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The Cambridge Weekly – 13 June 2022

Reading between the lines

After the resurging positive sentiment of past weeks, markets were last week once again showing signs of fragility – the mood was decidedly ‘risk off’. We could characterise this as growth scepticism, or more wariness that inflation will require even stronger and swifter central bank policy tightening before it is effectively squeezed out. Last week’s move towards monetary tightening from the European Central Bank (ECB) – even though long anticipated – provided the necessary headlines.

May 2022: Monthly market returns review

May was the definition of a rollercoaster month of capital market performance. Equity markets rose in the first few days of the month, followed by a rapid sell-off, eventually recovering to finish the month down 0.3%. Bond market returns ended up virtually flat after also correcting sharply before recovering. Even commodity prices could only gain a net 1% in May.

Monetary and fiscal policy – Giving with one hand, taking with the other

Boris Johnson’s pyrrhic victory on last Monday’s ‘no-confidence’ vote could have big implications for the UK economy. Not that you could tell from the market reaction: the FTSE 100 dropped ever so slightly in midweek, while sterling has stayed at the dollar value it was last Friday. But as the politicos were keen to point out, the Prime Minister’s weakened position makes him much more amenable to the whims of his colleagues. Last Thursday, Johnson promised a flurry of policies to help Britons through the cost-of-living crisis – naming growth as his government’s top priority.

Chips, the new doctor copper

US technology giant Intel took a beating from investors last week, leading to a 5.3% fall in its share price on Wednesday. It came after projecting disappointing results for the second quarter. Intel reckons its profits will be around 70 cents a share, while revenue is expected to come in at $18 billion. This is below analysts’ estimates of 82 cents per share profits and $18.5 billion in sales, and follows a disappointing first quarter of 2022, which saw falling revenues for its PC microchips.


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