Market Update

While the UK was engrossed in the Grand National over the weekend, France was witnessing a different kind of race: the opinion polls for the French presidential election. Although the incumbent president held the lead, Marine Le Pen posed a significant challenge to Emmanuel Macron, securing 23.41% of the vote compared to Macron's 27.6%. As a result, both candidates will now proceed to the run-off election on April 24th.
Despite Le Pen's views, which include a desire to withdraw France from NATO and her well-known criticisms of the EU, Macron remains the frontrunner in the election.
In Asia, we continue to observe pent-up valuations waiting for an opportunity to flourish, as lockdowns persist in Shanghai. As mentioned previously, China has pledged substantial support for its economy, and many major corporations listed in China are in sound financial health, making China an attractive option for long-term investments. While Chinese lockdowns may temporarily stifle markets, they also contribute to a temporary reduction in global oil demand, which exerts downward pressure on oil prices.
The price of oil has experienced volatility since the invasion of Ukraine, with market concerns centered on the impact of the war on global oil supply. However, as previously mentioned, the issue isn't a shortage of oil supply but rather a need for a reallocation of supply.
Despite India's condemnation of Russia, Prime Minister Modi has indicated a willingness to separate his political stance from economic actions by purchasing discounted Russian oil. Following the EU's recent decision to ban imports of Russian coal, India is now considering Russian coal imports as well. This move, despite warnings from President Biden about the potential implications for global sanctions against Russia, is unlikely to severely impact the Indian economy.
Regarding data this week, the US reported an inflation rate of 8.5% for March, while the UK recorded 7%, offering a snapshot of how the prices of goods have risen in the year up to March. As mentioned before, the conflict in Ukraine is exacerbating inflation, but other inflationary pressures are expected to ease, bringing inflation closer to target levels. These include gradually diminishing COVID-19-induced supply chain bottlenecks and, ultimately, a resolution to the tragic conflict.
The FTSE displayed minimal reaction to the high level of inflation in the UK, primarily because a majority of its revenue is generated offshore. Furthermore, energy companies like BP and Shell experienced gains in response to the news. It is anticipated that the CPI figure will accelerate further next month when April's data is reported, in light of the recent rise in the energy price cap at the beginning of April.
In the ECB's latest policy announcement on Thursday, they opted to keep interest rates unchanged, allowing them the flexibility to monitor how the economy evolves as it reopens following the crisis phase of the pandemic.