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Piraeus Bank: Significant pressures on international markets amid concerns about weaker growth and higher inflation

International stock markets came under significant pressure on a monthly basis (S & P500 –10.32% and MSCI EM –2.20%) amid worries about weaker growth, higher inflation and potential supply chain disruptions, with the possibility of stagnation as Piraeus Bank notes in the Prospectus of Agricultural Products Prices that it published today.

Investment psychology has been affected by US inflation and labor market data and fears of a forward-looking aggressive monetary policy by the Fed, while the ECB’s more aggressive rhetoric is troubling, as have new details designed to address it. financial fragmentation, the bank states in the bulletin and adds:

Pressures were exerted on the bonds, with the 2-year yield being 3.09% and the 10-year yield 3.20%. The dollar strengthened against both the euro and a basket of currencies, as did gold – as a safe haven – but also oil because of the recent OPEC + decision, which did not seem to allay concerns about supply supply from Russia and meeting growing demand from China loosening pandemic austerity measures.

Prolonged conflict in Ukraine threatens the key scenario of price de-escalation next year, along with a rally in energy prices, fertilizers, rising production costs, while record prices for agricultural products, on the one hand, fuel inflation and another restrict demand. In addition, the continuation of La-Ninia in the central and southern US states, as reported by NOAA, is expected to further affect crops in these areas. For wheat, its price will remain high, with reduced supply from Russia and Ukraine having a positive effect on its price. For corn, heat and a lack of rainfall in the US and the Eurozone could boost its price. As the pace of Ukraine’s exports remains uncertain and US production is hit by heatwaves, upward pressures on soybean prices may continue. Export restrictions from Mexico and India, as well as lower production in Brazil, could boost the price of sugar. As rice sowing has begun in India, monsoon progress is likely to accelerate production, putting prices on a downward trajectory.

Although the commodity index strengthened (+ 1.38%) on a monthly basis, the agricultural products index had losses (-10.29%), possibly due to the high level of valuations for profit. Although the May data for the Chinese economy were improved and slightly better than the estimates, the improvement recorded in June was not enough to return its economic activity to the dynamics of the previous period. However, taking monetary and fiscal measures to stimulate growth while improving the epidemiological picture is likely to have a positive effect on boosting demand.

The strengthening dollar may be a deterrent, as a result of the Fed tightening faster, as well as the prospects for a slowdown in growth.

See the Agricultural Product Price Sheet in the right column Related Files

Source: Capital

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