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. 

The major US equity indices extended losses on Thursday, with the Dow losing 0.35%, while the S&P 500 and Nasdaq Composite declined 0.84% and 1.37%, respectively. Consumer discretionary, financials and industrials were hit by recession fears, while defensive stocks outperformed. All three benchmarks are headed for their second straight losing week and are all down at least 2% so far during the period. In the meantime, European equity markets tumbled to multi-month lows yesterday, as rising interest rates and worries over the economic outlook again soured the mood. The Euro Stoxx 50 index dropped 1.8%, with technology shares among the worst performers as the bond selloff resumed. 


  • Asian equity markets slipped further on Friday. Central banks in Asia including Taiwan, Indonesia and the Philippines also raised interest rates on Thursday, denting sentiment further in the region. Benchmark equity indices in Australia, South Korea, Hong Kong and mainland China tumbled in early trade. Japanese markets were closed for a holiday.
  • European equity futures are pointing to a muted start as peers in the US continue to fall. 
  • Oil extended losses on Friday, down for the third consecutive session and heading for its fourth straight losing week, as persistent fears over an economic slowdown that would erode fuel demand offset higher demand in China and a stalled Iran nuclear deal.   
  • The Bank of England raised its key interest rate by 50bps to 2.25% yesterday, the 7th consecutive rate hike.  Five members of its MPC voted for the 0.5pp rise, while three voted for a higher 0.75pp rise and one member voted for a 0.25pp rise.  The bank also noted that uncertainty around the outlook for retail energy prices has fallen, following the announcements of support measures including an Energy Price Guarantee, which is likely to limit significantly further increases in inflation. 
  • The GfK Consumer Confidence indicator in the United Kingdom fell to -49 in September 2022 from -44 in August, hitting a new record low as British households continued to grapple with the cost of living crisis and wider economic uncertainties. The September figure also defied expectations for a slight improvement to -42 following the government’s £150 billion package aimed at freezing household energy bills.   
  • Turkey’s central bank surprised markets once again with its decision Thursday to cut its key interest rate, despite inflation in the country surging beyond 80%.  The country’s monetary policymakers opted for a 100 basis point cut, bringing the key one-week repurchase rate from 13% to 12%. 
  • Boeing will pay $200 million to settle charges from the US Securities and Exchange Commission that it misled investors about the 737 MAX that was ground for 20 months after two fatal crashed killed 346 people.  The SEC also said former Boeing CEO Dennis Muilenburg had agreed to pay $1 million.  
  • Royal Caribbean Group said Thursday that its demand remains strong, with bookings significantly outpacing 2019 levels.  The company had highlighted an immediate positive impact on bookings for 2022 and 2023 sailings from relaxed testing and vaccination protocols back in August.  
  • FedEx yesterday announced rate hikes and detailed its cost-cutting efforts after it warned last week that its fiscal first quarter results were hit by weakening global demand.