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 globalisation and further fuel higher structural inflation. 

US stocks meandered lower in late trading on Thursday, deepening losses for all three major indices in the holiday-shortened trading week as bond yields resumed their uphill climb and investors contended with mixed earnings and economic data.  The Nasdaq Composite closed 2.6% lower for the week, while the S&P 500 fell 2.1% and the Dow Jones finished down 0.8%.  In Europe, markets closed higher on Thursday and managed to eke out a gain for the week as well. 


  • Asian markets slipped in Monday trade, with investors reacting to the release of Chinese economic data, including Q1 GPD figures. 
  • Oil prices rose in early morning trading, scaling the highest in over 2 weeks, as a deepening crisis in Ukraine raised the prospect of heavier western sanctions on Russian oil in an already tight global energy market.  Prices jumped last week on news that the EU might phase in a ban on Russian oil imports. 
  • Most European markets are closed today while US stock futures are pointing to a lower open on Wall Street ahead of a busy week of earnings reports. 
  • The Chinese economy expanded by an annual rate of 4.8% in Q1, above market expectations of 4.4% and faster than the 4.0% growth in Q4.  Meanwhile, retail sales fell by a more-than-anticipated 3.5% as compared with a year earlier while industrial production grew by 5% yoy in March, beating market consensus of 4.5%. 
  • The People’s Bank of China lowered the reserve requirement ratio for most banks by 25 basis points on Friday, effective from 25th April.  The move will release about CNY530bn in long-term liquidity to bolster the economy. 
  • The ECB kept its monetary policy unchanged on Thursday and said that any adjustments to interest rates will take place some time after the end of the Governing Council’s net purchases under the Asset Purchase Program (APP) and will be gradual.  Policymakers also said incoming data since its last meeting reinforce its expectation that net asset purchases under its APP should be concluded in Q3. 
  • Elon Musk made a move to buy Twitter for $54.20 per share in cash.  Twitter shares initially rose on the news, climbing 12% premarket, before closing lower at the end of the session on Thursday.  The deal would value the company at about $43bn and is what Musk called his “best and final offer.” 
  • A quartet of large US banks reported earnings on Thursday, with all four reporting steep profit declines.  Wells Fargo’s Q1 profit declined from the year before despite recording a reduction in allowance for credit losses, while an increase in rates negatively impacted the lender’s mortgage banking business.  Elsewhere, Citigroup’s Q1 earnings tumbled 44% yoy as the banking giant took hits from higher cost of credit, increased expenses, and losses related to direct exposure in Russia. 
  • The earnings season in the US will enter a busy phase this week with financials and several large companies due to report.  The week will also be busy with data releases including flash services and manufacturing PMIs for major economies.