Weekly summary 4-8 July 2022

USA

Last week ended reasonably well for the stock markets, managing to recover a good portion of the previous week’s losses. The big reason is the optimism that it will be possible to fight inflation without major economic consequences.

This is because some data showed a strong improvement in the labor market, one of the main indicators that the Federal Reserve is paying attention to. This indicates, at least for now, that the economy is able to withstand the sharp rises in the benchmark interest rate that the Federal Reserve has been making.

This data makes the likelihood of another sharp rise in the benchmark interest rate increasingly likely. It is expected that at the next meeting they will rise by 0.50 or 0.75%.

Europe

After several weeks of losses, the European stock market indices saw some gains, albeit relatively small. The lower risk appetite comes from a variety of factors, such as the continuing restrictions still in place in China and the possibility of a recession that could be exacerbated by geopolitical conflict.

The minutes of the European Central Bank show that its members are considering a steeper increase in their key interest rate in September. They remind us that the risks of more permanent inflation are relatively worse than a more aggressive increase.

The UK is currently facing a political crisis following an announcement of resignation by Prime Minister Boris Johnson. This was after a series of scandals and the resignation of about 50 ministers from his cabinet.

Asia

The biggest news from Japan was, unfortunately, the assassination of the former Prime Minister of Japan, Shinzo Abe. He remained in office the longest and the principles of his policy still stand today. Economically, Japan maintains an expansionist policy, with its low benchmark interest rate and various supports in the strengthening of several companies

Visit the Disclaimer for more information.