Shares of banks and other financial institutions rose cautiously as the Ukraine crisis and inflation remained in focus.
The World Bank has sharply lowered its growth forecast for the world economy for this year, warning of several years of high inflation and sluggish growth reminiscent of the stagflation of the 1970s. Citing the damage caused by the war in Ukraine and the Covid-19 pandemic, the bank said global growth is expected to collapse to 2.9% in 2022 from 5.7% in 2021, significantly lower than its January forecast for growth of 4.1 %.
Furthermore, growth is expected to hover around the reduced pace in 2023 and 2024 as war disrupts human activity, investment and trade as governments withdraw fiscal and monetary support.
Meanwhile, the US Treasury decided to prevent US investors from buying Russian debt in the secondary markets, an apparent extension of the existing policy that only prohibited purchases of newly issued Russian government debt and certain debts of Russian companies.
Deutsche Bank has relocated hundreds of employees from its technology center in Russia to Berlin and decided to make the German capital a technology center for its investment and corporate banking activities. The German lender offered the roughly 1,500 employees who were in Russia the chance to move to Berlin with their families, and about half agreed, according to a person familiar with the move.
A handful of prominent US CEOs, including BlackRock’s Larry Fink and bosses of Delta Air Lines, Netflix and Universal Pictures, have landed on a new sanctions list imposed by Russia in retaliation for searing economic restrictions the West has imposed in Moscow.
Treasury Secretary Janet Yellen said in Senate testimony that she expects inflation to remain high, underscoring the challenge facing the US economy and the Biden administration as the inflation hits its highest rate in decades.
“I expect inflation to stay high, although I really hope it will go down now,” Yellen said, adding that the Biden administration was updating its forecast that inflation would be in. average of 4.7% this year. “The numbers aren’t locked in, but it’s likely to be higher,” she said. Yellen was testifying before the Senate Finance Committee before heading to the House Ways and Means Committee on Wednesday to discuss the administration’s annual budget request.
Write to Amy Pessetto at amy.pessetto@dowjones.com
(END) Dow Jones Newswire
06-07-22 1743ET
