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D-PIMS Weekly Market Update - Week of 5th to 11th September 2022

Today’s Monday update:

Over the course of last week, shortened by the Bank Holiday, market moving headlines were mostly related to economic and geopolitical matters:

• On Monday, European gas prices rocketed as much as 30% higher after Russia said one of its main gas supply pipelines to Europe would stay shut indefinitely, stoking renewed fears about shortages and gas rationing in the European Union this winter. The Nord Stream pipeline, which runs under the Baltic Sea to Germany, historically supplied about a third of the gas Russia exported to Europe, but it was already running at just 20% of capacity before flows were halted last week for maintenance.

European leaders sought to ease the impact of high energy prices across the continent after Ukrainian President Volodymyr Zelenskiy warned of a difficult winter, even as he reported progress in a counter-offensive against Russian troops.

Liz Truss was named as Britain's next prime minister on Monday, winning a leadership race for the governing Conservative party at a time when the country faces a cost-of-living crisis, industrial unrest, and a recession.

• On Tuesday, Liz Truss took over as Britain's prime minister on Tuesday, vowing immediate action to tackle one of the most daunting set of challenges for an incoming leader in post-War history led by soaring energy bills, looming recession, and industrial strife. Truss, the fourth Conservative prime minister in six years and successor to Boris Johnson, acknowledged the severe global headwinds from Russia's invasion of Ukraine and the COVID-19 pandemic.

Britain's new Prime Minister Liz Truss is expected to not activate the so-called "Article 16" emergency measures in the Northern Ireland Protocol in the coming weeks, the Financial Times reported on Tuesday, citing her allies.

• On Wednesday, Russian President Vladimir Putin said on Wednesday he wanted to discuss reopening a U.N.-brokered deal that allows Ukraine to export its grain via the Black Sea after accusing Kyiv and the West of using it to deceive developing countries and Russia. Putin's criticism, which alleged that the deal was delivering grain, fertiliser and other foodstuffs to the European Union and Turkey at the expense of poor countries, is likely to raise fears that the pact could unravel if it cannot be successfully renegotiated.

The European Commission will propose a price cap on Russian gas, alongside measures including a mandatory EU cut in electricity use during peak hours, and a cap on the revenues of non-gas power generators, the bloc's chief said on Wednesday.

Britain's new Prime Minister Liz Truss said on Wednesday her preference is to find a negotiated settlement with the European Union to resolve the issues around the contentious rules that govern post-Brexit trade with Northern Ireland. The stand-off over the Northern Ireland protocol is by far the biggest of several issues straining relations between the EU and Britain and could lead to a trade war if London presses ahead with legislation effectively tearing up some of the rules.

Sterling's slide against the dollar to a rate last seen in 1985 has sparked talk of a dramatic spiral downwards that ends in a collapse in confidence in British assets and a balance of payments crisis. The currency fell to as low as $1.1407 on Wednesday as investors grow fearful of the economic outlook. Sterling has lost nearly 10% of its value since early June -- a huge move for one of the world's major G10 currencies.

• On Thursday, Ukrainian leader Volodymyr Zelenskiy spoke of "good news" on the battlefields of eastern Ukraine, saying his army had retaken some towns and villages from Russia in what open-source analysts said looked like a deep and sudden thrust behind Russian lines.

Russian President Vladimir Putin threatened to halt all energy shipments to Europe, if Brussels goes ahead with a proposal to cap the price of Russian gas, in a combative speech declaring Russia would not lose the war in Ukraine.

The crowning achievement of Britain's Queen Elizabeth, who died on Thursday after 70 years on the throne, was to maintain the popularity of the monarchy across decades of seismic political, social and cultural change that threatened to make it an anachronism. A dignified, dependable figure who reigned longer than any other British monarch, Elizabeth helped steer the institution into the modern world, stripping away court ritual and making it somewhat more open and accessible, all in the glare of an increasingly intrusive and often hostile media.

• On Friday, Russian state television broadcast an interview, acknowledging that Kyiv had achieved a "substantial victory", after Ukrainian forces burst through the frontline in a lightning advance. The Ukrainian breakthrough near Kharkiv was the fastest advance reported by either side for months, and one of the biggest shifts in the war's momentum since Russian forces abandoned a disastrous assault on the capital Kyiv in March.

The Bank of England on Friday postponed the next week's interest rate decision following the death of Queen Elizabeth, its first delay to a monetary policy meeting since the central bank became operationally independent 25 years ago. Sterling fell slightly against the dollar as the BoE said it was rescheduling its next announcement on interest rates and other decisions until 22nd September from an original date of 15th September.

• Over the week, the main global stock markets were up, especially the US. Over the week, the D-PIMS portfolios were all up especially the higher risk portfolios. Markets were helped by some positive economic news. The Portfolios were helped by Natural Resources and US Smaller Company allocations.
 

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.


 

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