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. 

Wall Street closed higher on Thursday for a second consecutive session ahead of Chairman Powell’s speech at the Fed’s annual symposium. Major indices picked up momentum shortly before the closing bell, with the Dow adding more than 300 points while the S&P 500 and Nasdaq outperformed by gaining 1.4% and 1.7%, respectively. Elsewhere, European shares also registered gains yesterday, with the benchmark Euro Stoxx 50 adding 0.2% as investors digested a slew of upbeat economic data. 


  • Shares in Asia were trading higher this morning with Australia leading the gains in the region with a bounce of over 1%.  
  • European shares look set to play catchup with gains in the US and Asian markets while US equity futures held steady ahead of Powell’s speech this afternoon. 
  • Oil prices were trading north of 0.7% on Friday, as data from TomTom showed traffic levels in Asia Pacific, Europe, and North America all posted robust weekly growth. For the week, both WTI and Brent were on track for gains of around 3%. 
  • The US economy contracted an annualised 0.6% on quarter in Q 2022, less than a 0.9% fall in the advance estimate, due to upward revisions to consumer spending and inventories. Still, the economy technically entered a recession, following a 1.6% drop in Q1. 
  • ECB policymakers noted that the 50bps rate hike in July should be regarded as frontloading the exit from negative rates and necessary to normalise monetary policy, rather than indicating a change in the rate to be expected as the end-point of the normalisaton cycle, minutes from the ECB’s July 2022 meeting showed. At the same time, additional increases in borrowing costs will be made on a meeting-by-meeting basis and will be data-dependent, although further hikes should be appropriate in upcoming meetings.  
  • Global markets are on tenterhooks today in an anxious countdown to Federal Reserve Chair Jerome Powell’s speech at annual central banking symposium in Jackson Hole, Wyoming. Fed officials struck a hawkish chorus as the meeting got underway, signalling interest rates need to keep going up to fight inflation and hinting that investors are erring in expecting a slowdown in the pace of tightening anytime soon. Powell’s tone has the potential to roil markets both ways; if he ups the ante, bonds and shares look vulnerable, but if he is less tough than traders expect, they could breathe a collective sigh of relief. 
  • President Vladimir Putin ordered his army to boost troops by 137,000 to 1.15 million – the highest level in more than a decade – as Russia digs in for its war against Ukrainian forces. Putin’s brief decree did not explain the motivation for the increase or where the new recruits would come from. Russia has turned to private military contractors, local “volunteers” and recruits from among prison inmates to replenish the losses it has suffered in the six months since it invaded.