Global Markets Update Monday, 27 June 2022

Global stocks ended the week on a strong note. Global bonds rallied as growing fears of recession caused investors to scale back the extent to which they believe central banks will raise rates.


The FTSE 100 rose 2.7% over the week.

The Conservatives lost two by-elections – one to Labour and the other to the Liberal Democrats – further undermining Boris Johnson’s position as PM.

A summer of discontent seems likely with BA staff and teachers threatening to join rail staff in taking industrial action over pay levels.

UK inflation rose to 9.1% in May, marking a fresh 40-year high.

The flash estimate of the S&P Global/CIPS UK composite purchasing managers’ index (PMI) held steady at a 15-month low of 53.1 in June. Manufacturing activity was weaker than expected, falling to a 23-month low 53.4, while activity in the dominant services sector was better than expected, holding steady at 54.6.

UK retail sales volumes declined 0.5% over May after a downwardly revised 0.4% increase in April.

GfK’s UK consumer confidence indicator fell to -41 in June, the lowest level since records began almost 50 years ago.


The S&P 500 rebounded 6.0% over the week, while the tech-heavy Nasdaq surged 6.9% as investors assessed that a rate rise would be its last before the Fed reverses policy to support a weakening economy. According to the futures markets, investors are now pencilling in one quarter-point rate cut next year, followed by further easing in 2024.

Fed chair Jay Powell said that a US recession was “certainly a possibility” but he believed the economy was sufficiently resilient to withstand tougher monetary policy. Support for another 75 bps increase in rates in July appears to be growing among US policymakers.

The flash estimate of the US S&P Global composite PMI fell to a five-month low of 51.2 in June. Manufacturing activity fell to 52.4, the lowest level in almost two years, while services activity fell to a five-month low of 51.6. There was some good news though as input costs increased at their slowest pace in five months.

The final reading of the University of Michigan consumer sentiment index was revised down to a record low of 50.0 in June, from a preliminary reading of 50.2.


The FTSEurofirst 300 rallied 2.4% over the week.

The heads of the German and French central banks said inflation expectations are rising among businesses and consumers.

The S&P Global eurozone composite PMI fell to 51.9 in June, its lowest level in 16 months. Manufacturing activity PMI dropped to 52, a 22-month low, while services activity dropped to a five-month low of 52.8 as the surge in tourism growth seen in the last two months stagnated.

The European Commission’s eurozone consumer confidence indicator fell to -23.6 in June, its weakest reading since an all-time low that was recorded just after the pandemic began in April 2020.

The flash estimate of the S&P Global German composite PMI fell to 51.3 in June, its lowest level since the fourth wave of the COVID pandemic in December 2021. Services growth slowed to a five-month low of 52.4 amid a waning of demand and some reports of staff shortages, while manufacturing output fell to 49.0, signalling the second contraction in three months.

Germany moved a step closer to gas rationing as it triggered the second stage of its national gas emergency plan.

Emanuel Macron lost his majority in France’s National Assembly, meaning he will be forced to strike deals with political rivals in order to pass laws.

The Norges Bank raised its benchmark interest rate by 50bps to 1.25%. The increase was larger than expected and the steepest since 2002.

Iceland’s central bank raised interest rates by 100bps to 4.75%, its sixth consecutive increase in borrowing costs, and signalled further rate hikes should be expected in the coming months.


The Nikkei 225 increased 2.0% over the week.

The flash estimate of the au Jibun Bank manufacturing PMI declined to a four-month low of 52.7 in June. Services activity climbed to 54.2 in June, marking the strongest pace since October 2013 helped by the lifting of remaining COVID-19 curbs on international visitors.

Pacific Basin

The central bank of the Philippines raised its key overnight borrowing rate by 25bps to 2.5%, its first back-to-back increase in borrowing costs since 2018.

Singapore’s annual inflation rate accelerated to 5.6% in May and the highest level since November 2011.

The S&P Global Flash Australia composite PMI declined to 52.6 in June from 52.9 in May.

Emerging Markets

South African inflation rose to 6.5% in May, its highest level since January 2017.

Russia could be about to default on its foreign debt for the first time since 1998. About $100mn worth of interest on Russian government debt is due to bondholders. While Russia has the money to make the payments, the financial transactions needed are being hampered by sanctions.


The yield on the 10-year US Treasury bond slid 27 bps over the week to close at 3.05%. This compares to the 11-year high of 3.49% hit in mid-June.

The yield on the 10-year German Bund declined 28 bps over the week to close at 1.43%.


Copper prices fell to a 16-month low amid fears of a global recession. Aluminium also touched a one-year low, with zinc and nickel not too far behind.