Ongoing Markets Commentary: Tech shares take the lead

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 globalisation and further fuel higher structural inflation. 

US stocks closed higher on Monday, propelled by technology shares.  The S&P 500 was up 0.8%, the Dow Jones Industrial Average rose 0.3%, and the Nasdaq Composite added 1.9%.  Communication services and consumer discretionary led gainers, while utilities lagged the most.  European equities also rose for a second session on Monday, with gains driven by technology and discretionary stocks. 

Summary

• Asian stocks ticked up to their highest in more than a month as markets in China and Hong Kong remained closed for a holiday. 
• European stocks are on course for a flat open as are US stock futures. 
• Oil prices rose on Tuesday, as the potential for more sanctions on Russia added to concerns about supply disruptions while Iran nuclear talks stalled.  Meantime, Japan reportedly will make a decision on its release plan swiftly after receiving official notification from the IEA about a second round of a coordinated action. 
• The Reserve Bank of Australia, this morning, kept the cash rate unchanged at a record low of 0.1% for the 16^th month in a row, as expected.  While noting that Australia’s inflation has increased and a further increase was expected, the board said it wanted to see actual evidence that the price level is sustainably within the 2 to 3% target range before it increases interest rates. 
• The US Treasury has halted dollar debt payments from Russian government accounts at US banks, increasing pressure on Moscow to find alternative funding sources to pay bond investors.  The move is designed to force Russia into choosing between three unappealing options – draining dollar reserves held in its own country, spending new revenue, or going into default. 
• Twitter shares jumped over 28% on Monday after a regulatory filing showed Tesla CEO Elon Musk owns nearly 73.5 million of the social media company’s shares, equal to a 9.2% stake, making him the company’s largest shareholder.