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. 

Major US indices ended mixed on Tuesday after Snap said it expects its second-quarter revenue to fall below the low end of its projected range. The Dow Jones Industrial Average managed to exit negative territory and end 0.2% higher while the S&P 500 declined 0.8% and the Nasdaq Composite fell by 2.4%. Meanwhile, European equity markets closed in the red yesterday with retail and travel shares among the biggest draggers.

Summary

  • Shares in Asia rose on Wednesday, amid optimism that Beijing will continue to roll out stimulus measures in H2 of the year to spur the slowing economy, through both monetary and fiscal channels. The Shanghai Composite rebounded while the Hang Seng rose for the first time in three sessions. Markets is South Korea and Australia also gained noticeably, while the Nikkei tried to recover from Tuesday’s losses. 
  • European shares are on track for gains followed by US stock futures which are also seen poised for a positive open. 
  • Oil prices were higher this morning, erasing losses in the previous session, amid the prospect for even tighter global supplies and expectations of stronger demand. The new French foreign minister said yesterday she was optimistic that those still opposed to a new EU sanctions package that would phase out Russian oil imports could be convinced. 
  • TotalEnergies said this morning it has agreed to buy 50% of Clearway Energy Group, the fifth-largest renewables company in the US, marking the group’s largest US renewables energy acquisition. 
  • Russia will get pushed closer to a potential default after the US Treasury Department said it’s letting a key sanctions waiver benefitting American investors expire. US banks and individuals are now barred from accepting bond payments from Russia’s government, after a license that has so far allowed the cash to flow ends. 
  • Billionaire George Soros warned that Russia’s invasion of Ukraine has rattled Europe and could be the start of another world war.