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. 

European equity markets closed higher on Monday, with Germany’s DAX rising 0.8% to a 2-month high and the benchmark Stoxx 600 up 0.6% led by gains in tech amid easing fears of a sharp slowdown in the world’s largest economy. Meanwhile US markets were closed for the Memorial Day holiday. 


  • Asian shares were mixed in Tuesday trade as investors watched for market reaction to the release of official Chinese factory activity data for May. Markets in China and Hong Kong were trading higher, Japan was flat, while Australian shares were down for the day. 
  • European equity futures nudged lower and their US counterparts were mixed after last week’s rally. 
  • Oil prices jumped this morning after EU leaders reached an agreement late Monday to ban 90% of Russian crude by the end of the year, fuelling concerns of an even tighter market. 
  • The official NBS Manufacturing PMI for China rose to 49.6 in May from April’s 26-month low of 47.4, amid an easing of Covid-19 curbs in major key cities, including Shanghai and Beijing. Meanwhile the services PMI also increased compared to the previous month but was still below the 50-mark that separates expansion from contraction for the third consecutive month. 
  • European Union leaders agreed to pursue a partial ban on Russian oil, paving the way for a sixth package of sanctions to punish Russia and its president, Vladimir Putin, for the invasion of Ukraine. The sanctions would forbid the purchase of crude oil and petroleum products from Russia delivered to member states by sea but include a temporary exemption for pipeline crude. 
  • President Joe Biden will hold a rare Oval Office meeting later today with Federal Reserve Chair Jerome Powell amid the highest inflation in decades, which has hurt his standing with voters. The two will discuss the state of the American and global economy. 
  • Germany’s consumer price inflation rate is expected to climb to 7.9% in May from 7.4% in April, the highest since the winter of 1973/74 and above market expectations of 7.6%, a preliminary estimate showed. On a monthly basis, consumer prices are expected to rise 0.9% in May. 
  • Siemens signed the largest order in its history in a contract for Egypt’s high-speed rail system worth as much as €8.1 billion. 
  • Credit Suisse is in the early stages of weighing options to bolster its capital after a string of losses have eroded its financial buffers. The size of the increase would likely exceed the equivalent of $1.04 billion.