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. 

US stocks ended mostly higher in a choppy Tuesday session, as markets awaited the April inflation report later today. All three major market indices struggled to find their footing throughout the session but it was the Dow Jones Industrial Average that finished lower by 0.3%, slipping for a fourth consecutive day. The S&P 500 and the Nasdaq Composite both managed to end in the green after swinging between gains and losses, with the S&P 500 higher by 0.3% and the Nasdaq rising 1%. European markets also bounced back yesterday, following a big slump the day before, with broad gains led by financials. 


  • Shares in Asia were mixed on Wednesday as investors watched for market reaction to the release of higher-than-expected Chinese inflation data for April. Mainland Chinese stocks led gains regionally, with the Shanghai Composite rising 1.6% while the Shenzhen Component climbed 2.9%, as Shanghai reported a 51% drop in new Covid infections for Tuesday, while Beijing also reported fewer cases.  Hong Kong’s Hang Seng index advanced 1.7%.  
  • European stocks are on track for gains as US stock futures were little changed. 
  • Oil prices rebounded on Wednesday after losing around 9% in the previous two sessions, as supply side challenges reemerged, with the EU working on gaining support to ban Russian oil while major producers warned they may not be able to meet demand without further investment. 
  • China’s annual inflation rate accelerated to 2.1% in April from 1.5% in March, above market forecasts of 1.8%. This was the highest reading since last November, amid logistic disruptions caused by strict Covid measures. Meantime, producer price inflation eased to a 12-month low of 8.0% yoy in April from 8.3% in the prior month but above market consensus of 7.7%. 
  • US President Joe Biden said yesterday that cooling prices is his top domestic priority. He also said that the White House is in the middle of a review of tariffs imposed against China during former President Donald Trump’s tenure and could opt to drop them.  
  • Ukraine and Russia clashed over natural gas sent via pipelines to Europe in a spat that could disrupt supplies transiting the former Soviet Union nation for the first time since the war started.  Russian gas flowing via one of two key entry points will stop from Wednesday as occupying forces disrupt operations. 
  • Philip Morris said on Wednesday it was making a recommended cash offer to buy Swedish tobacco and nicotine products maker Swedish Match for an equivalent sum of $16 billion.