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 closed higher on Thursday, as investors shrugged off hawkish comments from several Fed policymakers and disappointing data. The Nasdaq added 1.6%, the S&P 500 gained almost 1% and the Dow was up by 194 points. Elsewhere, European equities continued to underperform, falling for a second session yesterday, led by economy-sensitive sectors amid persistent worries that tightening financial conditions would drag the bloc’s economy into a recession. 


  • In Asia, the Kospi rose for the first time in three sessions, with foreigners becoming net buyers, while the Nikkei was at over a one-week high, lifted by tech and healthcare shares. Markets in China traded at their highest levels in 3 months while those in Hong Kong extended gains, on optimism about further policy support from China. 
  • European and US equity futures pushed higher this morning as economic threats led investors to scale back expectations for inflation and interest rate hikes. 
  • Oil prices traded broadly flat this morning and were on track to decline for the second straight week. US manufacturing and services PMIs released Thursday came in well below expectations, raising fears of slowing US economic activity. Meanwhile, an emergency meeting between major US oil refiners and the US Energy failed to produce concrete solutions to reduce oil prices. 
  • European Union leaders granted Ukraine candidate status ahead of a long and difficult path to membership of the bloc. The country will have to meet conditions in the future on issues related to the rule of law, justice and anti-corruption. In the meantime, the US plans to provide Ukraine with an additional $450 million in aid and advanced weaponry that includes rocket systems. 
  • The S&P Global US Composite PMI fell to a five-month low of 51.2 in June from 53.6 in May, a preliminary estimate showed. The increase in activity was the second-weakest since July 2020, with slower service sector output growth and the first contraction in manufacturing production in two years. 
  • The GfK Consumer Confidence indicator in the UK fell to –41 in June from –40 in May, setting a new record low for the second consecutive month. Four of the five measures that form the confidence index decreased in June compared with the previous month, with the sharpest fall registered in consumers’ short-term outlook about their personal finances. 
  • Germany’s biggest utilities are working to revive their coal operations as the country turns to the dirtier fuel in a bid to reduce the use of natural gas for electricity generation. EnBW Energie Baden-Wuerttemberg is finalising the procuring and transportation of coal, while RWE is preparing for the reactivation of three lignite mines which are currently on standby.