D-PIMS Weekly Market Update - Week of 30th May to 5th June 2022
Today’s Monday update:
Over the course of last week, shortened by the Queen’s Jubilee holiday, market moving headlines were mostly related to the invasion of Ukraine and economic matters:
• On Monday, reports showed that Russia's invasion of Ukraine has reconfigured the global oil market, with African suppliers stepping in to meet European demand and Moscow, stung by Western sanctions, increasingly tapping risky ship-to-ship transfers to get its crude to Asia. The re-routings mark the biggest supply-side shakeup of the global oil trade since the U.S. shale revolution altered the shape of the market around a decade ago and suggest Russia will be able to navigate a European Union oil ban, provided Asia and China continue to buy its crude.
Russian Security Council Deputy Chairman Dmitry Medvedev said on Monday, that Washington's decision not to send Ukraine rocket systems that could reach into Russia was 'rational'. President Joe Biden said on Monday that the United States will not send Ukraine rocket systems that can reach into Russia, after it was reported Washington was preparing to send advanced long-range rocket systems to Kyiv.
• On Tuesday, European Union leaders agreed in principle on Monday to cut 90% of oil imports from Russia by the end of this year, resolving a deadlock with Hungary over the bloc's toughest sanction yet on Moscow since the invasion of Ukraine three months ago. Diplomats said the agreement would clear the way for other elements of a sixth package of EU sanctions on Russia to take effect, including cutting Russia's biggest bank, Sberbank, from the SWIFT messaging system. "Agreement to ban export of Russian oil to the EU," said European Council President Charles Michel in a tweet at the end of the first day of a two-day summit of the bloc's 27 leaders. "This immediately covers more than 2/3 of oil imports from Russia, cutting a huge source of financing for its war machine. Maximum pressure on Russia to end the war," he said.
Shanghai authorities on Tuesday began dismantling fences around housing compounds and ripping police tape off public squares and buildings, to the relief of the city's 25 million residents, before a painful two-month lockdown is lifted at midnight. The prolonged isolation has fuelled public anger and rare protests inside Shanghai and battered the city's manufacturing and export-heavy economy, disrupting supply chains in China and around the world, and slowing international trade. Residents will have to tests every 72 hours to take public transport and enter public venues. Tough quarantine is still in store for anyone catching COVID and their close contacts. The end of Shanghai's lockdown does not mean returning to pre-COVID ways of living.
• On Wednesday, Russian troops fought to take complete control of the eastern industrial city of Sievierodonetsk, as the United States said it will provide Ukraine with advanced rockets to help it force Moscow to negotiate an end to the war. President Joe Biden said the United States would provide Ukraine with more advanced rocket systems and munitions so it can "more precisely strike key targets on the battlefield". "These systems will be used by the Ukrainians to repel Russian advances on Ukrainian territory, but they will not be used on targets in Russian territory," the U.S. official told reporters.
Russia said on Wednesday that it did not rule out a meeting between President Vladimir Putin and his Ukrainian counterpart Volodymyr Zelensky, but that any such talks needed to be prepared in advance. Kremlin spokesman Dmitry Peskov told reporters in a call that work on a peace document with Ukraine had stopped a long time ago and had not restarted.
• Over the short week, the main global stock markets were mixed, with US and European markets down and Far Eastern markets up. Ongoing inflation and growth concerns were still holding markets back. Over the week, all the D-PIMS Portfolios were up apart from the Low to Medium Risk Portfolio, which was flat. The Portfolios were helped by their China 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.