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.
European markets are heading for a higher open Tuesday as investors in the region appear to shrug off concerns among their US and Asia-Pacific counterparts over China’s tightening of Covid restrictions, which continue to pressure output. The UK’s FTSE index is expected to open 27 points higher at 7,407, Germany’s DAX up 33 points at 14,419, France’s CAC up 20 points at 6,653, and Italy’s FTSE MIB up 70 points at 24,433, according to data from IG. Futures tied to the Dow Jones Industrial Average gained 9 points or 0.03%. S&P 500 futures were 0.08% higher while Nasdaq 100 futures added 0.1%. It follows a volatile trading day that brought the major three indexes down. The Dow dropped 45.41 points, or 0.13%, to 33,700.28.
Summary
- Investors continue to watch economic data closely and assess how it could affect the trajectory of monetary policy from central banks.
- The yield on 10-year treasuries was little changed at 3.82%.
- The dollar fell after advancing Monday amid an appetite for haven assets.
- China saw its first deaths from Covid in the mainland since May over the weekend. It prompted fears among investors that the country could bring back restrictions meant to slow virus spread, which would hurt business.
- A gauge of Asian equities came off its intraday highs as equities in Hong Kong slid with China’s daily virus infections climbing to near the highest on record. Covid-control restrictions now affect a fifth of China’s economy.
- Crude oil dropped to prices not see since January in Monday trading.
- German gas trader VNG is nearing a multibillion-euro rescue deal.
- UK opposition leader Starmer is expected to warn that days of cheap labour must end.
- Disney’s 6.3% gain following the return of Bob Iger as its CEO helped mitigate losses for the 30-stock index. Meanwhile the S&P 500 and Nasdaq Composite shed 0.39% and about 1.1%, respectively.
- Musk said Twitter is to hold off relaunching its blue check verification.
- Amazon has lost some of its lustre this year. The e-commerce giant’s stock has fallen more than 40%, well underperforming the S&P 500, which has declined about 15% in the same period.
- Coinbase shares have tumbled as the bitcoin slide continues, and investors fear contagion from FTX’s collapse.
