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. 

US equities closed the last session of the week higher as expectations of a full-percentage-point rate hike fell while a consumer sentiment index rebounded from a record low. The Dow Jones climbed 2.2%, the S&P 500 advanced 1.9%, and the Nasdaq was 1.8% higher. For the week, however, the three major market indices declined, with the Dow down by 0.2%, the S&P 500 almost 1% lower and the Nasdaq declining by 1.6%. In Europe, the major bourses registered solid gains, with the Euro Stoxx 50 up 2.4% on Friday and 0.6% for the week. 


  • Shares in Asia rose on Monday, with the Hang Seng jumping over 2.5% and the Shanghai Composite emerging from 1-month lows, after China’s state media said Beijing has sufficient monetary tools, including further cutting banks’ RRR, to support the economy. Also, the Kospi hit a near 3-233k high, up for the 2nd session. Markets in Japan were closed for a holiday. 
  • European equities are on course to follow global shares higher, with futures in the US also pointing to a positive start ahead of a busy earnings’ week.  
  • Oil prices fell in early morning trade as top US energy envoy Amos Hochstein indicated confidence that major producers in the Middle East have spare capacity and are likely to boost supplies following President Joe Biden’s visit to the region. Prices dropped almost 7% last week and have been declining since mid-June as growing recession concerns ripped through commodity markets. 
  • Kristalina Georgieva, the managing director of the International Monetary Fund, expects global interest rates to keep rising until 2023, when heated prices will begin to cool in response to the actions from central banks. Commodity prices may have levelled out and started sliding in recent months, but Georgieva said that they will do so in response to recession risks and not necessarily because inflation has been tamed. 
  • Citigroup shares climbed more than 13% last Friday after reporting better-than-expected Q2 results, earning $2.19 per share and an 11% year-on-year increase in revenue to $19.64 billion, beating consensus calling for $1.67 per share and $18.30 billion, respectively. 
  • Wells Fargo saw its second-quarter results slide from a year earlier, missing Wall Street’s expectations as it bulked up its loan-loss provision and saw higher rates along with weaker markets curb non-interest income. Revenue fell to $17.03 billion from $20.27 billion a year ago, while the consensus was for $17.54 billion. Earnings shrank to $0.74 a share from $1.38 previously while the Street was expecting $0.82. 
  • Corporate earnings will remain in the spotlight this week, particularly in the US. Elsewhere, the ECB, Bank of Japan and People Bank of China will hold monetary policy meetings and the UK, Canada, and Japan release inflation figures for June. Also, it will be interesting to follow flash manufacturing and services PMI figures for the US, Germany, France, UK, and Euro Area.