D-PIMS Weekly Market Update - Week of 22nd to 28th August 2022
Today’s weekly update:
Over the course of last week, market moving headlines were mostly related to economic geopolitical matters:
• On Monday, a senior U.S. official told Reuters that Iran has dropped some of its main demands on resurrecting a deal to rein in Tehran's nuclear program, including its insistence that international inspectors close some probes of its atomic program, bringing the possibility of an agreement closer. The United States aims to respond soon to a draft agreement proposed by the European Union that would bring back the 2015 nuclear deal with Iran that former President Donald Trump abandoned, and current President Joe Biden has sought to revive.
Taiwan wants to ensure its partners have reliable supplies of semiconductors, or "democracy chips", President Tsai Ing-wen told the governor of the U.S. state of Indiana on Monday, saying China's threats mean fellow democracies have to cooperate. Governor Eric Holcomb is making the third trip to Taiwan this month by a U.S. delegation after U.S. House Speaker Nancy Pelosi visited briefly, infuriating China, which views Taiwan as its own territory.
• On Tuesday, the Ukrainian agriculture ministry said that a total of 33 cargo ships carrying around 719,549 tonnes of foodstuffs have left Ukraine under a deal brokered by the United Nations and Turkey to unblock Ukrainian sea ports. The Joint Coordination Centre in Turkey that monitors implementation of the agreement put the total amount of grain and foodstuffs exported from three Ukrainian Black Sea ports since the deal was reached at 721,449 tonnes. Ukraine's grain exports slumped after Russia invaded the country on Feb. 24 and blockaded its Black Sea ports, driving up global food prices and prompting fears of shortages in Africa and the Middle East.
• On Wednesday, President Volodymyr Zelenskiy said that Ukraine was "reborn" when Russia invaded six months ago, marking 31 years of his country's independence from the Moscow-controlled Soviet Union with a vow to drive Russian forces out completely. After days of warnings that Moscow could use the anniversary of Ukraine's Independence Day to launch more missile attacks on major cities, Kyiv was unusually quiet and the second biggest city Kharkiv was under curfew after months of bombardment. The anniversary fell exactly six months after Russia sent tens of thousands of troops into Ukraine.
After half a year of war in Ukraine, a slim majority of Americans agree that the United States should continue to support Kyiv until Russia withdraws all its forces, according to a Reuters/Ipsos opinion poll released on Wednesday. The polling suggests continued support for President Joe Biden's policy of backing Ukraine, despite economic worries and domestic political developments grabbing Americans' attention in recent months.
• Figures out on Thursday, showed that British car production rose for a third straight month in July, 8.6% higher than a weak comparative last year, when car makers were struggling with acute shortages of chips and COVID-related absences, the Society of Motor Manufacturers and Traders (SMMT) said. The industry body said 58,043 units were made in Britain last month, up from 53,438 in July 2021, but the output remains 46.4% below pre-pandemic levels as the industry struggles with supply chain shortages, structural changes, and weak exports. The crisis in Ukraine, a major hub for automotive parts, as well as lockdowns in China and severe parts shortages have hurt car production in the United Kingdom.
• On Friday, the US Federal Reserve Chair Jerome Powell said The U.S. economy will need tight monetary policy "for some time" before inflation is under control, a fact that means slower growth, a weaker job market and "some pain" for households and businesses, in remarks warning there is no quick cure for fast rising prices. "Reducing inflation is likely to require a sustained period of below-trend growth. "These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain." He said.
The U.S. audit regulator said on Friday it has signed an agreement with Chinese regulators, taking a first step toward inspecting and investigating registered accounting firms in China and Hong Kong. The Public Company Accounting Oversight Board (PCAOB) said it was the most detailed and prescriptive agreement the regulator has ever reached with China. U.S. regulators have for long been demanding access to audit papers of Chinese companies listed in the United States, but Beijing has been reluctant to let overseas regulators inspect accounting firms, citing security concerns. The decision marks a major thaw in U.S.-China business relations and will be a huge relief for hundreds of Chinese companies and investors who have invested billions of dollars in the firms that have a chance to retain access to the world's deepest capital markets.
• Over the week, the main global stock markets were down, apart from China and Hong Kong. Over the week, the D-PIMS portfolios were down, especially the higher risk portfolios. Strong language from the Federal Reserve Chairman and falling bond values dragged on the portfolios. The Portfolios were helped by their Natural Resource and Gold 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.