D-PIMS Weekly Market Update - Week of 4th to 10th July 2022
Today’s Monday update:
Over the course of last week, market moving headlines were mostly related to political and economic matters and Ukraine:
• On Monday, Ukraine was holding talks with Turkey and the United Nations to secure guarantees for grain exports from Ukrainian ports, President Volodymyr Zelensky said. "Talks are in fact going on now with Turkey and the U.N. (and) our representatives who are responsible for the security of the grain that leaves our ports," Zelensky told a news conference alongside Swedish Prime Minister Magdalena Andersson. Ukraine, one of the world's leading grain exporters, accuses Russia of blocking the movement of its ships, and Zelensky said 22 million tonnes of grain was stuck at the moment with a further harvest of about 60 million tonnes expected in the autumn.
• On Tuesday, a closely watched part of the U.S. Treasury yield curve inverted again, as investors continue to price in the chance that the Federal Reserve's aggressive move to bring down inflation will push the economy into recession. Yields on two-year Treasuries briefly rose above those of 10-year Treasuries for the third time this year, a phenomenon known as a yield curve inversion that has in the past preceded U.S. recessions.
• On Wednesday, at least 13 British lawmakers left Prime Minister Boris Johnson's government in less than 24 hours, including Chancellor Rishi Sunak, saying the British leader no longer has their confidence and plunging his government into crisis.
Ukrainian defenders fought desperately to withstand a major Russian offensive in the Donetsk region, with the enemy laying down heavy artillery fire to pave the way for ground forces to advance, a senior Ukrainian official said on Wednesday. Russia says it wants to wrest control of the entire Donbas from Ukraine on behalf of Moscow-backed separatists in two self-proclaimed people's republics.
• On Thursday, Boris Johnson said he was resigning as Britain's prime minister, bowing to calls from ministerial colleagues and MPs in his Conservative Party. "The process of choosing that new leader should begin now," Johnson said at the door of Number 10 Downing Street.
A spike in stock market listing applications from Chinese companies in June has nearly doubled China's IPO (Initial Public Offering) candidates to almost 1,000, the highest in at least three years, potentially making the country a bright spot for bankers as equity offerings slow in other markets. The rush was partly due to China's easing of COVID curbs last month, bankers say. The IPO hopefuls also scrambled to submit their applications by 30th June to avoid having to refresh them with first-half results and further delay the process.
• On Friday, U.S. employers hired far more workers than expected in June and continued to raise wages at a steady rate, signs of persistent labour market strength that give the Federal Reserve ammunition to deliver another 75-basis-point interest rate hike this month. Nonfarm payrolls increased by 372,000 jobs last month. US employment is now 524,000 jobs below its level in February 2020.
Long one of the globe's economic stars, Germany is on a brink of a reversal of fortune which some fear imperils the prosperity built by its post-war generation. In May, Europe's biggest economy imported more than it exported for the first time in three decades, breaking a winning streak as a "global export champion" since the country's reunification.
• Over the week, the main global stock markets mostly up, with India and Japan faring the best and Hong Kong the worst. Over the week, all the D-PIMS Portfolios were well up, especially the higher risk portfolios. The Portfolios were helped by their Japan, technology and US Smaller Company 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.