4 Global Market Updates- 11 July, 2022

In this article, we have covered the highlights of global market news about the UK Conservative leadership, Fiscal policy, US Dollar, and Natural Gas.

Candidates for the UK Conservative leadership present contrasting tax strategies.

Jeremy Hunt, a candidate for the UK Conservative leadership, said on Monday that he wants to reduce all taxes. “I can decrease taxes within our present budgetary laws,” Hunt continued.

While this is happening, several UK media sites claim that UK Finance Minister Nadhim Zahawi intends to impose 20 percent budget cutbacks across the board to pay for his proposed tax cuts. Zahawi ran for the position of prime minister after Boris Johnson.

Foreign Secretary Liz Truss entered the UK Conservative Party leadership campaign over the weekend and stated her intention to begin lowering taxes “from day one.”

Tom Tugendhat, a different presidential candidate, reiterated Truss’s proposals for tax cuts and said he would “seek to minimize taxes across every part of life.” Rehman Chishti, the recently appointed minister of the foreign office, also launched his candidacy on Sunday, according to BBC News.

Politics are less critical than fiscal policy and Brexit, according to HSBC.

Despite his resignation as Tory leader, Boris Johnson will continue to serve as UK prime minister when a replacement is found. The departure of Mr. Johnson did not cause the pound to change considerably. According to HSBC analysts who can get through headline noise and short-term volatility, Fiscal policy and Brexit are more critical for the GBP.

“With the GBP showing no reaction to Mr. Johnson’s departure, UK political volatility looks to have surpassed GBP volatility. There won’t likely be a significant trend effect on the GBP until there is a significant change in fundamental policy under a new leader, or even under a new government if there is an early election, after cutting through any possible headline noise and short-term volatility.

“Fiscal policy has been considerably restrained in response to the significant stimulus during the COVID-19 crisis. In our opinion, a looser fiscal policy that encourages growth and lessens family debt might benefit the GBP, especially if a more hawkish Bank of England could counter it.


“On Brexit, the GBP may benefit from any indications that a new president or administration is adopting a more cooperative stance with the EU. This would lessen the chance of a rupture in the relationship between the UK and the EU over Northern Ireland and lessen the chance that the UK would encounter even tougher trade restrictions with the EU, including additional tariffs.

Despite this week’s risk-off start, the US Dollar is gathering momentum.

At the start of the week, safe-haven flows rule the markets, and in the early European session, the dollar gains ground versus its competitors. US stock index futures were down between 0.8 percent and 1.1 percent, while the US Dollar Index, which saw minor daily losses on Friday, was last seen up 0.5 percent on the day. On Monday, there won’t be any significant data releases in the economic calendar, and risk sentiment is expected to drive market activity. Andrew Bailey, the governor of the Bank of England, will testify before the UK Treasury Committee.

Data from China earlier in the day revealed that annual inflation—as determined by the Consumer Price Index—rose from 2.1 percent in May to 2.5 percent in June. This number was more significant than the 2.4 percent market consensus. Shanghai’s government verified the first case of the highly contagious BA.5 omicron sub-variant and issued a “very high” risk warning. City authorities are scheduled to hold a news briefing on new pandemic control measures later in the day.

Natural Gas Futures: It seems that prices will rise.

After the previous week, natural gas prices declined as open interest and volume decreased. However, additional fall looks unfavorable shortly, pushing the commodity back to its recent high of $6.83 per MMBtu.

The yearly maintenance of the Nord Stream 1 Gas Pipeline has begun throughout Europe. Investors are worried about whether the reopening will go as planned, even if this closure was scheduled.

According to statistics released Friday by the US Bureau of Labor Statistics, nonfarm payrolls increased by 372,000 in June, above the market consensus of 268,000. This reading exceeded the 268,000 expert prediction. According to an analysis of the data by FXStreet Analyst Joseph Trevisani, “June payrolls almost assure a 75 basis point hike at the July 27 Federal Open Market Committee (FOMC) meeting.” The chances of three-quarters of a point increase are 93.0 percent in Treasury futures, with 7.0 percent backing a full 1.0 percent.

Please click here for the News Updates from July 9, 2022.