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D-PIMS Weekly Market Update - Week of 23rd to 29th 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, U.S. President Joe Biden said he would be willing to use force to defend Taiwan, capping a series of critical comments about China while in Asia that an aide said represented no change in U.S. policy toward the self-ruled island. Biden's remarks, made during his first visit to Japan since taking office, and as Japanese Prime Minister Fumio Kishida looked on, appeared to be a departure from existing U.S. policy of so-called strategic ambiguity on Taiwan. Biden added it was his expectation that such an event would not happen or be attempted. A White House official later said there was no change in policy towards Taiwan. China's foreign ministry said the United States should not defend Taiwan's independence.

• On Tuesday, U.S. President Joe Biden said that the crisis in Ukraine was a global issue which heightened the importance of maintaining international order, territorial integrity and sovereignty. "This is more than just a European issue. It's a global issue," Biden said of the Ukraine situation at the ‘Quad’ meeting of the United States, Japan, India and Australia.

The United States is confident that Finland and Sweden will be able to resolve Turkish concerns for their membership to NATO, Deputy U.S. Defence Secretary Kathleen Hicks said on Tuesday.

Russia has not yet seen an Italian peace plan for Ukraine, but hopes to receive it through diplomatic channels, Kremlin spokesperson Dmitry Peskov said on Tuesday.

• On Wednesday, the Interfax news agency cited Russian Deputy Foreign Minister Andrei Rudenko, as saying that Russia is ready to provide a humanitarian corridor for vessels carrying food to leave Ukraine, in return for the lifting of some sanctions. Western powers have been discussing the idea of setting up "safe corridors" for grain exports from Ukraine's ports, adding that any such corridor would need Russian consent.

The United States pushed Russia closer to the brink of a historic debt default on Wednesday by not extending its license to pay bondholders, as Washington ramps up pressure on the country following its invasion of Ukraine. Almost $2 billion worth of payments on Russian international bonds fall due before year-end.

• On Thursday, Britain announced a 25% windfall tax on oil and gas producers' profits, alongside a £15 billion package of support for households struggling to meet soaring energy bills. The move, which will give each UK household a £400 discount on their energy bill and more for lowest-income households, marks a change of heart for Prime Minister Boris Johnson's government which had previously resisted windfall taxes, calling them a deterrent to investment.

Ukraine is desperately trying to export its vast stores of grain by road, river and rail to help avert a global food crisis but has no chance of hitting its targets unless Russia's blockade of its Black Sea ports is lifted, a government official said on Thursday. Before Russia sent troops into Ukraine on 24th February, the country had the capacity to export up to 6 million tonnes of wheat, barley and maize a month, but exports collapsed to just 300,000 tonnes in March and 1.1 million in April. At the moment, Ukraine has at least 20 million tonnes of surplus grain in silos and the APK-Inform agricultural consultancy estimates another 40 million could be available for export once the next harvest comes in this summer

• Ukrainian President Volodymyr Zelensky on Friday said Ukraine was not eager to talk to Russia's Vladimir Putin, but that it has to face the reality that this will likely be necessary to end the war.

Figures out on Friday, showed that U.S. consumer spending rose more than expected in April as households boosted purchases of goods and services, and the increase in inflation slowed, which could underpin economic growth in the second quarter amid rising fears of a recession. The economy's near-term prospects were also brightened by other data from the Commerce Department on Friday showing the goods trade deficit narrowed sharply last month. A record trade deficit caused a contraction in output in the first quarter.

• Over the week, the main global stock markets were mixed, with US and European markets up and Far Eastern markets down. Ongoing inflation and growth concerns were still holding markets back, although lower yields on Government Bonds helped. Over the week, all the D-PIMS Portfolios were up, and were helped by their diversity and Technology allocations.


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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.