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. 

The Dow ended virtually flat on Thursday, and the S&P 500 and the Nasdaq 100 added roughly 0.2% each as investors digested more earnings results from corporate America while weighing hawkish remarks from several Fed policymakers. In the meantime, European bourses finished yesterday’s session on a high note, with the Euro Stoxx 50 bouncing by 0.6%, driven by gains among energy companies tracking higher oil prices. 


  • Asian markets were a mixed bag on Friday. Stimulus hopes kept Chinese blue chips flat, while South Korea lost 0.4%. Japan’s Nikkei held steady, helped in part by a renewed slide in the yen. 
  • European equities are on track for a soft start this morning while US futures were flat early Friday morning. 
  • Oil prices edged higher on Friday, extending a rally into a third day, as investors weighed hopes for strong fuel demand after a larger-than-expected drawdown in US crude stocks, brushing off worries about a global economic slowdown. 
  • There were several hawkish remarks from Fed officials yesterday, indicating their commitment to keep raising interest rates to bring inflation substantially lower. St. Louis Fed President James Bullard said he is considering support for a third straight 75-basis point rate hike in September and said he is not ready to say the economy has seen the worst of the inflation surge. San Francisco Fed President Mary Daly also highlighted the need to push interest rates into restrictive territory, while Kansas City Fed President Esther George said she and her colleagues will not stop tightening policy until they are “completely convinced” overheated inflation is coming down. 
  • Chinese President Xi Jinping and Russian leader Vladimir Putin are both planning to attend a Group of 20 summit in Bali scheduled for mid-November, Indonesian President Joko Widodo said.  
  • UK consumer confidence fell to a record low as concerns about a recession increased and soaring inflation tightened a squeeze on household finances. GfK said its gauge of confidence declined three points to minus 44 in August, the lowest since records started in 1974, and all other measures fell. 
  • Retail sales in the UK unexpectedly rose 0.3% in July, recovering form declines in the last three months and beating market forecasts of a 0.2% fall. Sales on non-store retailing rebounded by 4.8% as a range of promotions in July boosted purchases, while food store sales increased 0.1%. 
  • Turkish President Recep Tayyip Erdogan said he discussed avenues to end Russia’s war during talks with his Ukrainian counterpart, as well as conditions for a possible prisoner exchange. The Turkish leader met with President Volodymyr Zelenskiy and United Nations Secretary Antonio Guterres in the Ukrainian city of Lviv on Thursday. Erdogan said he would follow up on the discussions with Russian President Vladimir Putin, whom he met two weeks ago. 
  • Malta’s annual inflation rate rose for the 13th straight month to 6.8% in July from 6.1% in June. It was the highest inflation rate since records began in 1997, underpinned by a faster rise in prices for food and non-alcoholic beverages, restaurant and hotels, transportation, and housing and utilities.