Weekly Market Update - 21 May 2022

UK Inflation Jumps To 40-Year High

U.K. inflation soared to a 40-year high of 9% in April as food and energy prices spiraled, official figures revealed Wednesday, escalating the country’s cost-of-living crisis.

Consumer prices rose by 2.5% month-on-month, fractionally below expectations for a 2.6% climb in a Reuters poll of economists, which had also projected a 9.1% annual increase.

The 9% rise in the consumer price index is the highest since records began in their current form in 1989, outstripping the 8.4% annual rise posted in March 1992 and well ahead of the 7% seen in March of this year. The U.K.’s Office for National Statistics also said its estimates suggest that inflation would have last been higher “sometime around 1982.”

From April 1, the U.K. energy regulator increased the household energy price cap by 54% following a surge in wholesale energy prices, including a record rise in global gas prices. The regulator, Ofgem, has not ruled out further increases to the cap at its periodic reviews this year.

Source: CNBC

Tencent Holdings Ltd. Slid More Than 8%

Top executives warned it will take time for Beijing to act on promises to prop up the Chinese tech sector, suggesting the embattled industry may struggle to grow in the short term.

The comments from executives came after Tencent reported revenue growth all but evaporated in the first quarter, walloped by sweeping government restrictions as well as lockdowns across the country. The quarantining of much of Shanghai -- the nation’s finance and media hub -- obliterated commercial payments and may undercut advertising spending in the current quarter, they said, depressing big drivers of the social media giant’s business.

Source: Yahoo

Coinbase Facing Challenges

Hidden away in Coinbase Global’s disappointing first-quarter earnings report—in which the U.S.'s largest cryptocurrency exchange reported a quarterly loss of $430 million and a 19% drop in monthly users—is an update on the risks of using Coinbase’s service that may come as a surprise to its millions of users.

In the event the crypto exchange goes bankrupt, Coinbase says, its users might lose all the cryptocurrency stored in their accounts too.

Coinbase said in its earnings report Tuesday that it holds $256 billion in both fiat currencies and cryptocurrencies on behalf of its customers. Yet the exchange noted that in the event it ever declared bankruptcy, “the crypto assets we hold in custody on behalf of our customers could be subject to bankruptcy proceedings.” Coinbase users would become “general unsecured creditors,” meaning they have no right to claim any specific property from the exchange in proceedings. Their funds would become inaccessible.

Source: Fortune