The main stock markets globally are mostly weaker early in the week, with the dollar index stabilising after yesterday’s drop. The dollar’s trade-weighted index is broadly flat today after declining 0.4% yesterday. S&P 500 futures are marginally lower after the benchmark lost 0.4% yesterday. EuroStoxx 600 is 0.1% up, while Nikkei 225 is down 0.7% and China’s CSI 300 is 0.2% lower. GBUSD fell to1.216 yesterday as investors interpreted Theresa May’s latest comments on Brexit as a confirmation that access to single market remains subordinate to her government’s immigration priorities. The sterling is close to a multi-year minimum of 1.212 reached in October 2016. Gold is up 0.3% today gaining 3.2% since the beginning of the year.
China’s factory prices are rising at the highest rate in five years. Producer price index rose 5.5% YoY in December against consensus forecast of 4.6% YoY. CPI for December came out at 2.1%, slightly below consensus of 2.2% YoY. The strong PPI data points to a continuing recovery in the country’s investment demand and is positive for commodity prices and growth in key EM countries.
Oil prices are recovering after a fall of 3.8% yesterday. Brent prices are up 0.4% at $55.1/bbl today. Oil prices are supported by reports that Russia has cut oil output by 0.1 mn bbl/day in early January. Crude oil inventories in the US are projected to increase by 2 mn bbl in the previous week.
Russia and CIS area developments and market colour
The rouble is 0.3% stronger against the dollar, in line with higher oil prices. OFZ yields opened little changed today after closing some 20bps lower yesterday, thanks to concentrated non-resident demand. Final inflation data for December are due at 13.00 GMT today. Russia and Kazakhstan longer-term sovereign Eurobond yields are some 1-2 bps tighter. Belarus-18 is 7 bps wider at 4.99% while Azerbaijan-24 is flat. Ukraine’s longer-dated sovereign bond yields are 2-4 bps wider today.
The National Bank of Kazakhstan left the key policy rate unchanged at 12.0% while signalling that the easing cycle is likely to resume next month.
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