The war in Ukraine has tended to increase uncertainty regarding inflation and growth prospects. When and with what consequences this war will end is pure speculation, but capital markets are expected to build a certain immunity to the headline risks in the coming weeks. The medium- to long-term consequences, on the other hand, could be significant. It is possible that we are at the beginning of a new bloc formation or a new Cold War. This would put a significant damper on globalization and further fuel higher structural inflation. 

US equities finished higher in choppy action, posting the first gains in four sessions, as investors digested a host of monetary policy decisions from central banks in Asia. The Bank of Japan and People’s Bank of China kept their respective benchmark interest rates unchanged, but the former surprisingly tweaked its yield curve control policy. The Dow Jones Industrial Average increased 0.3% to 32,850, the S&P 500 Index rose 0.1% to 3,822, and the Nasdaq Composite ended practically flat at 10,547. Markets in Europe underperformed, with the Euro Stoxx 50 Index down 0.2% to 3,802. 

Summary as at 21.12.2022 

  • Asian equity markets were mixed on Wednesday, with Japanese shares extending losses triggered by the Bank of Japan’s surprise hawkish move. At the same time, investors continued to assess the outlook for inflation, interest rates, and growth. Shares in South Korea, Hong Kong, and mainland China fluctuated amid a lack of market-moving catalysts, while Australian shares rose on firmer commodity prices. 
  • European and US markets are seen heading for a positive open, providing a moment of relief for investors.   
  • Oil prices consolidated recent gains this morning after an industry report showed that US crude inventories declined by 3.1 million barrels last week, exceeding estimates for a 0.2-million-barrel drop and compared to the prior week’s 7.8-million-barrel build-up. Russian seaborne crude shipments also collapsed in the first full week of the latest G7 sanctions. 
  • Ukrainian President Volodymyr Zelensky will visit Washington on Wednesday, his first trip outside his country since Russia invaded 10 months ago, with plans to meet President Joe Biden and address Congress in person to rally support from a crucial ally. Zelensky will have the opportunity to appeal directly to Republican lawmakers skeptical of continued US aid. 
  • Elon Musk confirmed he will step down as CEO of Twitter after finding a successor, though he plans to retain control over the company’s engineering teams. “I will resign as CEO as soon as I find someone foolish enough to take the job!’’ he wrote in a tweet. Meanwhile, shares of Telsa fell nearly 6% yesterday, hitting a more than two-year low after a string of brokerages cut their price targets on the electric-vehicle maker’s share, citing the risk from Elon Musk’s Twitter distraction. 
  • Shares of Nike advanced by over 12% in after-hours trading on Tuesday after the company reported better-than-expected financial results. Nike announced fiscal Q2 second-quarter revenue increased 17% year-over-year to $13.31 billion, which beat average analyst estimates of $12.57 billion. The company reported quarterly earnings of 85 cents per share, which beat estimates of 65 cents per share. 
  • Shares of FedEx also rose in extended trading on Tuesday as the company reported a bigger fiscal second-quarter profit than Wall Street expected. The company plans to take out £3.7 billion in costs this year by parking planes, closing offices, stopping rural Sunday delivery, and furloughing workers in its freight division.