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 main US share indices fell sharply on Monday, extending the decline from the previous week with losses in all sectors, as investors braced for a prolonged period of rate hikes following hawkish remarks from FOMC members last week. The Dow closed 1.91% lower, the S&P 500 dropped 2.14% and the Nasdaq Composite sank 2.55%. European markets were also lower yesterday, as investors fretted about hawkish signals from European Central Bank policymakers. In the meantime, the euro fell to a new two-decade low as concerns about the economic prospects for the region continue to mount. 


  • Shares in Asia mostly fell on Tuesday, with the Nikkei slumping over 1%, as the service sector in Japan shrank in July while factory activity grew the least in 19 months. Markets in Hong Kong and Australia were also lower. Meanwhile, the Shanghai Composite edged up after the PBoC again cut key lending rates on efforts to boost credit demand in China. 
  • European equity markets are seen opening higher this morning as US equity futures were also pointing to a modest rebound. 
  • Oil prices were higher this morning after Saudi Arabia warned that OPEC+ could reduce output to counter sharp declines in oil prices. Saudi Oil Minister Prince Abdulaziz bin Salman said that extreme volatility and a lack of liquidity in the futures market do not reflect fundamentals that are still showing signs of physical tightness, dangling the threat of potential OPEC+ production cuts that could come at any time. 
  • The Bundesbank President Joachim Nagel was quoted saying that the European Central Bank must keep raising rates even if a recession in Germany is increasingly likely, as inflation will stay uncomfortably high through 2023. 
  • Liz Truss, the front-runner to be Britain’s next prime minister, is preparing to fast-track an emergency spending package to help people cope with surging energy costs, according to sources familiar with the matter. Meanwhile, leadership contender Rishi Sunak indicated he would not serve in a government run by Truss. 
  • Apple plans to begin manufacturing the iPhone 14 in India about two months after the product’s initial release out of China. The company, which has long made most of its iPhones in China, is seeking alternatives as Xi Jinping’s administration clashes with the US government and imposes lockdowns across the country that have disrupted economic activity. 
  • Zoom Video Communications lowered its full-year outlook after its second-quarter revenue was hit by the strong dollar and its online business performance. 
  • TotalEnergies and Eni on Monday announced a significant natural gas discovery at the Cronos-1 well off Cyprus. Preliminary estimates indicate about 2.5 trillion cubic feet of gas in place, with significant additional upside that will be investigated by a further exploration well in the area. It marks the third offshore gas find reported in waters off Cyprus, all of them still untapped, and comes as the European Union seeks alternative supply of Russian gas.