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 lost over 200 points on Monday, and the S&P 500 and Nasdaq closed down roughly 1% each as persistent worries about high inflation and the potential for a recession in the US overshadowed a slew of upbeat earnings results. Wall Street turned an initial rally into a selloff after Bloomberg reported that Apple intends to slow hiring and spending growth in some divisions next year to prepare for a possible economic slowdown. Still, surprising positive reports from Goldman Sachs and Bank of America kept sentiment alive. In the meantime, European equity markets managed to close higher yesterday, with the benchmark Euro Stoxx 50 up 1%, led by gains in basic resources as risk appetite returned to markets. 


  • Major Asian bourses mainly fell today, with shares in Hong Kong slipping over 1% and those in China moving lower, as daily Covid-19 cases in the mainland increased again. The Nikkei traded at a 3-week peak, however, as traders returned from a holiday amid a slew of upbeat US earnings results. 
  • European equities are set to decline as US futures were steady ahead of more earnings results 
  • Oil prices were steady this morning, taking a breather after rallying more than 5% in the previous session as a still tight global market countered fears that a looming recession would hurt energy demand. Biden’s visit to Saudi Arabia failed to yield any pledge from Arab leaders to ramp up production, with Saudi’s ministers insisting OPEC+ would base their decisions on market factors. 
  • Apple plans to slow hiring and spending growth next year in some divisions to cope with a potential economic downturn. The decision stems from a move to be more careful during uncertain times, though it isn’t a company-wide policy. Apple joins tech rivals in taking similar steps, such as Alphabet, Amazon, Meta and Snap. 
  • Gazprom declared force majeure on several European natural-gas buyers, a move that may signal it intends to keep supplies capped, reinforcing Russia’s grip on the regions’ energy. The notice came amid a further tilt to the east by the company, with steady increase of natural gas delivery to China. A full halt of Russian gas supplies could potentially reduce the EU’s GDP by as much as 1.5%.  
  • Novartis this morning reported lower first-half earnings amid a decline in operating income due to prior-year divestment gains, fair value adjustments and higher restructuring costs. Looking ahead, the company affirmed its guidance for full-year 2022, expecting mid-single-digit growth in net sales and core operating income. 
  • SoftBank Group paused talks for an initial public offering of Arm in London due to the political turmoil in the UK government. The political upheaval could pave the way for the Japanese technology and investment company to pursue a US listing, which Chief Executive Masayoshi Son had originally favoured. 
  • Goldman Sachs posted a profit of $2.9 billion, or $7.73 a share, during the three months ending in June. Analysts were expecting earnings of $6.61 a share. The bank also generated revenue of $11.9bn. While that was down 23% from a year ago on the back of a slower pace in investment banking, it still managed to surpass consensus estimates of $10.7bn. 
  • Bank of America posted an increase in net interest income with the lender reaping the benefits of the Fed’s rate hikes, while second-quarter results were hurt by higher expenses related to regulatory settlements. The bank painted an overall positive outlook for consumer spending going forward, saying that despite decades-high inflation, spending continues to grow, albeit at a slower pace.