D-PIMS Weekly Market Update - Week of 29th August to 4th September 2022
Today’s weekly update:
Over the course of last week, shortened by the Bank Holiday, market moving headlines were mostly related to economic geopolitical matters:
• On Tuesday, Ukrainian President Volodymyr Zelenskiy urged Russian troops to flee for their lives as his forces launched an offensive near the city of Kherson, saying Ukraine's military were taking back their territory though Russia said the assault had failed. Ukraine's offensive in the south comes after weeks of a stalemate in the war.
Russia's Gazprom reduced gas deliveries to Engie on Tuesday in a dispute over contracts, the French utility said, deepening winter energy supply concerns. Europe is already on notice that Gazprom will shut off the Nord Stream 1 gas pipeline to Germany from Aug 31 to Sept 2 for maintenance and there is some concern that Moscow, which has already cut the pipeline's supply to just 20% of capacity, may step up pressure by delaying the restart. In its statement, Engie gave no details on the nature of the dispute between it and Gazprom over the application of contracts.
• On Wednesday, Ukrainian troops have attacked Russian positions along the entire front, Ukrainian President Volodymyr Zelenskiy said, while Russia halted gas supplies via a major pipeline to Germany citing the need for maintenance. Ukraine, armed with sophisticated Western-supplied weapons, launched a fresh push this week to reclaim territory in its south. Zelenskiy, said his forces were also on the offensive in the east. Separately, a team from the U.N. nuclear watchdog set off from Kyiv towards the Zaporizhzhia nuclear plant in Ukraine's south to assess any damage after shelling nearby sparked fears of a radiation disaster.
• On Thursday, a team of U.N. experts arrived at Ukraine's Zaporizhzhia atomic plant complex, to assess the risk of a radiation disaster after being delayed several hours by shelling near the site. Russia and Ukraine accused each other of trying to sabotage the mission of the International Atomic Energy Agency (IAEA) to the plant in southern central Ukraine, which is controlled by Russian forces but operated by Ukrainian staff.
• Figures out on Friday, showed that U.S. employers hired slightly more workers than expected in August, keeping the Federal Reserve on track to deliver a third 75 basis points interest rate hike this month, though the unemployment rate increased to 3.7%. Nonfarm payrolls increased by 315,000 jobs last month, the Labour Department said in its closely watched employment report. That marked the 20th straight month of job growth. Economists polled by Reuters had forecast payrolls increasing 300,000. Estimates ranged from as low as 75,000 to as high as 450,000. The unemployment rate increased to 3.7% from a pre-pandemic low of 3.5% in July.
Europe is anticipating the prospect of Liz Truss as Britain's next prime minister with a mixture of irritation and unease: diplomats say that with the war in Ukraine and rampant inflation, the last thing they need is another Brexit battle. Frontrunner in the Conservative party contest to succeed Boris Johnson, Truss has few admirers across the 27-nation European Union to start with. As foreign minister, she championed legislation that would unilaterally tear up part of Britain's divorce deal with the EU and has promised, as prime minister, to get it passed - a move that would put London on a collision course with Brussels.
• Over the week, the main global stock markets were mostly down, especially the Far East and the US. Over the week, the D-PIMS portfolios were down, especially the higher risk portfolios. Rising Bond yields and fears about interest rate rises form the US Federal Reserve Chairmans weighedon markets. The Portfolios were helped by some Absolute Return holdings.
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