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. 

Stocks Fall in Cautious Start to Key Fed Week: Markets Dow and S&P 500 futures were both down about 0.2%, while Nasdaq 100 futures dropped 0.5%. Last week, the Dow fell 4.13%, the S&P 500 dropped 4.77% and the Nasdaq Composite sank 5.48%, with all three benchmarks posting their fourth losing week in five and tumbling to their lowest levels in two months. Equities are coming off their worst week since mid-June The yield on 10-year Treasuries were little changed at 3.45% on Friday   

Summary

  • Stocks in Asia fell on Monday ahead of major central bank meetings this week. The Hang Seng traded at a near 6-month low and the Shanghai Composite extended losses from the prior week, amid deepening property woes and despite a renewed pledge from Beijing to speed up projects and boost consumption 
  • The British pound sank to its weakest level against the dollar since 1985   
  • Oil climbed toward $86 per barrel as the Chinese city of Chengdu ended a two-week lockdown, boosting the outlook for demand.   
  • Gold prices weakened below $1,670 an ounce on Monday, extending last week’s sharp decline as investors geared up for a raft of interest rate decisions by major central banks this week, 
  • Some key events this week:  
    World Bank President David Malpass speaks in New York, Monday. 
    European Central Bank vice president Luis de Guindos speaks in Madrid, Monday 
    Federal Reserve interest rate decision, Wednesday. 
    Central bank policy meetings in Japan, UK, Indonesia, South Africa, Turkey and Switzerland, Thursday. 
    Meanwhile, investors await a handful of earnings reports this week, while looking ahead to the next reporting season which begins in October.