Your weekly news into global investments.
While US inflation remains elevated, and well above the 2% target set by the Fed, the market was pleasantly surprised by a lower-than-expected annual rise in consumer prices during July.
Just as global risk appetite started to improve, geopolitical tension flared up again. This time between China and the United States (US).
A notable change this week was the tone of the Fed on interest rate hikes. Over the past few months, we have all become accustomed to the hawkish tone of the Fed and its message that interest rates will be hiked as much, and as quickly, as needed to fight inflation.
The ECB took centre stage on Thursday, as investors anxiously awaited its interest rate decision. With inflation at record-high levels, markets had been anticipating a hike.
The release of the Spring 2022 Economic Forecast by the European Commission is anything but rosy. It paints a sombre picture of the economic outlook for Europe and highlights the uncertainty that faces the region.
After a controversial, and at times chaotic, three years as Prime Minister, Boris Johnson resigned on Thursday. Johnson was elected as the leader of the Conservative Party and Prime Minister in 2019.
Investors have long been gearing up for a recession, and this week saw United States (US) Federal Reserve (Fed) Chairman, Jerome Powell, acknowledge that aggressive rate hikes may result in an economic downturn, however Powell also stated that a recession would be preferable to a prolonged period of high inflation.
Globally, the shift away from Russian resources, in particular gas and oil, has seen many countries seeking alternatives. The United States (US) is looking towards sanctioned Venezuela for oil, while Germany contemplates the use of less environmentally friendly solutions, as the possibility of running out of Russian gas looms.
Yesterday, the ECB announced that it reached a decision, during its June Monetary Policy Committee meeting, to end net asset purchases under its Asset Purchasing Programme as of 1 July 2022. The Bank also intends to raise the key ECB interest rates by 25 basis points in July.
In November 2021, the World Food Programme warned that 45 million people across 43 countries faced severe food shortages, and many now fear that high inflation will be the catalyst that tips these communities into a full-blown famine.
Anyone involved in the financial markets is surely feeling some sense of sea sickness, as volatility remains abundant in all areas of financial markets.
Following the release of the March US inflation numbers, which revealed that US inflation hit its highest levels in 40 years, market participants started bidding on a more hawkish Federal Open Market Committee and interest rate hikes as high as 0.75%.