Weekly Digest: Eurozone Inflation, Economic Hurricane
02/06/22: The Eurozone inflation hits a new record high, JPMorgan Chase CEO warns of the economic hurricane, EU leaders agree to ban most Russian crude imports. And more.
The price of gold was caught between the support of slightly lower US Treasury yields and the pressure of a strong dollar.
This is how the prices of gold, silver, platinum, and palladium have changed over the past week:
⚠️Eurozone inflation came in at a record 8.1% for the month, up from April’s record high of 7.4% and above expectations of 7.8%. (DW)
As a result of a global energy shortage caused by the Ukraine war, energy prices jumped 39.2%. Food prices increased by 7.5%, while other goods — such as clothing, appliances, cars, computers, and books — rose by 4.2%, and service costs increased by 3.5%.
In May, German inflation reached its highest level in nearly half a century, as a result of rising energy and food prices since the start of the Ukraine conflict. (CNBC)
The figure, which exceeded analysts' expectations of 8.0% in a Reuters poll, marks the second month in a row of record highs, following April's 7.8% increase, which was the largest in four decades.
On Tuesday, eurozone stocks fell to session lows after data showed that inflation hit a new high in May, fueling expectations of more interest rate hikes by the ECB. (Reuters)
The eurozone STOXX index fell 1.3%, while the pan-European STOXX 600 index dropped 0.7%.
"The Eurozone's high inflation reading has prompted stocks to reverse course, showing that investors are still very jumpy when it comes to the economic outlook and continued high inflation readings," said Chris Beauchamp, chief market analyst at online trading platform IG.
Gold vs. stocks: Read our SPOTLIGHT to see which has performed better so far in 2022.
Oil prices fell as a result of a report that Saudi Arabia is willing to increase crude production if Russia's output falls significantly as a result of EU sanctions. (CNBC)
Brent crude futures were last trading at $114.34 per barrel, down 1.68% from their high. Crude oil futures in the United States fell 1.87% to $113.10 per barrel on Friday.
Is global recession here? Not yet but better be prepared for high prices and low growth, economists say. (CNBC)
With the war in Ukraine and pandemic disruptions continuing to disrupt supply chains, stagflation is here to stay - marked by low growth and high inflation “for at least the next 12 months,” Simon Baptist, global chief economist at the Economist Intelligence Unit.
Read our SPOTLIGHT to learn what the risk of recession means for investors.
JPMorgan Chase CEO Jamie Dimon says the country's largest bank is preparing for an impending economic storm, and he advises investors to do the same. (CNBC)
“You’d better brace yourself. JPMorgan is bracing ourselves and we’re going to be very conservative with our balance sheet… You know, I said there are storm clouds but I’m going to change it … it’s a hurricane,” Dimon said.
What else is happening
As part of the EU's sixth sanctions package against Russia since its invasion of Ukraine, EU leaders agreed on Monday to ban 90% of Russian crude by the end of the year. (CNBC)
In response to European sanctions on Russian oil, Moscow could look for new buyers or cut production to keep prices high.
“What is going on now will change the oil-natural gas trade into the future. Oil prices will not decline any time soon and the fallout of Russian sanctions will be felt for a few years,” said Hossein Askari, a professor at the George Washington University School of Business.
Read our SPOTLIGHT to learn what the current geopolitical tensions could mean for the price of gold.
The U.K. Finance Minister has imposed a windfall tax on oil and gas giants as the government tries to ease the country’s cost-of-living crisis. (CNBC)
“The oil and gas sector is making extraordinary profits not as the result of recent changes to risk-taking or innovation or efficiency but as the result of surging global commodity prices driven in part by Russia’s war,” Rishi Sunak.
The move comes following an embarrassing investigation into lockdown parties at Downing Street, as well as considerable pressure on the Conservative government due to soaring inflation.
Hundreds of ancient Egyptian coffins and bronze deity statues have been discovered by archaeologists near Cairo. (Reuters)
Anubis, Amun, Min, Osiris, Isis, Nefertum, Bastet, and Hathor were among the gods discovered in a cemetery in Saqqara.
See you next week!