The sense of calm in markets continues

Last Week in the City provides a round-up of market movements and the global investing outlook. This covers the three days to 1 June 2022.

| 7 min read

The recent tentative market rally following almost two months of falls continued this week. There is a shortened trading week in London as the country celebrates the Queen’s Platinum Jubilee. Other global markets remain open with some important data releases due in the US later this week, particularly non-farms payroll data, which is released on Friday. This means London markets will need to catch up with global events when it reopens on Monday.

Although a new calmness has entered markets, the oil prices spike eased back once more as the EU managed to agree some deadlines for cutting its reliance on Russian oil. This raised some concerns that surging oil prices could provide a further turbo-charge to inflationary pressures, forcing central banks to take even tougher action and keep raising interest rates. However, oil prices eased from highs. Strict Covid-19 lockdowns are now being eased.

This week, the blue-chip FTSE 100 index was up 1.7% by mid-session on Wednesday, with the more UK-focused FTSE 250 2.9% ahead.

In celebration of the Queen’s Platinum Jubilee: A message from Charles Stanley’s chief executive Paul Abberley.

Jubilee special: A look at how Britain’s leading stock market indices have evolved over the 70-year reign of Queen Elizabeth II – and what this says about our economy and prosperity.

Podcast: Unpicking the frenetic market action of recent weeks: In our latest podcast, Chief Investment Commentator Garry White and Chief Global Strategist John Redwood discuss the recent market gyrations.


Oil prices rose sharply after European Union (EU) leaders agreed a plan to block more than two-thirds of Russian oil imports. Russia currently supplies 27% of the EU's imported oil and 40% of its gas. The EU pays Russia around €400bn a year in return. The 27 member states reached a compromise on the new sanctions by exempting Russian oil imported by land into the EU. European Commission President Ursula von der Leyen said oil imported through the Soviet-era Druzhba pipeline – which connects Russia with several Eastern and Central European countries – is exempt from the sanctions for the time being. The resistance to sanction was led by Hungary.

India is accelerating its purchases of discounted Russian oil, as the west accelerates its energy-related sanctions against Moscow.

Shell said it will work to keep gas flowing to its customers in Europe after Russian energy firm Gazprom said it would cut supplies in 24 hours. The Russian state-controlled group also turned off supply to top Dutch trader GasTerra, which buys and trades gas on behalf of the Dutch government, after it refused to comply with a Kremlin decree mandating gas payments be transferred in rubles via a Russian bank account. GazTerra received a letter from Gazprom which said it would "discontinue supply with effect from 31 May 2022." Danish utility Ørsted also said its gas invoice to Gazprom was due and it would not comply with the Russian ruble decree either. European gas prices rose.

India is accelerating its purchases of discounted Russian oil, as the west accelerates its energy-related sanctions against Moscow. Russian crude-oil flows to India are expected to reach 3.36 million metric tonnes in May, according to estimates from Refinitiv. This is nearly nine times higher than the 2021 monthly average of 382,500 metric tonnes. Overall, the country has received 4.8 million metric tonnes of discounted Russian oil since the Ukraine war started, the data suggested.

Russia’s central bank said it was open to allowing the use of cryptocurrency for international payments. However, First Deputy Governor Ksenia Yudayeva reiterated that the central bank, as the regulating authority, continued to see “relatively high risks” from wider use of cryptocurrency in Russia.

Concerns about shortages of stable foods in some countries has mounted, as it now looks likely that a poor US wheat harvest will add to supply shortages. The winter wheat harvest potential in America has fallen by more than 25% due to severe drought in some areas and flooding in others. The US is the world's fourth-largest wheat exporter.


Credit card borrowing in the UK rose at the fastest annual rate since 2005 in April, according to data from the Bank of England. This may partly be a result of the cost-of-living squeeze, with disposable incomes falling sharply for many.

The cost-of-living crisis is expected to hold back UK house price growth for the rest of the year, according to estate agents Savills. Property deals and mortgage approvals fell in both March and April with affordability continuing to slow the rate of house-price increases. Nevertheless, Savills still expects house prices to rise 7.5% this year. Supporting this view, the number of mortgages approved by UK lenders has dropped to its lowest since June 2020, a sign that the housing market may be cooling.

A profit warning from discount retailer B&M said that its profits could fall as customers struggling with rising prices opt for cheaper products. The statement resulted an 11% fall its share price. B&M was one of the retail industry’s pandemic winners, as it was allowed to stay open during lockdowns.

The US housing market remained hot in March, despite rising mortgage rates. House prices rose 20.6% year-on-year, according to the S&P CoreLogic Case-Shiller Home Price Index. That is a rise from February’s gain of 20%. This may be a function of buyers acting to lock in deals before rates rose significantly higher.

Eurozone inflation hit a record 8.1% in May, more than four times the European Central Bank’s 2%. Inflation rose from 7.4% in April, hitting the highest level since records began in 1997. Gains were driven by the increased cost of food and energy. Analysts had been expecting inflation to come in at 7.6%.


Travellers face three-hour queues at major UK airports as airlines continued to cancel flights. The aviation industry is suffering from staff shortages after thousands were let go during the Covid-19 pandemic. They are now struggling to recruit new workers and have their security checks processed.

Shanghai, China's largest city and a global trading hub, is beginning to reopen after two months of strict lockdown that has exacerbated problems in supply chains and worsened the global inflation problem. China remains committed to its "zero-Covid" strategy of eliminating all outbreaks with stringent and enforced lockdowns. However, the measures have hit economic growth to such an extent that the ruling Communist Party was recently forced to admit that the country would miss its economic growth target in 2022. Major carmakers, including Tesla and Volkswagen, suspended production temporarily, while electronics makers such as Apple reported severe supply-chain disruptions around the city.


Taiwan deployed fighter jets to warn off 30 warplanes sent by China into its air defence zone. The incident represents Beijing’s largest incursion since January. The provocative move came days after US President Joe Biden warned China against invading Taiwan, and on the same day as a US official visited the island to discuss security with leaders.

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The sense of calm in markets continues

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