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 ended higher for a 3rd consecutive session on Friday, with the Dow adding nearly 600 points and the S&P 500 and the Nasdaq advancing 2.3% and 3.1% respectively. Consumer spending surpassed expectations in April, suggesting demand remained robust to start Q2 and may support a GDP expansion this year. Also, the closely watched core PCE inflation rate eased further, strengthening expectations that the Fed will not embark on more aggressive interest rate hikes that emerged after the release of minutes from the FOMC’s May meeting. On the week, the three main averages gained over 6%, with the Dow and S&P 500 booking their best week since November 2020. European markets also ended higher, with the Stoxx 600 wrapping the week with a 3% gain. 


  • Shares in Asia rose on Monday, with the Hang Seng surging to a 4-week high, and the Nikkei hitting an over 5-week peak. Shares in China also gained, as Shanghai prepares to ease a lockdown that began two months ago while Beijing has reopened parts of its public transport. 
  • European shares are tipped to rise as US markets remain closed for Memorial Day. 
  • Oil prices rose to two-month highs this morning as traders waited to see if the European Union would reach an agreement on banning Russian oil ahead of a meeting on a sixth package of sanctions against Moscow for its invasion of Ukraine. 
  • Russia is constructing a way to pay its Eurobond debt that would sidestep the western financial infrastructure. Foreign investors can open accounts at Russian banks in rubles and hard currency to receive payments. Meanwhile, Russia is back on default countdown, with another bond payment in question. 
  • China reported the fewest new Covid-19 cases in almost three months, with the easing of outbreaks in Beijing and Shanghai emboldening authorities to relax some of the strictest virus controls of the pandemic and move to stimulate the country’s faltering economy. 
  • It will be a busy week in the US with the labour report taking the central stage followed by ISM Manufacturing and Services PMI. Also, investors will be closely watching Q1 GDP growth releases for Switzerland, Canada, Australia, Brazil, India and inflation rates for several European countries including Germany and France.