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 finished Tuesday’s session down over 200 points, while the S&P 500 and Nasdaq lost 0.6% and 0.4%, respectively, as investors fretted over the implications of soaring inflation and tighter monetary policy on the growth momentum. Meanwhile, the Dow and the S&P 500 ended May virtually flat, while the Nasdaq lost over 2%. Elsewhere, European equity markets closed deeply in the red yesterday, led by a drop in retail shares amid renewed concerns over the need for aggressive interest rate hikes to fight stubbornly high inflation. 


  • Shares in Asia were mixed this morning, with investors watching for market reaction to the release of a private survey on Chinese factory activity for May. 
  • European equities are on track to gain as US stock futures also edged up early morning. 
  • Oil prices steadied on Wednesday after a sharp intraday reversal in the previous session, following reports that some producers were considering suspending Russia’s participation in a production deal of OPEC+, which could pave the way for other producers to pump more crude into markets.  
  • The Australian economy advanced 0.8% qoq in Q1 of 2022, exceeding market forecasts of 0.5% and after an upwardly revised 3.6% in Q4. This was the second straight quarter of expansion following a contraction in Q3 2021, with growth led by both household consumption and government spending. 
  • The Caixin China General Manufacturing PMI increased to 49.1 in May from April’s 26-month low of 45.0 and beating market forecasts of 48.0. That said, the latest figure was the third straight month of fall in factory activity, amid stringent Covid-19 control measures. 
  • The annual inflation rate in the Euro Area increased to 8.1% in May, a fresh record high, from 7.4% in each of the previous two months and well above market forecasts of 7.7%. Preliminary estimates showed energy prices continue to record the biggest increase although there is a widespread price increase. 
  • Deutsche Bank’s asset management unit, EWS, replaced its embattled CEO Asoka Woehrmann just hours after a police raid in a probe of alleged greenwashing on Tuesday. 
  • President Joe Biden said he will give Ukraine advanced rocket systems and other US weaponry to better hit targets in its war with Russia. The package of weapons includes missiles that will allow Ukraine to strike locations so far as 80 kilometers away. 
  • President Joe Biden used a rare meeting with Federal Reserve Chair Jerome Powell to declare that he is respecting the central bank’s independence – while simultaneously shifting responsibility for taming decades-high inflation ahead of the November midterms. 
  • Treasury Secretary Janet Yellen gave her most direct admission yet that she made an incorrect call last year in predicting that elevated inflation would not pose a continuing problem. “There have been unanticipated and large shocks to the economy that have boosted energy and food prices and supply bottlenecks that have affected our economy badly that at the time I didn’t fully understand,” Yellen said in an interview aired Tuesday on CNN. 
  • Billionaire activist Nelson Peltz will join the board of Unilever, the company said yesterday. Peltz, whose hedge fund Trian has built up a 1.5% stake in Unilever, will use his new position as non-executive director to instigate the kind of turnaround he helped oversee at other consumer companies, including Procter & Gamble.