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. 

All three major US stock indexes fell on Tuesday after disappointing economic figures and weaker outlook from Walmart magnified fears of reduced consumer spending, adding to growing recession worries. The Dow fell 0.71%, the S&P 500 retreated 1.16% while the Nasdaq 100 plunged 1.87% ahead of earnings from Microsoft and Alphabet. In Europe, the Euro Stoxx 50 closed 0.56% lower amid growing concerns over the economy and the worsening energy crisis. 

Summary

  • Asian equity markets traded mostly lower on Wednesday, following the broadly negative cues from the global markets overnight, as traders looked ahead to the US Federal Reserve’s monetary policy decision and accompanying statement later in the day. 
  • European equity futures ticked higher while we saw a jump in US contracts, as quarterly updates from major technology firms lifted sentiment. 
  • Oil prices rose on Wednesday after falling in the previous session, as an industry report pointed to a large drop in US crude inventories. API data released late on Tuesday reportedly showed that US crude stockpiles declined by 4mn barrels last week, way higher than the 1mn barrel drop expected by analysts. 
  • The annual inflation rate in Australia climbed to 6.1% in Q2 from 5.1% in Q1 and compared with market forecasts of 6.2%. This was the highest print since Q2 2001, amid an acceleration in prices of food and further rises in cost of both fuel and dwelling. 
  • Chinese property developer Country Garden Holdings said on Wednesday it plans to raise the equivalent of $360mn from a share sale to help refinance existing offshore debt, and for general working capital and future development purposes.   
  • Credit Suisse this morning announced that CEO Thomas Gottstein would step down as the bank reported a massive second-quarter loss, as poor investment bank performance and mounting litigation provisions hammered earnings. He will be replaced by Ulrich Koerner, previously CEO of the bank’s asset management division. 
  • Deutsche Bank beat market expectations to post an eighth straight quarter of profit on Wednesday, recording a second quarter net income of €1.046bn. 
  • Microsoft shares rose 5% in extended trading on Tuesday after the company issued a rosy income forecast for the year ahead, despite issuing quarterly results that failed to reach Wall Street consensus. 
  • Alphabet reported earnings that missed Wall Street estimates after the closing bell on Tuesday.  Nonetheless, its shares jumped 4% in after-hours trading as a modest beat on ad revenue offered some relief to investors about the resilience of digital advertising.