Global Markets Update Monday, 5 September 2022

Gazprom said it would close the Nord Stream 1 pipeline indefinitely after the pipeline was temporarily shut for maintenance. The move followed an announcement that G7 countries had agreed to a price cap on Russian oil.


The FTSE 100 declined 2.0% over the week.

The UK’s new prime minister will be announced on Monday (5 Sept), ending a summer of policy paralysis. Liz Truss is widely expected to become PM.


The S&P 500 dropped 2.5% over the week, while the tech-heavy Nasdaq fell 3.3%. This marked the third consecutive weekly decline for US equities.

The US economy added 315,000 jobs in August, while job growth in July was revised down to 526,000. The number of jobs added in June was also revised down to 293,000, from almost 400,000.

US consumer confidence (as measured by the Conference Board), increased in August for the first time in three months as the labour market tightened.

US officials told chipmaker Nvidia to stop selling two chips designed for artificial intelligence work to Chinese companies.


The FTSEurofirst 300 fell 2.5% over the week.

Eurozone inflation rose to 9.1% in August, up from 8.9% in July, while German inflation accelerated to a 40-year high of 8.8% year on year in August.

Germany said it will impose a windfall tax on electricity producers to finance a new €65bn energy aid package.

The Ifo Institute’s survey of German business confidence fell for a third consecutive month. The news came as German manufacturers said they are halting production due to the surge in energy prices.


The Nikkei 225 lost 3.5% over the week.

Japan is seeking to significantly increase military spending to counter the growing threat from China.

Pacific ex Japan

China’s Caixin manufacturing purchasing managers’ index fell to 49.5 in August, down from 50.4 in July.

Chinese authorities locked down the city of Chengdu, the country’s sixth largest city after it reported 155 new cases of COVID-19. The technology hub of Shenzhen reported 87 new infections on Friday, stoking fears of a second lockdown.


The yield on the 10-year US Treasury bond rose 20bps over the week to close at 3.23%. The yield on the two-year note briefly hit a fresh 15-year high above 3.5%. Yields on US junk bonds have jumped to almost 8.6% from a mid-August low of 7.4%, with credit spreads widening to just above 500bps from around 420bps in mid-August.

The yield on the 10-year German Bund rose 13bps over the week to close at 1.52%. Over August 10-year Bund yields rose more than 70bps, marking the worst monthly sell-off since 1990. Meanwhile, the two-year Bund yield posted its biggest monthly increase in more than 40 years.

The yield on the 10-year UK Gilt rose 32bps over the week at close at 2.92%. Two-year Gilt yields rose almost 130bps in August, their largest monthly rise since 1994.