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 fell sharply on Friday to cap their eighth weekly loss out of the last nine, as a stronger than expected report on US nonfarm payrolls suggested the labour market remains robust enough for the Federal Reserve to raise rates quickly. All three of the major indices finished negative for the holiday-shortened week, with the S&P 500 shedding 1.2%, and the Dow Jones and Nasdaq each down by about 1%. European markets also closed lower on Friday but losses were more contained, resulting in an overall muted week. 


  • Asian markets were mixed in Monday trade, as a private survey showed another contraction in China’s service sector activity for May. Chinese equities led gains among the region’s major markets, with other gains registered in Hong Kong and Japan, while the Australian market was trading lower. 
  • European equities are on track to follow Asian markets higher while US stock futures are also pointing to a positive open. 
  • Oil prices rose notably on Monday after Saudi Arabia raised the official selling price for its flagship Arab light crude to Asia and northwest Europe. The move came despite a decision by the OPEC+ last week to increase output in over the next two months by 648,000 barrels per day. 
  • The Caixin Cina General Services PMI increased to 41.4 in May from April’s 26-month low of 36.2, the third straight month of contraction amid further Covid-19 lockdown measures.  
  • The US economy added 390k payrolls in May 2022, the least since April last year but above market forecasts of 325k. The latest reading left the economy 822k jobs below its pre-pandemic level, in a sign, that the labour market remains resilient and is getting close to full employment. Meanwhile, the labour force participation rate edged up to 62.3% in May from a 3-month low of 62.2% in April. 
  • Russia took aim Sunday at Western military supplies for Ukraine, launching airstrikes on Kyiv that it claimed destroyed tanks donated from abroad, as Vladimir Putin warned that any Western deliveries of longer-range rocket systems would prompt Moscow to hit “objects that we haven’t yet struck.” 
  • Telsa CEO Elon Musk said in an email to all employees on Friday that the company will cut 10% of salaried workers and that he had a “super bad feeling” about the economy. 
  • Investors will be following closely the latest read on consumer prices in the US this week, with expectations for a small drop in headline inflation to 8.2% year-on-year compared to April’s 8.3%. Core inflation is expected to trickle down to 5.9% from 6.2%. Also, markets will closely follow central bank meetings in the Euro Area and Australia.