Markets jittery as Biden and Putin begin Geneva Summit
Markets traded with uncertainty on Wednesday, as U.S. President Joe Biden and Russian leader Vladimir Putin met for the first time in Geneva, Switzerland.
The meeting follows on from this past weekend’s G-7 summit, where Biden made his debut on the international stage as the President of the world’s largest economy.
Tensions were heightened over the past few days as NATO said that its relationship with Russia was at its worst since the cold war.
It was also stated by the alliance that, “Until Russia demonstrates compliance with international law and its international obligations and responsibilities, there can be no return to ‘business as usual”.
Wednesday’s meeting provides an opportunity for Putin’s Russia to ease tensions with the rest of the world, and potentially build a base for future cooperation.
British inflation surpasses BOE target
In the United Kingdom, it was reported that the country’s inflation had surpassed the Bank of England’s target rate.
The latest inflation report from the UK showed that inflation came in at 2.1%, going above the Bank’s 2% target for the first time in almost two years.
Many in the markets had expected May’s number to come in at 1.8% however rising fuel prices, which were close to 18% higher than the year before, contributed to the overall spike.
Crude oil prices have been trading at multi-year highs in recent weeks, as the rise in demand for energies continues to outweigh the short-term supply.
London’s FTSE 100 closed 0.17% on the news, with markets now waiting to see what action the BoE could take to combat inflation.
Chinese economic data disappoints
Data released from China on Wednesday showed that both Retail Sales figures, as well as Factory output were lower than expected.
The figures which were for the month of May, highlighted that industrial output was 8.8% slipping from a figure of 9.8% in April.
Whilst it was also reported that retail sales came in at 12.4%year on year, versus the 17.7% increase in April.
China, along with the United States, have led the global economic recovery in the last few months. So the slow-down could cause some concerns to overall global growth in 2021.
Hao Zhou, who is a senior economist at Commerzbank in China stated that, “The extent of the slowdown in the second half is key. So far, it’s still normal and there’s still room for the fiscal policy to play a part later in the year”.
Many believe that a recent rise in commodity prices could be one of the reasons for the decline.
Quote of the day – “Buy things that are going up. Sell things that are going down. And when they stop, get out!”– Rob Smith
Senior Market Analyst