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 rose for a second day on Tuesday, as investors braced for the Federal Reserve’s policy decision and evaluated broadly positive corporate reports and strong economic data. European stocks also finished Tuesday’s session in the green with gains of 0.7% or higher for both the French CAC40 and the German DAX.
Summary
- Shares in Asia were lower in Wednesday trade, with Hong Kong’s Hang Seng leading the decline as shares of Tencent and Alibaba both declined at least 3% each. Elsewhere, the Kospi in South Korea dipped 0.2% while the ASX 200 in Australia sat fractionally lower. Markets in Japan and mainland China are closed on Wednesday for holidays.
- Futures point to a cautious start for European stocks while their US counterparts drifted flat to slightly positive.
- Oil prices climbed by 1% on Wednesday, amid drawdowns in US crude and fuel stockpiles. Meantime, the EU is working on new sanctions against Russia that will target its oil industry.
- Russia is focusing on cementing both military and political control over the territory it has taken so far in Ukraine after making only marginal gains in the east. The Kremlin is installing occupation governments, ordering locals to use rubles for transactions and planning hastily organized referendums in some areas to open the way for full annexation.
- AMD reported first quarter earnings after the bell on Tuesday, beating analyst estimates for earnings and revenue, sending the stock up as much as 8% in extended trading.
- Airbnb reported better-than-expected results overnight and gave an upbeat forecast for the second quarter, as the company sees a rebound in travel coming out of the pandemic. The shares rose more than 6% in after-hours trading.
- Lyft stock plunged 26% on Tuesday after the ride hail company said it would have to spend more heavily to attract drivers and forecast operating earnings less than a quarter of Wall Street targets, reflecting the added costs.
- Starbucks’ US same-store sales were up 12%, beating expectations of nearly 9%, but revenue and EPS came in just a bit below expectations. Sales in China decreased 23% following a rise in Covid-19 cases and government shutdowns. The company suspended its outlook for this year.
