub-90 – a 7-month low. GHANA (+0.75) continuing firmer with demand skewed towards longer tenors at the open; ANGOL (+0.375) and NGERIA (+0.25) breaking a run of lackluster performances so far this week. ZAMBIN flat at the open having traded 1.5pts down as the underperformer in the space on Wednesday; buyers came through later in the session reversing losses as deep as 4pts early Wednesday.