U.S. markets under the pressure in front of recession risk
The Wall Street is in the red again, significant sales took place in the high-tech sector, under pressure shares of commodity companies. The day before, investment banks GS, MS, BofA in their comments lowered their expectations regarding the prospects of the world’s leading economies, indicating worsening situation in the labor market. Risk-off sentiment is dominating, VIX is growing noticeably again. The Dow Jones fell 350.76 points, or 1.03%, to close at 33,596.34, the S&P 500 lost 57.58 points, or 1.44%, to finish at 3,941.26 while the Nasdaq dropped 225.05 points, or 2%, to end on 11,014.89.
The EU is set to discuss a ninth package of sanctions against Russia this Wednesday. New proposals would impose restrictions on Russia’s drone sector as well as on other technologies and components used by Russia for military purposes. New measures would also target investments and Russia’s media and financial sectors and add about 180 individuals and entities to the EU’s sanctions list. In the meantime, a third Russia airfield came under drone attack Tuesday after Russia accused Ukraine of carrying out strikes against two bases used by its long-range bombers, the deepest retaliation on its territory since the start of invasion in February. Russian stock market traded lower this morning with oil trading little changed after a three-day decline and most industrial metals slipping amid uncertainty over the outlook for the demand. IMOEX lost 0.75% to 2,175 and RTSI lost 0.89% to 1,087. Russia’s biggest lender Sberbank, energy giants Gazprom and Lukoil and metals producer Norilsk Nickel contributed the most to the slide. Shares in oil company Rosneft were down 1.5% after reporting nine-month results. Food Retailer Magnit’s stock rose. Russian rouble has opened the week with declines due to new package of sanctions concerns. It was slightly higher this morning with USDRUB down 0.16% to 62.93 and EURRUB down 0.24% to 65.90. Russian bond yields were mostly flat with 10-year benchmark rouble bonds unchanged at 10.15%. Meanwhile, VTB, a major Russian bank, sanctioned by the West, suspended payments on a number of subordinated bonds, including the issue of “perpetual” Eurobonds.
EU markets open lower as investors digested the further easing of COVID restrictions in China as well as regional recessionary concerns. The DAX index in Germany traded 0.1% lower at 14,295.25 level, the CAC 40 in France traded down 0.1% at 6,662.54 points, while the FTSE 100 in the U.K. climbed 0.1% to 7,506.20. Additionally, the ECB is expected to increase interest rates again next week, even if they are now “very near” their neutral level, according to ECB policymaker Constantinos Herodotou on Tuesday.
SSA opens with a tilt towards the downside following Tuesday’s red session. Brent closed sub-80 in a risk-negative session sending oilers down at least 1.5pts with duration the most sold – ANGOL (-1.625), NGERIA (-1.50). GHANA (-3.125) led the slide for a second straight session as the debt restructuring proposal on GHS debt faces resistance from local holders in addition to a challenge on the legality of the exercise by the country’s attorney general.
The NTB secondary market closed on a flat note as average yields remained unchanged across the curve. Average yields on the short & medium tier closed flat while the long end of the curve dropped by 1bps. There was mild buying interest at the long end of the curve. In the OMO secondary market, average yields closed flat across the curve.
The FGN bonds secondary market closed on a mildly negative note as average yields closed higher by 1bps across the curve. Average yields on the medium tier of the curve rose by 2bps however, the short & long end of the curve closed flat. The Apr 2029 bond was the worst performer. The DMO will offer FGN bonds of 2029, 2032 & 2037 this Dec in an auction next week. Total to be offered is N225 billion.