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 finished solidly higher on Tuesday despite a flurry of headwinds, notably the Fed’s aggressive tightening campaign to combat persistently high inflation, reemphasized by Fed Chair Jerome Powell in an interview. A mostly upbeat economic calendar appeared to aid sentiment, as retail sales, industrial production, capacity utilisation, and business inventories all rose. The Dow Jones rose 1.3%, the S&P 500 increased by 2.0% and the Nasdaq Composite rallied by 2.8%. European markets also registered good gains across the board. 


  • Asian markets eked out their fourth straight session of gains on Wednesday, but the recent rally lost momentum on nagging doubts about inflation and the drag from rate rises overshadowed bits and pieces of good news about the global growth outlook. Meanwhile, Shanghai achieved three straight days with no new Covid-19 cases outside quarantine zones on Tuesday, after announcing plans on Monday to end a lockdown that has lasted more than six weeks, with authorities saying “normal life” will resume on June 1. 
  • European stock futures are signalling a flat open similar to their US counterparts with traders weighing in hawkish Fed comments overnight. 
  • Oil futures rose on Wednesday after tumbling in the previous session, amid hopes of demand recovery in China as the country relaxes some of its strict Covid-restrictions. 
  • The Federal Reserve will not hesitate to keep raising interest rates until inflation falls in a clear and convincing way, Chair Powell said during a livestream interview with the Wall Street Journal. Powell added that “if that involves moving past broadly understood levels of neutral, we won’t hesitate at all to do that” and noticed by the US economy is strong and well positioned to withstand less accommodative monetary policy. 
  • UK inflation soared to a 40-year high of 9% in April as food and energy prices spiralled, official figures revealed on Wednesday. Consumer prices rose by 2.5% month-on-month, fractionally below expectations for a 2.6% climb, and a year-on-year increase of 9.1%. 
  • US Retail sales increased 0.9% mom in April, following an upwardly revised 1.4% surge in March and matching forecasts as Americans continued to spend despite stubbornly high levels of inflation.  
  • The Euro Area economy expanded 0.3% in Q1 2022, slightly higher than initial estimates of a 0.2% rise, and matching the growth of the previous quarter. Among the biggest economies, Germany expanded 0.2% and Spain 0.3% while France GDP growth stalled and Italy shrank. Compared to the previous year, the GDP grew 5.1%, also above 5% in the preliminary estimate and 4.7% in Q4. 
  • The Biden administration is poised to fully block Russia’s ability to pay US bondholders after a deadline expires next week, a move that could bring Moscow closer to the brink of default. 
  • Home Depot raised its full-year profit guidance after strong demand boosted the home-improvement retailer’s fiscal first-quarter results and helped it post a surprise comparable sales gain. Transactions were down 8.2% but were partially offset by an 11.4% increase in the average ticket and a 2.7% increase in sales per square foot. 
  • Walmart cut its annual profit forecast and signaled a bigger hit to margins with the shares plunging 11.4% during yesterday’s session. 
  • A unit of Allianz pleaded guilty to fraud and agreed to pay $5.8 billion after misrepresenting the risk posed by a group of hedge funds that collapsed amid pandemic market gyrations. Allianz said it has previously set aside enough money to cover the settlement.