Russia, hit by new US sanctions, halts dollar and euro trade on main bourse

New US sanctions against Russia have forced an immediate suspension of trading in dollars and euros on its leading financial marketplace, the Moscow Exchange.

The exchange and the central bank rushed out statements on Wednesday – a public holiday in Russia – within an hour of Washington announcing a new round of sanctions aimed at cutting the flow of money and goods to sustain Russia’s war in Ukraine.

“Due to the introduction of restrictive measures by the United States against the Moscow Exchange Group, exchange trading and settlements of deliverable instruments in US dollars and euros are suspended,” the central bank said.

The move means banks, companies, and investors will no longer be able to trade either currency via a central exchange, which offers advantages in terms of liquidity, clearing, and oversight.

Instead, they will have to trade over-the-counter (OTC), where deals are conducted directly between two parties. The central bank said it would use OTC data to set official exchange rates.

Many Russians hold part of their savings in dollars or euros, mindful of periodic crises in recent decades when the rouble has crashed in value. The central bank reassured people that these deposits were secure.

“Companies and individuals can continue to buy and sell US dollars and euros through Russian banks. All funds in US dollars and euros in the accounts and deposits of citizens and companies remain safe,” it said.

One person at a large, non-sanctioned Russian commodities exporter told Reuters: “We don’t care, we have yuan. Getting dollars and euros in Russia is practically impossible.”

With Moscow pursuing closer trade and political ties with Beijing, China’s yuan has ousted the dollar to become MOEX’s most traded currency, accounting for 53.6% of all foreign currency traded in May.

Dollar-rouble trading volume on MOEX tends to be around 1 billion roubles (USD 11 million) a day, according to LSEG data, while euro-rouble trading hovers at around 300 million roubles daily. For yuan-rouble trading, daily volumes now regularly top 8 billion roubles.

WIDE SPREADS

On the eve of the national holiday, the rouble closed at 89.10 to the dollar and at 95.62 against the euro.

But following the sanctions news, some banks immediately jacked up their dollar rates.

Norvik Bank said it was offering to buy dollars for just 50 roubles but sell for 200 roubles, though it later adjusted the rates to 88.20/97.80. Tsifra Bank was buying dollars at 89 roubles and selling at 120.

Other major banks were quoting narrower spreads of 6-7 roubles between their buy and sell rates.

The US Treasury said it was “targeting the architecture of Russia’s financial system, which has been reoriented to facilitate investment into its defense industry and acquisition of goods needed to further its aggression against Ukraine”.

Russia’s central bank has been bracing for such sanctions for around two years. In July 2022, the bank said it was modeling various sanctions scenarios with forex market participants and infrastructure organizations.

“This is bad, but expected news,” Russian broker T-Investments said on Telegram.

Forbes Russia had reported in 2022 that the central bank was discussing a mechanism for managing the rouble-dollar exchange rate should exchange trading be halted in the event of sanctions against MOEX and its National Clearing Centre, which was also hit by the new sanctions.

NERVY TRADING AHEAD

MOEX said share trading and money market trades settled in dollars and euros would also cease.

The sanctions will hit the exchange’s profits by slashing trading volumes. In May, the total volume on MOEX was 126.7 trillion roubles (USD 1.43 trillion), up more than a third on the same month of the previous year.

In 2023, MOEX recorded a net profit of 60.8 billion roubles, a year-on-year increase of 67.5%.

Yevegeny Kogan, an investment banker and professor at Russia’s Higher School of Economics, urged people against panicking.

“You know, it’s genetic for us – if we’re scared, we run to buy currency. And it doesn’t matter whether it’s 100, 120 or 150. You mustn’t rush,” he warned people on Telegram, saying things could get very serious if people ignored that advice.

“Friends, it looks like tomorrow will be a very nervy day.”

(USD 1 = 88.9955 roubles)

(Reporting by Alexander Marrow; Writing by Mark Trevelyan; Editing by Tomasz Janowski and Mark Potter)

US disinflation good, Chinese disinflation bad

Softer-than-expected US inflation lit a fuse under investor risk appetite and asset prices on Wednesday which should fire up animal spirits across Asia on Thursday, although a hawkish tilt in the Fed’s new economic projections could put a lid on things.

The Fed’s revised outlook – fewer rate cuts this year, slightly higher unemployment, a higher long-term policy rate – cooled equity, FX, and fixed income markets late in the US session on Wednesday. Quite significantly, in the end.

But it was not enough to puncture the US ‘soft landing’ narrative and the market impact was clear – record highs for the S&P 500, Nasdaq and world stocks, and declines in US bond yields, the dollar, and cross-asset volatility.

That is a friendly mix of market conditions and sentiment for investors in Asia and across emerging markets on Thursday. Not for the first time recently, however, the dark cloud in an otherwise blue sky appears to be China.

Cooling price pressures may be welcome in the US economy and most economies around the world, but not in China, which remains blighted by the threat of deflation, tepid consumer demand, an imploding property sector, and fragile growth.

Figures on Wednesday showed that disinflationary pressures in China and even outright deflation persist, intensifying the pressure on Beijing to come in with heavy fiscal or monetary stimulus. Or both.

The cumulative effect on Chinese assets recently is notable – stocks and the yuan have tumbled, prompting state-owned banks to sell dollars to shore up the currency and reviving doubts about China as an investment destination.

Chinese stocks have lost 5% in the last three weeks, twice as much as the MSCI Asia ex-Japan index, and significantly under-performing Japan’s Nikkei, which has basically flatlined, and US and global stocks, which have risen to new peaks.

The yuan hit a seven-month low on Tuesday but rallied strongly on Wednesday. Perhaps it – and other currencies in Asia – will take advantage of the dollar’s weakness on Thursday.

On the other hand, the European Commission’s decision to impose extra duties of up to 38.1% on imported Chinese electric cars from July, will escalate investors’ concerns over trade wars between China and the West.

Beijing will likely retaliate, but how?

The Asia & Pacific economic calendar on Thursday is light, with a central bank policy decision in Taiwan and Australian unemployment figures the main releases.

Taiwan’s central bank is expected to hold its benchmark discount rate at 2.00% on Thursday and keep it there until late next year as it deals with persistent concerns over inflation.

Australia’s unemployment rate, meanwhile, is seen easing back to 4.1% from 4.0%, and job growth is seen slowing to 30,000 from 38,500.

Here are key developments that could provide more direction to markets on Thursday:

– Taiwan interest rate decision

– Australia unemployment (May)

– Thailand consumer confidence (May)

(Reporting by Jamie McGeever; Editing by Josie Kao)

Oil prices up 3% to one-week high on hopes of higher summer fuel demand

NEW YORK – Oil prices climbed about 3% to a one-week high on Monday, buoyed by hopes of rising fuel demand this summer despite a stronger US dollar and expectations the US Federal Reserve will leave interest rates higher for longer.

The Fed hiked interest rates aggressively in 2022 and 2023 to tame a surge in inflation. Those higher rates have boosted borrowing costs for consumers and businesses, which can slow economic growth and reduce demand for oil.

Similarly, a stronger US dollar can reduce demand for oil by making dollar-denominated commodities like oil more expensive for holders of other currencies.

Brent futures rose USD 2.01, or 2.5%, to settle at USD 81.63 a barrel, while US West Texas Intermediate (WTI) crude rose USD 2.21, or 2.9%, to settle at USD 77.74.

That was the highest close for both crude benchmarks since May 30.

“Futures are higher as expectations of summer demand are supportive of prices … despite the broader macro landscape remaining less optimistic than weeks previous,” analysts at energy consulting firm Gelber and Associates said in a note.

Goldman Sachs analysts said they expect Brent to rise to USD 86 a barrel in the third quarter, noting in a report that solid summer transport demand will push the oil market into a third-quarter deficit of 1.3 million barrels per day (bpd).

The US dollar, meanwhile, rose to a four-week high against a basket of other currencies as the euro fell sharply due to political uncertainty in Europe after gains by far-right parties in voting for the European Parliament prompted a bruised French President Emmanuel Macron to call a snap national election.

Oil last week posted a third straight weekly loss on concerns that a plan to unwind some production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, from October will add to rising supply.

Despite the OPEC+ cuts, oil inventories have risen. US crude stocks increased in the latest week, as did gasoline stocks. Energy consultancy FGE also expects oil to rally, with prices reaching the mid-USD 80s into the third quarter.

“We continue to expect the market to firm up,” FGE said. “But it will likely need a convincing signal of tightening from preliminary inventory data.”

LOOKING AHEAD

Investor attention now turns to the release of US consumer price index data for May on Wednesday for hints on when the Fed may start reducing interest rates.

The market is also waiting for the conclusion of the Fed’s two-day policy meeting on Wednesday, in which the central bank is overwhelmingly expected to hold interest rates steady.

Markets dialed back expectations for rate cuts by the Fed in September after stronger-than-expected jobs data on Friday, with pricing now reflecting a less-than-50% chance of a reduction. Expectations for a cut had risen as high as 69% last week.

Traders also trimmed their expectations for the amount of Fed easing this year, with pricing implying just one cut versus two prior to the payrolls data, according to data from financial firm LSEG.

The market is also waiting for monthly oil supply and demand data from the US Energy Information Administration (EIA) and OPEC on Tuesday and the International Energy Agency (IEA) on Wednesday.

(Reporting by Scott DiSavino, Alex Lawler, and Noah Browning; Additional reporting by Florence Tan; Editing by David Goodman, Jason Neely, David Evans, Paul Simao, and Deepa Babington)

Gold rebounds as market’s focus turns to US inflation data

Gold prices rebounded on Monday after the precious metal’s biggest daily drop in three and a half years in the last session, as investors awaited US inflation data and the Federal Reserve’s decision on interest rates later this week.

Spot gold was up 0.8% at USD 2,310.81 per ounce as of 1817 GMT. US gold futures settled about 0.1% higher at USD 2,327.

The sell-off on Friday seemed a bit excessive and “bargain hunters are surfacing at this lower price point,” said Phillip Streible, chief market strategist at Blue Line Futures.

“There’s so much data and so many events coming out … so there’s going to be more volatility and more fireworks this week.”

Bullion lost about USD 83 an ounce on Friday, declining 3.5% in its biggest one-day drop since November 2020 after a stronger-than-expected US jobs report dented hopes for a September interest rate cut FEDWATCH and reports that China’s central bank was holding off gold purchases put off investors betting on Chinese demand.

“People’s Bank of China (PBOC) has never been a constant buyer. There have been distinct phases of buying followed by multi-month breaks. But as long as the PBOC doesn’t resume buying, gold prices could trade sideways because the China buying topic is a key market focus,” said Carsten Menke, an analyst at Julius Baer.

Gold’s tentative recovery occurred despite a rise in the dollar and US Treasury yields, with the market’s focus shifting to the release of the US consumer price index report on Wednesday, the same day as the Fed’s policy decision.

The US central bank is not expected to make any change to its policy rate this week, but the focus will be on policymakers’ updated economic projections and Fed Chair Jerome Powell’s news conference after the end of the two-day meeting.

Higher rates increase the opportunity cost of holding non-yielding bullion.

Spot silver rose 1.9% to USD 29.72 per ounce and platinum was up 0.8% at USD 973.60, while palladium fell about 0.9% to USD 904.25.

(Reporting by Harshit Verma and Rahul Paswan in Bengaluru; Editing by Arpan Daniel Varghese, Shinjini Ganguli, Paul Simao, and Alan Barona)

Nvidia sparks chatter over possible Dow inclusion after stock split

Nvidia’s 10-for-1 stock split aimed at luring retail investors has taken effect, sparking speculation over the chances of the artificial intelligence bellwether’s inclusion in the blue-chip Dow index.

The split, aimed at lowering per-share value to make it more affordable for employees and investors, increases the company’s outstanding shares without changing its market valuation.

“A side-effect of Nvidia’s stock split will be to put it in the running to follow Amazon and Apple into the Dow, potentially pushing out fellow chip stock Intel that currently has the lowest weighting,” said Ben Laidler, global markets strategist at digital brokerage eToro.

The stock dipped 0.2% on Monday, after having climbed nearly 27% since the company announced the share split and a strong forecast last month. The dominant AI chip maker also clinched USD 3 trillion in market value last week and surpassed Apple to become the second-most valuable firm in the world, trailing only Microsoft.

“Historically, when we see runs like this into a split, there is often a hangover effect afterwards and I’d expect some buyer exhaustion this week,” Dennis Dick, market structure analyst at Triple D Trading, said on Nvidia shares.

Market analysts said stock splits tend to attract individual investors who trade in smaller lots and have less capital to deploy than institutional investors.

However, Goldman Sachs strategists led by David Kostin said in a note most recent stock splits have not generated a significant increase in retail trading activity, but there have been some notable exceptions such as Amazon’s split in 2022 and Nvidia’s 2021 split.

Moreover, “investors typically assign higher valuations to liquid stocks because of their low trading costs and flexibility in a variety of market environments”, the strategists said.

Over the last several years, trading volumes have briefly increased following stock split announcements but evidenced little change during and after the splits took effect, according to Goldman’s analysis of 45 Russell 1000 stock splits since 2019.

Nvidia’s stock was last trading at USD 120 per share post-split, compared with USD 1,200 on Friday, making it a potential contender for the 30-member price-weighted Dow index.

An S&P Dow Jones Indices spokeswoman late in May said it does not comment or speculate on index additions or deletions.

(Reporting by Medha Singh in Bengaluru; additional reporting by Pranav Kashyap and Arsheeya Bajwa; Editing by Devika Syamnath)

S&P 500, Nasdaq post record closing highs; Fed meeting, CPI ahead

NEW YORK – The S&P 500 and Nasdaq eked out record closing highs on Monday, although investors were cautious ahead of this week’s consumer prices report and a Federal Reserve policy announcement.

Providing some support to the Nasdaq and S&P 500, Nvidia shares ended up 0.7%, the session after a 10-for-one stock split. Some investors now believe the chip maker might be included in the blue-chip Dow.

The Consumer Price Index report for May is due Wednesday along with the conclusion of the Fed’s two-day policy meeting.

The central bank, which will release updated economic and policy projections, is expected to hold interest rates steady. Investors will look for clues on when the US central bank may begin to cut interest rates.

“This is an important week for the market in terms of comments and messaging from the Federal Reserve,” said Quincy Krosby, chief global strategist, LPL Financial in Charlotte, North Carolina.

“In addition to that, you’re going see Wednesday morning the CPI report. Anything related to the economy and anything related to inflation is viewed by the market through the lens of the Federal Reserve.”

The Dow Jones Industrial Average rose 69.05 points, or 0.18%, to 38,868.04, the S&P 500 gained 13.8 points, or 0.26%, to 5,360.79 and the Nasdaq Composite added 59.40 points, or 0.35%, to 17,192.53.

Traders dialed back expectations for rate cuts in September after Friday’s stronger-than-expected jobs data for May, with the odds of a reduction at 50%.

“I feel like it’s going to be pretty muted as people try to hedge themselves for what they might see on Wednesday,” said Alex McGrath, private wealth advisor at NorthEnd Private Wealth.

Apple shares dipped 1.9% on the first day of the iPhone maker’s annual developer conference. Investors are eager for updates on how it is integrating artificial intelligence into its offerings.

Among the day’s gainers, Southwest Airlines jumped 7% after activist investor Elliott Investment Management disclosed it has built up a USD 1.9 billion position in the company.

Diamond Offshore Drilling shares climbed 10.9% after oilfield services company Noble said it would buy the smaller rival in a USD 1.59 billion deal. Noble shares rose 6.1%.

Advancing issues outnumbered declining ones on the NYSE by a 1.06-to-1 ratio; on Nasdaq, a 1.01-to-1 ratio favored advancers.

The S&P 500 posted 19 new 52-week highs and 5 new lows; the Nasdaq Composite recorded 56 new highs and 177 new lows.

Volume on US exchanges was 10.39 billion shares, compared with the 12.80 billion average for the full session over the last 20 trading days.

(Additional reporting by Lisa Pauline Mattackal and Johann M Cherian in Bengaluru; Editing by Pooja Desai and David Gregorio)

US yields rise as inflation data, Fed meeting eyed

NEW YORK – US Treasury yields were mostly higher on Monday as investors awaited key inflation data and the Federal Reserve’s policy announcement later in the week, following a stronger-than-expected jobs report on Friday.

Yields jumped on Friday following the payrolls report from the Labor Department, reversing declines earlier in the week after other data indicated the labor market could be cooling.

On Wednesday morning consumer price index (CPI) data will be released. Signs that inflation may be easing could alter market expectations for the Fed’s path of interest rates.

The central bank is scheduled to release its policy statement on Wednesday afternoon at the close of its two-day meeting and will also give its economic projections.

“Within an environment where investors really don’t know which way this is heading, people are really getting anxious for the Fed meeting,” said Jim Barnes, director of fixed income at Bryn Mawr Trust in Berwyn, Pennsylvania.

“It seems that everybody is itching for a rate cut, but it’s not justified as of yet. And so they’re clinging on Wednesday morning, CPI data, hoping that’ll give us more direction and additional commentary from the Fed later on that afternoon, trying to get some clarity.”

The yield on the benchmark US 10-year Treasury note on Monday rose 4.3 basis points to 4.471%.

The yield on the 30-year bond US30YT=RR gained 4.9 basis points to 4.597%.

The Fed is widely expected to keep rates steady at this week’s meeting, while the probability of a cut of at least 25 basis points at the September meeting is roughly 50%, according to CME’s FedWatch Tool, down from nearly 60% a week ago, as the strong jobs report raised some uncertainty about the timing of a rate cut.

Ahead of the Fed meeting, bond investors, worried about persistently sticky inflation, have reduced their exposure to longer-dated US Treasuries.

An auction of USD 58 billion in three-year notes on Monday was described as weak by analysts, with a below-average demand of 2.43 times the notes on sale and a high yield of 4.659%.

The US Treasury Department will also sell USD 39 billion in 10-year notes on Tuesday and USD 22 billion in 30-year bonds on Thursday.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at a negative 41.88 basis points.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, edged 1.7 basis points higher to 4.887%.

The breakeven rate on five-year US Treasury Inflation-Protected Securities (TIPS) was last at 2.304% after closing at 2.291% on June 7.

The 10-year TIPS breakeven rate was last at 2.314%, indicating the market sees inflation averaging about 2.3% a year for the next decade.

(Reporting by Chuck Mikolajczak; Editing by Emelia Sithole-Matarise and Leslie Adler)

Playing the waiting game, Japan stirs

Asian markets look set to remain on the defensive on Tuesday, kept in check by rising bond yields, political shockwaves in Europe, a buoyant dollar, and caution ahead of the US Federal Reserve’s policy decision later in the week.

That’s not necessarily a blanket outlook across the continent though – Japanese equities got the week off to a solid start, shrugging off a spike up Japanese Government Bond yields after revisions to first quarter GDP were stronger than expected and the yen fell broadly.

The economic calendar on Tuesday is light, with only South Korean current account figures, Philippines trade numbers, and Australian business confidence on tap.

Japan’s GDP revisions on Monday will have boosted sentiment towards Japan and raised expectations that the Bank of Japan will press ahead with policy normalization at its policy meeting later this week.

The 10-year JGB yield jumped 4.5 basis points on Monday, its biggest rise in two months and enough to reverse half of last week’s decline.

The BOJ is widely expected to hold off following up on its historic 10-basis point rate hike in March – its first since 2007 – for at least a few months more.

Japanese swap markets aren’t fully pricing in another 10 bps of tightening until the BOJ’s September meeting, and are currently pointing towards a total 25 bps of rate hikes between now and the end of the year.

Instead, the BOJ is more likely this week to discuss cuts in its JGB purchases as part of efforts to unwind monetary stimulus and reduce its USD 5 trillion balance sheet.

But the yen will need more from the BOJ if it is to avoid falling back into the 158-160 per dollar zone that prompted two bouts of intervention from Tokyo recently. The yen on Monday slipped back below 157.00 per dollar.

The currency’s near-term fate, however, is probably in the dollar’s hands, and the greenback is on quite a ride right now. Last week, it was languishing at a two-month low against a basket of major currencies, but rebounded following Friday’s US jobs report, and on Monday touched a one-month high.

Record closing highs on Wall Street and buoyant Treasury yields should continue to underpin the dollar, and that’s a combination that will probably weigh on emerging market assets more broadly.

If sentiment towards Japan is brightening, investors remain cool towards Chinese assets.

The CSI 300 index of blue-chip shares and Shanghai Composite index both slumped on Friday to a six-week low. Chinese markets were closed on Monday so there could be outsized moves at the open on Tuesday as investors play catch-up for two global trading sessions.

Here are key developments that could provide more direction to markets on Tuesday:

– South Korea current account (April)

– Philippines trade (April)

– Australia business confidence (May)

(Reporting by Jamie McGeever)

Indexes end down after strong jobs data

All three major US stock indexes closed lower on Friday after the US monthly jobs report suggested that any interest rate cuts from the Federal Reserve may come later rather than some investors has been expecting.

Stocks, however, rose for the week, with Nasdaq gaining more than 2%.

Traders reduced bets for a rate cut in September following the data, which showed stronger-than-expected job gains for last month.

“The Fed may see these (jobs) numbers as an obstacle for cutting rates in September,” said Quincy Krosby, chief global strategist, LPL Financial in Charlotte, North Carolina.

Utilities were down the most of the major S&P 500 sectors.

Stocks retreat, Treasuries flail as US rate cut hopes wither

NEW YORK/LONDON, June 10 – Global stocks pulled back from an all-time high on Friday after surprisingly strong U.S. monthly jobs data dimmed hopes that the Federal Reserve would soon follow euro zone and Canadian interest rate cuts, causing Treasury yields to shoot higher.

The world’s largest economy added 272,000 jobs last month, beating the 185,000 hires predicted by economists and derailing an investor consensus that the jobs market had slackened just enough to push consumer prices lower.

“This is a strong report, and it suggests that there are no signs of any cracks in the labor market,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“It’s a plus for the economy and a plus for corporate earnings, but it’s a negative in terms of the prospects of a rate cut perhaps as early as September.”

Diminished hopes for a near-term Fed move weighed on stocks, which closed lower after a choppy session. The MSCI’s world share index dropped 0.3%, after touching a record high of 797.48 points.

Wall Street finished in the red. The S&P 500 fell 0.1% after hitting an all-time high of 5,375.08 points. The Dow Jones Industrial Average edged down 0.2%, and the Nasdaq Composite also lost 0.2%.

The benchmark 10-year US Treasury yield, a benchmark for borrowing rates globally, leapt over 15 basis points after the jobs report, to 4.4335%, its biggest one-day jump in about two months.

The two-year yield, which tracks interest rate expectations, climbed nearly 17 basis points to 4.8868%, following six straight days of declines until Thursday. Bond yields rise as prices fall.

Money market pricing just after the payrolls data implied traders saw the Fed only starting to cut rates from their 23-year high of 5.25-5.5% by November. US interest rate futures also lowered the chances of the Fed’s cutting rates by 25 basis points in September to 56%, down from around 70% on Thursday, according to LSEG’s Fedwatch.

A September move had been strongly expected earlier in the day, particularly after the European Central Bank made a widely expected decision to cut its deposit rate from a record 4% to 3.75% on Thursday.

The Bank of Canada on Wednesday became the first Group of Seven nation to trim its key policy rate, following cuts by Sweden’s Riksbank and the Swiss National Bank.

Following the jobs report, euro zone rate pricing also went into reverse, with traders now pricing 55 bps of cuts in the region this year, down from 58 bps before the data.

Europe’s Stoxx 600 share index, which has gained almost 10% year-to-date, lost 0.2%.

Euro zone bonds were also lackluster on Friday, with Germany’s 10-year Bund yield rising 8 bps to 2.618%.

Elsewhere, the dollar rose 0.8% against a basket of currencies, having been set for a weekly loss before the jobs data. The euro dropped 0.8% to USD 1.0802 a day after a slight gain.

Brent crude oil futures lost 0.6% to USD 79.36 per barrel. The stronger dollar weighed on spot gold, which dropped 3.6% to USD 2,290.59 an ounce.

(Editing by Christina Fincher, William Maclean, Leslie Adler and Richard Chang)

2024 Mid-Year Economic Briefing: Navigating the Easing Cycle

Investing with Love: A Mother’s Guide to Putting Money to Work

Investor Series: An Introduction to Estate Planning

Consensus Pricing – June 2025

Policy Rate Update: Dovish BSP Narrows IRD