Today is Tuesday, August 23, 2022, and here’s your weekly selection of essential intelligence on financial markets and the global economy from S&P Global Market Intelligence. Subscribe to be notified of each new Insight Weekly.
In this edition, we put the spotlight on the world economy. Real global GDP is likely to have declined in the second quarter of 2022, pulled down by contractions in emerging Europe, mainland China and the U.S., according to IHS Markit, a part of S&P Global. In Europe, energy-intensive industries are expected to bear the brunt of Russian gas supply cuts, reducing industrial output in economies already bruised by the impact of inflation on consumer spending power. Global commodity prices remain elevated compared to year-ago levels, but they have resumed a downward trajectory, reflecting fears of weakening demand.
Key revenue metrics for the U.S. banking industry reached all-time peaks in the second quarter, according to S&P Global Market Intelligence data. Commercial banks, savings banks, and savings and loan associations earned $93.16 billion of pre-provision net revenue in the quarter, well above the levels seen in the previous nine quarters. Margin expansion provided almost all of the 9.5% increase in net interest income, which in turn drove the jump in pre-provision net revenue.
Global semiconductor shortages in July were around six times their long-run average, according to the latest PMI survey data from S&P Global Market Intelligence. As such, price pressures remain sky-high, hurting sectors heavily reliant on semiconductors, such as technology equipment, automobile and auto parts, and general electronics. These industries saw a decline in new orders last month as demand conditions deteriorated.
- In Focus: Global Economy
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Global recession watch: Inflation at a fever pitch
High inflation is eroding household purchasing power, sending consumer sentiment indicators to new lows in some regions.
—Read the full article from S&P Global Market Intelligence
Europe's economies sail toward recession as Russian gas cuts bite
With less gas flowing from Russia to Europe, energy-intensive industries like the steel sector are expected to suffer major disruptions, worsening an already weak economic picture.
—Read the full article from S&P Global Market Intelligence
Weekly Pricing Pulse: Commodity prices slide on renewed demand fears
The IHS Markit Materials Price Index has fallen 20.1% from its all-time high in early March as oil prices continued to drop in response to weakening macroeconomic fundamentals.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Financials
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US banks break revenue records in Q2'22
Net interest income, noninterest income and pre-provision net revenue were at all-time highs.
—Read the full article from S&P Global Market Intelligence
JPMorgan's Dimon retains position as highest-paid US bank CEO in 2021
Jamie Dimon received $31.8 million in cash and stock compensation in 2021, a 0.6% increase from 2020, and $84.4 million in total adjusted compensation, which was up 166.7% year over year.
—Read the full article from S&P Global Market Intelligence
Croatia's banks face short-term pain, long-term gain with euro adoption
Economic optimism surrounding eurozone membership will likely more than offset the sting of lost foreign-exchange profits and costly IT upgrades.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Fintech
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US venture capital firms keep their faith in Asia-Pacific's fintech sector
Singapore and India emerged as the biggest financial technology funding destinations for investors in the second quarter, S&P Global Market Intelligence data showed.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Private Equity
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IPOs vanish in H1, but private equity firms find other exit routes
Private equity exits fell by more than one-third compared to the first half of 2021, but trade sales remained relatively robust.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Credit and Markets
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Retail investors and hedge funds help push market higher
Through Aug. 3, retail investors have been net buyers year-to-date of $24.7 billion in equities. Hedge funds are net sellers over the same period for $14.1 billion.
—Read the full article from S&P Global Market Intelligence
The ascent of APAC in the global economy
The economic weight of the APAC region is forecast to rise by 2040, underpinned by the economic expansion of mainland China, India and the 10 members of the Association of Southeast Asian Nations.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Technology, Media and Telecommunications
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Falling demand and semiconductor shortages hit struggling tech and autos firms
Sectors with a greater reliance on semiconductors saw new orders fall in July, highlighting the additional difficulties these industries could face if the supply of semiconductors fails to improve and prices remain high.
—Read the full article from S&P Global Market Intelligence
Cable broadband struggles as pandemic subsidies shrink, competition increases
"Where do expectations go from here?" New Street Research analyst Jonathan Chaplin wrote of broadband subscriber trends. "The short answer: down."
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Energy and Utilities
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Inflation Reduction Act could help utilities sell competitive renewables assets
"I think more than ever now, the odds of ... pipeline projects materializing is very high," Scotiabank's Andrew Weisel said.
—Read the full article from S&P Global Market Intelligence
Inflation bruises some gas utilities while others shore up defenses
Diversified energy delivery companies and gas utility operators signaled that inflation, labor shortages, supply chain constraints and rising interest expenses will weigh on near-term earnings.
—Read the full article from S&P Global Market Intelligence
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- Deep Dives: Metals and Mining
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US coal exports rise in Q2'22 amid global energy crisis
Shipment volumes increased 14.8% quarter over quarter to 21.6 million tonnes and climbed 4.6% year over year, according to S&P Global Market Intelligence data.
—Read the full article from S&P Global Market Intelligence
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- The Week in M&A
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Amazon treads carefully with M&A strategy amid growth, regulatory pressures
Fintech M&A deal tracker: Valuation drop sparking buyers' interest
Seacoast to soar above $15B in assets with spree of 3 bank deals in 5 months
Axa's €660M insurance book sale tops European financials M&A activity in July
Buffett finishes Verizon exit, ups stakes in Ally, Occidental in Q2
BHP's offer to buy OZ Minerals tops metals, mining M&A for week ended Aug. 12
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Written and compiled by Louis Bacani