D-PIMS Weekly Market Update - Week of 16th to 22nd May 2022
Today’s Monday update:
Over the course of last week, market moving headlines were mostly related to the invasion of Ukraine and economic matters:
• On Monday, Shanghai set out plans for the end of a painful COVID-19 lockdown of 25 million residents that has lasted more than six weeks, heavily bruising China's economy, and for the return of more normal life in phases from 1st June.
Ukrainian troops counter-attacking against Russian forces in the country's northeast have pushed them back from the city of Kharkiv and advanced as far as the border with Russia, Ukrainian officials said on Monday.
Irish Foreign Minister Simon Coveney said on Monday that the European Union is ready to talk with Britain to resolve the issues in their Northern Irish trade dispute, but the current treaty of the Northern Ireland Protocol must remain.
McDonald's Corp said on Monday, that it has started a process to sell all of its 847 restaurants in Russia, exiting the country after more than 30 years following its invasion of Ukraine. The decision to sell its Russia assets, including the iconic Pushkin Square location in central Moscow, marks a major retreat by an iconic Western brand. Once a symbol of flourishing American capitalism in the dying embers of the Soviet Union, the store was the first to be opened in the country in 1990. More than 5,000 people had attended the opening.
• On Tuesday, British Foreign Secretary Liz Truss said she intends to introduce legislation in the coming weeks to make changes to the Northern Ireland protocol, which was part of the Brexit divorce deal. She said a legislative solution was not about scrapping the Northern Ireland protocol and remained consistent with Britain's obligations in international law. Truss said Britain's preference remained a negotiated solution with the European Union and would continue speaking to EU negotiator Maros Sefcovic. She said she had invited Sefcovic to London for more talks as soon as possible.
Ukraine's military said on Tuesday, it was working to evacuate all remaining troops from their last stronghold in the besieged port of Mariupol, ceding control of the city to Russia after months of bombardment.
• On Wednesday, Finland and Sweden formally applied to join NATO, prompted by Russia's invasion of Ukraine and triggering one of the most significant changes in Europe's security architecture in decades. Finland and Sweden were both neutral throughout the Cold War and their decision to join NATO reflects the sweeping shift in public opinion in the Nordic region since Russia's 24th February invasion.
British inflation surged last month to its highest annual rate since 1982, piling pressure Chancellor Rishi Sunak to step up his help for households facing a worsening cost-of-living crisis. Consumer price inflation hit 9% in April, the Office for National Statistics said on Wednesday, surpassing the peaks of the early 1990s recession. Reuters' poll of economists had pointed to a reading of 9.1%.
• On Thursday, British manufacturers reported the joint-strongest growth in orders this month since records began, while output rose at the fastest rate since last July, figures from the Confederation of British Industry (CBI) showed. The CBI's headline order book index - which measures the extent to which order levels are above or below normal, rose to +26 in May from +14 in April, matching previous records from March and November. "Manufacturers have reported output growth and order books improving in May. But cost pressures remain acute and are pushing manufacturers to raise prices," CBI deputy chief economist Anna Leach said.
Turkey has told allies that it will reject Sweden and Finland's membership to NATO, Turkish President Tayyip Erdogan said in a video posted on his Twitter account on Thursday.
The top U.S. military officer, General Mark Milley, spoke by telephone with Russia's Chief of General Staff Valery Gerasimov, the Pentagon said on Thursday, the first conversation between the two since Russia's invasion of Ukraine in February. "The military leaders discussed several security-related issues of concern and agreed to keep the lines of communication open," said a spokesman for Milley, the chairman of the U.S. Joint Chiefs of Staff.
The U.S. Senate overwhelmingly approved nearly $40 billion in new aid for Ukraine on Thursday, sending the bill to the White House for President Joe Biden to sign into law as Washington races to keep military assistance flowing nearly three months after Russia's invasion. The Senate voted 86-11 in favour of the emergency package of military, economic and humanitarian assistance, by far the largest U.S. aid package for Ukraine to date. All 11 no votes were from Republicans.
• Figures out on Friday, showed that British retail sales jumped unexpectedly in April as shoppers loaded up on alcohol and tobacco. Retail sales volumes rose 1.4% month on month after a 1.2% drop in March, the Office for National Statistics said. Economists polled by Reuters had expected a 0.2% monthly fall.
• Over the week, the main global stock markets were mixed, with Far Eastern markets up and the rest down, especially in the US. Tensions over Russian sanctions and rising yields on Government Bonds weighed on markets. Over the week, the D-PIMS portfolios were a little down, and were helped by their China, domestic UK and some technology allocations.
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