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 equity indices turned red in late trading yesterday as investors grew nervous ahead of today’s CPI release. Demand for safer assets rose as inflation is expected to extend its rising momentum, strengthening bets that the Fed will continue its aggressive tightening path in this month’s meeting. The Dow Jones erased early gains and closed 200 points down, while the S&P 500 and the Nasdaq both lost around 0.9%. On the other side of the Atlantic, European equities managed to gain ground in the final hour of trading to end Tuesday’s session in the green, with the Euro Stoxx 50 index adding 0.4%, driven by gains in industrial shares. 


  • Shares in Asia were higher on Wednesday as China released trade data showing a 13.2% increase in yuan-denominated exports for the first half of 2022, while imports rose 4.8%. In the meantime, both the Bank of Korea and the Reserve Bank of New Zealand raised rates by 50 basis points. 
  • European equity futures edged lower while their US counterparts moved in the opposite direction as investors look ahead to a key inflation report that is expected to remain hot. 
  • Oil prices steadied early morning after tumbling over 7% in the prior session, with traders continuing to assess a weakening demand outlook due to recession fears, a rallying dollar, and China’s resurgent Covid-19 outbreaks.  
  • The International Monetary Fund cut its growth projections for the US economy this year and next, and raised its unemployment rate estimates through 2025, warning that a broad-based surge in inflation poses systemic risks to both the country and the global economy. 
  • Russia’s huge exports of diesel and other fuel products that are being shunned in Europe are fast heading to new destinations in the Middle East. Flows to the region have risen every month since February. By contrast, Europe’s imports slid 30% in the period. 
  • Italian PM Mario Draghi said he won’t continue leading the government if the Five Star Movement leaves his coalition. He is currently under mounting pressure from several parties in his broad alliance to soften reforms and reshuffle the cabinet. A key test awaits him Thursday in the Senate, with a confidence vote over an aid package for businesses and households hit by energy prices. 
  • PepsiCo raised its full-year revenue forecast from 8% to 10% on Tuesday, helped by sustained demand for sodas and snacks even in the face of rising prices. However, the company maintained its full-year earnings growth forecast of 8% as surging commodity and freight costs continue to bite into margins. 
  • American Airlines affirmed expectations that it would return to profitability in the second quarter despite lower-than-projected capacity as revenue per available seat miles will likely top the carrier’s guidance. 
  • Twitter wants a fast trial to resolve its claim that Elon Musk wrongfully cancelled his proposed $44 billion buyout of the company. Their lawyers say they need only four days in Delaware Court to prove that the world’s richest man should be forced to honour his agreement and pay $54.20 a share for Twitter. The company hopes to start the non-jury case on 9th September.