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Risk Rises For A Fragile Global Economy


France Conducts Hypersonic Glider Test

France’s defense procurement agency has reportedly conducted a maiden test of a prototype hypersonic glider as it seeks to develop new missile technology capable of evading the most sophisticated air defenses.

A Reversed Course For Gold

Traders positioned for Federal Reserve Chair Jerome Powell’s speech and more data that could offer clues on future interest rate hikes. Spot gold fell by 0.6% to USD 1,911.53 per ounce while U.S. gold futures settled by 0.5%, lower at USD 1,923.80.

China Races To Catch U.S. A.I. Advancements

China’s tech sector is aggressively on the rise as it intends to compete head-to-head with U.S. titans Google and Microsoft Corp. in the global artificial intelligence race.

Today’s News

In light of the events that transpired over the past weekend, Russia has been the talk of the world as an aborted mutiny has left the global market questioning the stability of the country. Yevgeny Prigozhin, leader of the Wagner private military company, launched an armed rebellion against the government of Vladimir Putin, accusing the country’s military leadership of mismanaging the ill-fated invasion of Ukraine that erupted in 2022. 

The rebellion was short-lived and was eventually aborted before the week’s end. At the time, the markets seemed unaffected by the news. However, the instability of the country has raised some questions that eventually caused some ripples in the global commodity supply, particularly with gold and oil.

As the world’s largest wheat exporter, the prices of wheat evidently rose, achieving a new 4-month high.

The internal turmoil of Russia has then resulted in the following events:

U.S. Turns Attention To Russia’s Wagner Group

Sanctions were quickly imposed on Tuesday on companies that were accused of engaging in illicit gold dealings to fund the mercenary force that invaded the Russian capital. The U.S. Treasury Department stated that it slapped sanctions on four companies in the United Arab Emirates, Central African Republic and Russia it accused of being connected to the Wagner Group and its leader, Yevgeny Prigozhin.

Source: REUTERS

The Treasury claimed that the companies are engaged in illicit gold dealings to fund the militia to sustain and expand its armed forces, including those in Ukraine and Africa.

Russian Firm Issues Oil-For-Debt Deal With PDVSA

An unnamed Russian oil firm has reportedly sent a request to the Venezuela’s state-run company PDVSA to take control of exports from their joint ventures in an attempt to revive cash flow from the 5 companies that have been hard-hit by the newly imposed U.S. sanctions, claimed sources.

Source: Bloomberg

Roszarubezhneft, a state-owned company that acquired Russian oil major Rosneft’s (ROSN.MM) assets in Venezuela in 2020 – wants to market the crude and fuel oil produced by the joint-ventures – similar to a deal PDVSA struck last year with U.S. oil producer Chevron (CVX.N).

Pound Hikes Higher Amidst Russian Instability

The pound sterling is headed for its biggest daily gain against the dollar in two weeks while being boosted by a modest return of risk appetite after the aborted mutiny in Russia over the weekend that briefly threatened to upend markets. Investors are still trying to determine how this will affect the global economy and the outlook for interest rates.

Source: REUTERS

The pound was last up by 0.14% against the dollar, on course for its largest 1-day rise since June. Against the euro, the pound was reportedly flat at 85.80 pence. The Bank of England also raised its rates on June by 50 basis points to 5%, in light of evidence that the inflation of the last two years is becoming more entrenched in the economy and therefore harder to fight.

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