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. 

Major US stock indexes fell on Tuesday as investors weighed increased tensions between the US and China with House Speaker Nancy Pelosi’s Taiwan visit and reacted to comments from Fed officials about the central bank’s path forward. The Dow shed 1.23%, the S&P 500 lost 0.67%, and the Nasdaq Composite fell 0.16%. In the meantime, the major European bourses also fell for a second day, with the Euro Stoxx 50 index down 0.59%. 


  • Shares in Asia were mostly higher Wednesday as geopolitical tensions between the US and China intensified over US House Speaker Nancy Pelosi’s visit to Taiwan. 
  • European equity markets head for a lower open contrary to their US counterparts, which are seen gaining slightly at the open. 
  • Oil prices were broadly flat this morning ahead of an OPEC+ meeting where it is expected to keep output largely unchanged amid supply challenges and concerns a potential global recession could hit energy demand. 
  • The Caixin China General Services PMI rose to 55.5 in July 2022 from 54.5 in June. This was the second straight month of growth in services activity and the strongest pace since April 2021, with new orders rising the most in 9 months as the economic fallout from the latest Covid-19 outbreaks was fading. 
  • US House Speaker Nancy Pelosi pledged that the US would not abandon Taiwan, reaffirming support for the democratically elected government in Taipei. China responded by announcing the most provocative military drills in decades around the island and halting some trade with Taiwan, while warning airlines operating in Asia to avoid flying in areas around the island. 
  • Federal Reserve officials effectively pushed back against a narrative in financial markets over the past week that policy makers are envisioning a pivot away from tightening amid evidence of a turn in the economy. San Francisco Fed President Mary Daly said the central bank was completely united to get inflation down, while Cleveland’s Loretta Mester said she wants to see “very compelling evidence” that month-on-month price increases are moderating. 
  • Liz Truss extended her lead over rival Rishi Sunak, with polls suggesting she is on track to succeed Boris Johnson as UK prime minister. The foreign secretary is 34 points ahead of her opponent, according to Tuesday’s YouGov poll of Conservative Party members for The Times newspaper. That is significantly wider than the 18-point lead she enjoyed in the last survey almost two weeks ago. 
  • Société Générale this morning reported better-than-expected earnings despite a €3.3 bn hit from exiting its Russian operations. Analysts estimated a net loss of €2.85 bn for the quarter but the bank posted a net loss of €1.48 bn. 
  • Ferrari raised its guidance for 2022 after reporting record results for the second quarter amid unprecedented demand for its high-priced sports and grand touring cars. The company has been largely immune from the supply chain disruptions that have forced larger automakers to reduce production over the last several quarters, thanks to its small sales volumes.  
  • PayPal shares surged 11% in Tuesday after-hours trading after the fintech posted better than expected results and boosted its full-year guidance.