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. 

The major US averages reversed early losses to close higher on Monday, led by the Nasdaq Composite’s 1.3% rise, while the Dow and the S&P 500 gained 0.7% and 0.6%, respectively.  The moves came as tech names rallied in the afternoon amid falling bond yields and ahead of an intense week of earnings for mega cap tech stocks.  Earlier, uncertainty reverberated across world markets, with Chinese shares marking their biggest slump since a pandemic-led selling in February 2020 and European stocks falling to their lowest in over a month on fears to strict restrictions in China. 


  • Shares rose in Asia after China pledged further economic support amid Covid lockdowns.  The Australian ASX bucked the trend after it was hurt particularly by a decline in mining companies. 
  • European stocks are on track to rebound following Monday’s slide while US futures are seen building on the late rally of the previous session. 
  • Oil prices rose on Tuesday as traders recalculated demand from China after the People’s Bank of China pledged to increase economic support.  Brent crude and WTI both sank around 4% Monday to their lowest in two weeks, on mounting worries about the outlook of global energy demand. 
  • The People’s Bank of China today pledged to boost monetary support for the nation’s Covid-afflicted economy by keeping liquidity reasonably ample and boosting the healthy stable development of the financial markets. 
  • Twitter’s board has accepted an offer from billionaire Elon Musk to buy the social media company and take it private.  The cash deal at $54.2 per share is valued at around $44 billion. 
  • HSBC’s first quarter net profit declined 28% due to a net charge for expected credit losses and lower revenue, although the revenue outlook is positive thanks to rising interest rates. 
  • UBS posted a 17% rise in first quarter net profit this morning, upending expectations for a fall in profit amidst uncertainties over the war in Ukraine, thanks to strong trading.  This was in sharp contrast to the profit declines US peers reported this month.