U.S. equities declined in anticipation for this week’s Fed Reserve interest rate decision
U.S. stocks declined on Friday as the markets remained skittish amid inflationary concerns and possible 75-basis point interest rate hike by the Fed Reserve this week. Also, FedEx offered earnings guidance that came in well below expectations and provided pessimistic comments on the global economy. Subsequently, Dow Jones declined 0.5% to finish at 30,822.42, S&P 500 declined 0.7% to finish at 3,873.33 while Nasdaq 100 declined 0.9% to finish at 11,448.40. The 10-year yield Treasury fell little from 3.458% to 3.449%. Gold spot price increased $6.30 to $1,683.60 per ounce while WTI crude oil nudged $0.01 higher to $85.11 per barrel.
Ukrainian President Zelenskiy renewed his pledge to retake all Russian-controlled territory after Ukraine’s recent advances. Ukrainian forces remain likely to regain much of western Kherson Oblast and continued to consolidate positions on the east bank of the Oskil River in the Kharkiv region. In the meantime, Russia has intensified a campaign of long-range missile strikes targeting Ukraine’s key infrastructure. In economic news, Russia’s Central Bank cut its benchmark interest rate by 50 bps points to 7.5% on Friday, as widely expected, but warned that it was running out of room to cut borrowing costs further in the months ahead. The wording of the statement that followed the announcement confirmed that CBR is paying more attention to economic recovery and activity, apart from watching inflation. Russian ruble gained slightly against the US Dollar following the announcement and is trading 0.23% up this morning with USDRUB at 60.04. EURRUB is up 0.18% at 59.99. Russian stock market extended last week’s gains as investors looked past a decline in the prices of oil and natural gas. Both IMOEX and RTSI were up this Monday 0.09% to 2,437 and 0.31% to 1,279 respectively. Energy companies Lukoil, Gazprom and Novatek were among the best performers along with internet company Yandex and precious metals producer Polymetal. Electricity transmission operator Federal Grid slid 0.6%. The yield on the Russia 10-year benchmark bonds rose towards the 9.6% level, the highest since the end of May, as investors digested the central bank’s policy decision. As CBR Governor Nabiulina signaled that there is little room left for future loosening, OFZ prices went under pressure.
SSA closed weaker on Friday with oilers bearing the brunt of the selling ahead of today’s muted trading session due to London’s closure. ANGOL (-1.50) and NGERIA (-1.25) with long end mostly offered while bids remained on short tenors. ZAMBIN (-1.125) also moved weaker albeit with lower trading volumes.