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 started off the new week with significant losses, as protests in China over its zero-tolerance Covid policy kept investors on edge. The Dow Jones Industrial Average and the S&P 500 both fell by 1.5%, while the Nasdaq Composite tumbled 1.6% in moderate volume. Shares in Europe also finished lower, with the Euro Stoxx 50 Index down 0.7% for the day.
Summary
- Asian equity markets mostly rose on Tuesday, with Hong Kong and mainland China shares leading the advance as heavy police presence deterred further Covid protests in China, while policy support from Beijing boosted property firms. Shares in Australia and South Korea also eked out gains, while Japanese equities fell after Fed officials signalled that rates will continue to rise well into next year.
- European markets are headed for a flat start while US equity futures held steady early Tuesday morning.
- Oil prices steadied on Tuesday as traders weighed a weakening demand outlook against speculations that OPEC+ may agree on another production cut in its next meeting to support oil prices.
- European Union states debated whether to set a price cap as low as $62 a barrel on exports of Russian crude oil after several countries demanded a level that could put more pressure on Moscow, although diplomats said the talks remain stuck. Poland and the Baltic nations said the price level was still too high, according to the diplomats.
- Elon Musk claimed on Monday in a series of tweets that Apple had threatened to remove the Twitter app from the App Store as part of its app review moderation process. He also claimed that Apple had pulled most of its advertising from Twitter.
- Bitcoin tumbled to as low as $16,000 on Monday, as investors continued to fret about the stability of the sector and the financial health of some crypto exchanges following the insolvency of FTX. Crypto firm BlockFi was the last key player to file for Chapter 11 bankruptcy, with more than 100,000 creditors and a balance sheet with liabilities and assets ranging from $1 billion to $10 billion.
