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D-PIMS Weekly Market Update - Week of 2nd to 8th 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, the European Union prepared sanctions on Russian oil sales over its invasion of Ukraine, after a major shift by Germany, Russia's biggest energy customer, that could deprive Moscow of a large revenue stream within days. Kyiv says Russia's energy exports to Europe, so far largely exempt from international sanctions, are funding the Kremlin war effort with millions of euros every day. Germany said it was prepared to back an immediate EU embargo on Russian oil. "We have managed to reach a situation where Germany is able to bear an oil embargo," German Economy Minister Robert Habeck said.

• Tuesday - Two months after warning that Beijing appeared poised to help Russia in its fight against Ukraine, senior U.S. officials say they have not detected overt Chinese military and economic support, a welcome development in the tense U.S.-China relationship. As well as steering clear of directly backing Russia's war effort, China has avoided entering new contracts between its state oil refiners and Russia, despite steep discounts.

British factory activity edged up in April after slowing to its weakest in just over a year in March following Russia's invasion of Ukraine, but manufacturers were wary about the outlook as costs leapt and demand faltered, a survey showed on Tuesday.

British Prime Minister Boris Johnson said on Tuesday, that a windfall tax on energy companies would hamper investment and keep oil prices higher over the long term. "If you put a windfall tax on the energy companies, what that means is that you discourage them from making the investments that we want to see that will, in the end, keep energy prices lower for everybody," Johnson told ITV when asked about the government's plans to ease a cost-of-living crisis.

• On Wednesday, the Federal Reserve on Wednesday raised its benchmark overnight interest rate by half a percentage point, the biggest jump in 22 years, and the U.S. central bank's chief made an appeal to Americans struggling with high inflation to be patient while officials take the hard measures to bring it under control. In a widely expected move, the Fed set its target federal funds rate to a range between 0.75% and 1% in a unanimous decision. Fed Chair Jerome Powell said policymakers were ready to approve half-percentage-point rate hikes at upcoming policy meetings in June and July. In a news conference after the release of the Fed's policy statement, Powell explicitly ruled out raising rates by three-quarters of a percentage point in a coming meeting, a comment that triggered a stock market rally.

• On Thursday, the Bank of England sent a stark warning that Britain risks a double-whammy of a recession and inflation above 10% as it raised interest rates on Thursday to their highest since 2009, hiking by quarter of a percentage point to 1%.

Germany has started filling the huge Rehden gas storage facility abandoned by Russia's Gazprom, the site's state-appointed manager said on Thursday, as Europe's biggest economy looks to guard against the risk of Moscow turning off supplies.

• On Friday, Ukraine said a new attempt was under way to evacuate scores of civilians trapped in a heavily bombed steel works in the city of Mariupol, after bloody fighting with Russian forces thwarted efforts to bring them to safety the previous day.

Germany will deliver seven self-propelled howitzers to Ukraine, on top of five such artillery systems the Dutch government already pledged, German Defence Minister Christine Lambrecht said on Friday. Germany reversed its long-held policy of not sending heavy weapons to war zones last week, following pressure at home and abroad for it to help Ukraine fend off Russian attacks.

• Over the week, the main global stock markets were all down, especially China and Hong Kong. Central Bank’ interest rate increases and rising yields on Government Bonds weighed on markets. Over the week, the D-PIMS portfolios were down.

The value of investments and the income from them can fall as well as rise and you may not get back the original amount you invested.

Past Performance is no guarantee of, or guide to future returns.

The comments made above represent our interpretation of events and market views and are in no way a guarantee of future investment performance.