Ongoing Market Commentary: Growth stocks lead Wall Street rally

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. 

Wall Street snapped a two-day decline on Thursday, with the Dow Jones finishing more than 400 points higher, while the S&P 500 and the Nasdaq Composite outperformed by adding 1.8% and 2.7%, respectively. Growth stocks were among the top performers despite a sour outlook from market bellwether Microsoft and fears of rising borrowing costs. Similarly, European bourses managed to gain some ground, with consumer-related shares leading gains in the region. 

Summary

• Asian shares followed their US peers higher Friday with gains in Japan, Korea and Australia. Markets are shut in Hong Kong and China where officials have vowed to carry out a slew of government policies to stimulate the economy. 
• European shares are on course to follow Asian stocks higher while US futures fluctuated ahead of a key US jobs report. 
• Oil prices were roughly unchanged on Friday, clinging to gains made in the previous session on doubts that OPEC+ producers can hike their crude output enough to make up for lost supply from Russia. 
• OPEC+ agreed to open its oil taps in the summer months, a gesture of reconciliation to the US. The modest supply boost – amounting to just 0.4% of global demand over July and August – may ease tight markets, but it leaves unanswered the question of whether the US can turn Saudi Arabia into an ally in its campaign to economically isolate Russia. 
• Citigroup may record losses of at least $50 million following a fat-finger trade that caused a flash crash in European stocks last month. The bank is still tallying losses from the mistaken trade and the final figure could balloon higher. 
• Federal Reserve Vice Chair Lael Brainard said expectations for half-percentage-point increases in US interest rates this month and next were reasonable, and saw no case for pausing the central bank’s tightening campaign afterward. 
• Black CEO Larry Fink said he expects inflation to remain elevated for several years primarily because of snarled global supply chains. His remarks came a day after JPMorgan CEO Jamie Dimon warned investors to prepare for an economic “hurricane.” 
• Producer price inflation in the Eurozone accelerated further to a new record high of 37.2% in April from 36.9% in March, suggesting inflationary pressures continue to build across the region. 
• Shares of Microsoft came under pressure yesterday after the company said it is bracing to miss earnings and revenue targets in the current quarter due to a stronger US dollar.