Summary of the Impacts of Releases
13 June 2022 – 17 June 2022
Impact of Economic Releases:
The major economic releases of this week include the unemployment figures from the UK, PPI figures from the US and UK, and CPI figures from Eurozone and UK. Additionally, Bank of England raised its base rate by 25 basis points to 1.25% and the U.S Federal Reserve raised by 75 basis points.
Europe
- Following on last week’s U.S. CPI release which stands at 8.6% YoY, global indices entered the bear market as fears of recession grows; While central banks take to hiking interest rates to control inflation, investors fear that this may possibly slow growth and stunt corporate earnings
- Italian Prime Minister and former ECB president, Mario Draghi says that the ECB increasing interest rates is unavoidable, but it must be done more gradually than the U.S Federal Reserve considering the different economic circumstance in the Euro zone
- The Bank of England has stuck to its gradual increase in interest rates with their fifth increase since December 2021, to 1.25% by 25 basis points
- Amidst many central banks increasing rates to curb persistent inflation, the Swiss National Bank unexpectedly raised its -0.75% interest rate, which was the world’s lowest, by 50 basis points; Germany’s IFW also raised its 2022 Inflation forecast to 7.4% from 5.8%, while the IFO institute cut its 2022 forecast for German growth to 2.5% from 3.1%
- Following the series of negative news on inflation and the probability of recession, the world stocks plummeted again on 16th June as investors hold back from the economy
- The EURO STOXX 50 Index fell by 7.96% week-on-week and the DAX Index fell by 8.17%
- As the STOXX Europe 600 Index fell by 7.25%, all sectors are in the red with the Technology sector having the greatest loss at -11% week-on-week, and the Travel & Leisure sector trailing not far behind at -10.87%.
U.S.
- With the CPI release of a 40-year high inflation level at 8.6% in May announced on Friday (10th June), a sharp sell-off in the U.S. Market occurred; Along with confirmation on bear market, investors fears heightened on concerns about aggressive interest rate hikes of up to 75 basis points and worries of entering a recession
- Since November 1994, Feds hiked rates by 75 basis points – the most rapid pace in decades – while signaling a similar magnitude in July; In efforts to slow down the economy and combat inflation that is running on a 40-year high, this decision made will increase Feds benchmark federal-funds rate to a range from 1.5% and 1.75%
- Investors gain confidence that the central bank was committed to tamping down inflation and are supporting the Feds fast movement to dampen inflation, albeit worries of falling into recession, embracing safety in their portfolios in times of volatile market prices.
All timings here are based on SGT/HKT time zone
Learn more: https://www.eurex.com/ex-en/
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