KEY TAKEAWAYS :
- Surprise! Inflation’s back up in the USA!
- Banks and defence: the invasion of Ukraine a year on has impacted many sectors in different ways.
- Beyond Meat sees soaring stock prices, whilst pizza takeaway chains are losing the fight in tougher times.
- No respite on coffee and chocolate prices, and it’s not looking good for the future.
Surprise! Inflation’s back up in the USA
Data for January’s inflation was released and it’s a nasty surprise: back up at 0.6%, from the previous 0.3% in December. Climbing inflation in the US spread wobbles through the markets again, as the Fed’s aggressive interest rate hike will likely pervade into the next few months.
Europe saw flat markets as a result, and Germany further dampened the mood with news that their economy had contracted more than anticipated.
Australia rounded off the not-so-jolly week by signalling that it would not be pausing the interest rate changes previously planned for feb, and would be ploughing on with meetings to discuss their inflation controlling strategy.
Banks and defence: the invasion of Ukraine a year on has impacted these two sectors in different ways
A year on from the invasion of the Ukraine, certain market sectors are showing the effects of the ongoing conflict. Defence is amongst the winners, with the share prices of European companies in the sector BAE systems, Leonardo, Thales and Saab all up since last year.
Austrian bank Raiffeisen however saw share prices slide dramatically last week after the US questioned their involvement in the region post Russian sanctions. Many large banks who had operations in Russia have suffered since the sanctions, with the need to close operations and transactions.
Beyond Meat sees soaring stock prices, whilst pizza takeaway chains are losing the fight in tougher times
Beyond Meat, a vegan food firm, has seen shares soar by more than 39% since the beginning of the year. Despite the reported shrinking revenues and reduced sales, their focus on tightening profit margins seems to be paying off.
Pizza takeaway giants Dominos and Papa Johns on the other hand are struggling in the current climate. With their share prices down by 26% and 18% respectively, the crunch on consumers' pockets is clearly being seen with the food they’re buying (which isn’t pizza apparently).
No respite on coffee and chocolate prices, and it’s not looking good for the future
Coffee and cacao, two of our staples in life, are facing the rising prices battle. The costs of these raw foods have been steadily increasing throughout 2021, but have again picked up pace in the beginning of this year.
Initially, the strength of the USD was what drove the prices as many raw materials like coffee beans are purchased in the ever-strengthening dollar.
Climate change is now also driving the price hikes. As Italy this week has announced both fears of a drought and a destruction of their national drink, with the not so conventional combination of coffee and olive oil in Starbucks, the impact on supply chain is not to be underestimated.
It’s thought that droughts and another unusual winter season will affect coffee production throughout 2023, shrinking supply and further driving up prices.