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D-PIMS Weekly Market Update - Week of 15th to 22th 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, British Prime Minister Boris Johnson's government won a confidence vote it had called in itself, with members of the governing Conservative Party voting in support of ministers to avoid triggering a national election. The opposition Labour Party has called on Johnson, who has said he will step down, to be replaced immediately by a caretaker leader until his successor is elected by the Conservative Party in early September. The government won the vote by 349 to 238.

Former chancellor Rishi Sunak won the most support in the third round of voting to find a replacement for Prime Minister Boris Johnson on Monday.

• On Tuesday, France's government is offered to pay 9.7 billion euros to take full control of EDF, in a buyout deal that gives it a free hand to run Europe's biggest nuclear power operator as it grapples with a continent-wide energy crisis. The finance ministry said in a statement on Tuesday that the government would offer EDF's minority shareholders 12 euros per share, a 53% premium to the closing price on 5th July, the day before the government announced its intention to fully nationalise the debt-laden group.

Russian gas flows via the Nord Stream 1 pipeline were seen restarting on time on Thursday after the completion of scheduled maintenance, two sources familiar with the export plans told Reuters. The pipeline, which accounts for more than a third of Russian natural gas exports to the European Union, was halted for ten days of annual maintenance on 11th July.

• On Wednesday, the European Union set out emergency plans to curb gas usage after President Vladimir Putin warned the bloc that Russian supplies sent via the biggest pipeline to Europe, Nord Stream 1, were at risk of being reduced further. The disruptions have hampered Europe's efforts to refill gas storage before winter, raising the risk of rationing and another hit to fragile economic growth if Moscow further restricts supplies in retaliation for Western sanctions over the war in Ukraine.

Former chancellor Rishi Sunak and foreign secretary Liz Truss made the final two candidates on Wednesday to become Britain's next prime minister, kickstarting the last stage of the contest to replace Boris Johnson. Sunak has led in all rounds of the voting among Conservative lawmakers, but it is Truss, who seems to have gained the advantage so far among the around 200,000 members of the governing party who will ultimately choose the winner.

• On Thursday, Russia resumed supplies of gas via the Nord Stream 1pipeline to Europe, the pipeline operator said, amid concerns Moscow would use its vast energy exports to push back against Western pressure over its invasion of Ukraine. A spokesperson for Austria's OMV, said Russia's Gazprom signalled it would deliver around 50% of agreed gas volumes via Nord Stream on Thursday, levels seen before the shutdown. Concern that Russian supplies of gas sent through Nord Stream 1 pipeline could be stopped by Moscow prompted the European Union to tell member states on Wednesday to cut gas usage by 15% until March as an emergency step.

• On Friday, Russia and Ukraine signed a landmark deal to reopen Ukrainian Black Sea ports for grain exports, raising hopes that an international food crisis aggravated by the Russian invasion can be eased. The accord crowned two months of talks brokered by the United Nations and Turkey aimed at what U.N. Secretary General Antonio Guterres called a "package" that would both restore Ukrainian grain exports while easing Russian grain and fertilizer shipments despite tough Western sanctions on Moscow. Guterres said the accord opens the way to significant volumes of commercial food exports from three key Ukrainian ports – Odesa, Chernomorsk and Yuzhny, and the U.N. would set up a coordination centre to monitor implementation of the deal.

• On Saturday/Sunday, Moscow said that Russian air strikes on the Ukrainian port city of Odesa were aimed at military targets including a stockpile of U.S. supplied missiles. The attack on Saturday raised doubts over Moscow's willingness to abide by a crucial agreement reached on Friday to unblock Ukraine’s seaports to allow for the transport of millions of tons of grain and other agricultural products. But the government in Kyiv vowed to push on with efforts to restart exports of grain and other crops. Ukraine "will not back down from our goal of unlocking seaports," Ukrainian Infrastructure Minister Oleksandr Kubrakov said on Facebook. “We continue technical preparations for the launch of exports of agricultural products from our ports.”

• Over the week, the main global stock markets were up, with the UK domestic index faring the best and China the worst. Over the week, all the D-PIMS portfolios had a strong positive week, particularly the higher risk portfolios. The Portfolios were helped by their UK Mid Cap and US smaller company 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.