D-PIMS Weekly Market Update - Week of 11th to 17th July 2022
Today’s Monday update:
Over the course of last week, market moving headlines were mostly related to political and economic matters and Ukraine:
• On Monday, the biggest single pipeline carrying Russian gas to Germany began annual maintenance, with flows expected to stop for 10 days, but governments, markets and companies are worried the shutdown might be extended because of the war in Ukraine. The Nord Stream 1 pipeline transports 55 billion cubic metres (bcm) a year of gas from Russia to Germany under the Baltic Sea. Maintenance lasts from July 11 to 21. Operator Nord Stream AG confirmed the shutdown started as planned at 0600 CET and that gas flows would drop to zero a few hours later. Last month, Russia cut flows to 40% of the pipeline's total capacity, citing the delayed return of equipment being serviced by Germany's Siemens Energy.
Oil prices fell in volatile trade on Monday, reversing most of the previous session's gains as markets braced for an expected drop in demand because of mass testing for COVID-19 in China, which outweighed ongoing concern over tight supply.
The Conservative Party will announce the replacement for British Prime Minister Boris Johnson on Sept. 5 following a vote among party members under rules agreed by the party's officials on Monday. The Conservative Party said the postal ballot of party members would be a choice between two candidates to be selected under an expedited process to whittle down the field from the 11 candidates.
• On Tuesday, Ukraine said it had carried out a successful long-range rocket strike against Russian forces in southern Ukraine, territory it says it is planning to retake in a counter-offensive using hundreds of thousands of troops. According to Ukraine, the strike hit an ammunition dump in the town of Nova Kakhovka in the Kherson region and killed 52 Russians. It came after Washington supplied Ukraine with HIMARS mobile artillery systems which Kyiv says its forces are starting to use with ever greater efficacy.
• Figure out on Wednesday, showed that U.S. consumer prices surged 9.1% in June, the largest annual increase in more than four decades amid stubbornly high costs for gasoline, food and rent, cementing the case for another 75-basis-point interest rate hike by the Federal Reserve this month. The larger-than-expected increase in the year-on-year consumer price index reported by the Labour Department also reflected higher prices for healthcare, motor vehicles, apparel as well as household furniture. In the 12 months through June, the CPI jumped 9.1%. That was the biggest gain since November 1981 and followed an 8.6% rise in May. Economists polled by Reuters had forecast the CPI would rise 1.1% and accelerating 8.8% year-on-year.
• On Thursday, Ukraine, the United Nations and Turkey hailed progress at talks aiming to resume Black Sea grain exports blocked by Russia and ease the risk of starvation faced by millions, but an end to the war remained far off as heavy shelling continued. Turkey and Ukraine said a joint coordination centre with Russia and the United Nations would be set up. Turkey's Defence Minister Hulusi Akar said an agreement would be signed next week. Ankara will ensure the safety of shipments in transit and the parties will jointly check grain cargoes in ports, he added, but U.N. chief Antonio Guterres said more work was needed before a deal was finalised.
• Over the week, the main global stock markets were mostly down, with Japan faring the best and China the worst. Over the week, the D-PIMS Low to Medium risk portfolio was up and the rest down, especially the higher risk portfolios. The Portfolios were helped by their Japan and some Absolute Return holdings.
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The comments made above represent our interpretation of events and market views and are in no way a guarantee of future investment performance.