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 globalisation and further fuel higher structural inflation. 

The Dow lost over 1,000 points on Thursday and the Nasdaq Composite sank almost 5%, their biggest drop since 2020, while the S&P 500 tumbled 3.6% as investors continue to bet on bigger interest rate hikes to rein on inflation and worry about its impact on growth despite Fed Chair Jerome Powell’s less hawkish tone. European markets also closed mostly lower, erasing sharp gains seen after the opening bell, as the Fed relief-induced rally gave way to the BOE’s recession warnings. 


  • Stocks in Asia mainly plunged on Friday after an overnight rout on Wall Street. The Hang Seng and the Shanghai Composite tanked 3.5% and 2.3%, each, as China pledged to fight any criticism of its zero-Covid policy. Shares in Australia shed over 2%, as the RBA flagged more rate hikes. The Nikkei rose, however, boosted by utilities and energy stocks. 
  • European equity futures point to a cautious start to trading while US stock futures were seen little changed.  
  • Oil prices edged higher on Friday and were headed for their second straight weekly advance, as concerns about tight global supply and impending EU embargo on Russian oil outweighed uncertainties about global economic growth. 
  • The Reserve Bank of Australia is committed to doing what is necessary to ensure that inflation in the country returns to target over time, the central bank said in its quarterly statement on monetary policy. The board mentioned that core inflation could hit 4.6% by December, a two percentage points higher than its forecast made in February. 
  • The Bank of England raised interest rates by 25bps to 1% yesterday, its 4th consecutive rate hike, pushing borrowing costs to the highest since early 2009. The decision came in line with expectations although 3 members voted for a bigger 50bps increase. The UK economy is estimated to have risen by 0.9% in Q1 but the GDP is expected to be broadly unchanged in Q2 and to contract around 1% in Q4. Inflation is expected to rise further over the remainder of the year, to just over 9% in Q2 and averaging slightly over 10% at its peak in Q4. 
  • Adidas this morning lowered expectations for 2022 revenue and net income targets as renewed Covid-19 related lockdowns in Greater China continued to hit operations. 
  • All eyes today will be on the US April jobs report which is expected to show strong solid payroll growth and wage costs adding to inflationary woes.