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 posted solid gains, adding to the previous day’s advance, amid some upbeat earnings results and economic data. The Dow Jones Industrial Average rallied 1.6% to 33,376, the S&P 500 Index rose 1.5% to 3,878, and the Nasdaq Composite advanced 1.5% to 10,709. European markets were also noticeably higher, rebounding from some recent choppiness that has come from monetary policy tightening actions on both sides of the Atlantic.
Summary as at 22.12.2022
- Asian equity markets rose on Thursday after the fallout from the Bank of Japan’s surprise policy shift began to fade, with global bond yields easing from recent highs. Shares in Australia, Japan, South Korea, Hong Kong, and mainland China all advanced.
- Both European and US equity futures are indicated higher this morning as global sentiment gets a boost.
- Oil prices rose for the fourth straight session this morning as an expected surge in travel for the holiday season is threatening to exacerbate tightening US energy supplies. Latest data showed that US crude inventories fell by 5.89 million barrels last week, much more than market forecasts for a 1.66 million barrel drop.
- Ukrainian President Volodymyr Zelensky pressed the US Congress for tanks, planes, and other weapons to help repel Russia’s invasion, portraying the war as a battle of democracy against tyranny as he looked to win support from skeptical Republican lawmakers. In his first trip abroad since President Vladimir Putin’s forces invaded, Zelenskiy told a joint meeting of Congress that US support had been crucial so far and predicted the year ahead would turn the tide in the war.
- In the US, the Conference Boards’ Consumer Confidence Index jumped to 108.3 in December – the highest since April – from November’s upwardly revised 101.4 level, and versus estimates calling for a reading of 101.0. The index movement came as the expectations and the present Situation components of the survey both increased solidly.
- Semiconductor maker Micron announced yesterday that it would reduce its headcount by about 10% in 2023, in the latest example of a technology industry slowdown affecting employment. The company also said it is suspending 2023 bonuses.
- Two top associates of disgraced crypto company FTX pleaded guilty to criminal charges and are cooperating with US prosecutors leading the investigation into the company’s collapse. Caroline Ellison and Gary Wang had been charged “in connection with their roles in the frauds that contributed to FTX’s collapse.” Meanwhile, Sam Bankman-Frid left the Bahamas for the US late Wednesday local time.
