Western Policy Makers Renew Support for Ukraine at Munich Security Conference

Munich Security Conference Updates

This weekend saw politicians, policy makers and diplomats meet in Germany for the Munich Security Conference where the conflict in Ukraine remained the key topic of focus. The conference comes as this Friday marks a year since the start of the Russian invasion of Ukraine.

One of the key headlines includes Chancellor Olaf Scholz saying that Germany will soon deploy its first Leopard tanks to Ukraine, as Zelenskyy calls for more heavy armour. Scholz also declared “everyone who can deliver such battle tanks should really do this now.” Meanwhile, Emmanuel Macron called on his western allies to “intensify our support” as Russia further builds up forces in Ukraine. Adding to these sentiments, Rishi Sunak said that the UK “gave ￡2.3 billion last year – and we will match or exceed that in 2023.” He also stated that the “UK stands ready to help any country provide planes that Ukraine can use today”.

Elsewhere, US Secretary of State, Anthony Blinken also warned against the CCP providing military support to help bolster the Russian campaign. According to Blinken, Beijing already provides “non-lethal support", though a new report suggests that they are considering sending “lethal support" to their neighbour. Though China continues to weigh up the extent to which its interests are served by its involvement in the Ukrainian conflict, shortly before the invasion Xi Jinping said that there are 'No limits' between China and Russia’s relationship and thus Western leaders fear China’s involvement could escalate the conflict further. Of course, Sino-US relations continue to remain frosty having been exacerbated by the recent diplomatic tensions over surveillance balloons.

Polish President Calls on Ukraine to Receive Post War Security Guarantees

Polish President, Andrzej Duda has also called on Nato to provide post-war security guarantees to Ukraine. This could involve the assurance of military and finical assistance in the event that any aggressor further encroaches on their sovereign territory. While Kyiv applied to join Nato in September of last year, it is not yet a member. As such, Ukraine counties call on the 1994 Budapest Memorandum to demand further military assistance. Under the memorandum, Ukraine agreed to relinquish their Soviet Union inherited nuclear weapons on the proviso of security guarantees from Russia, the US and UK - including their pledge not to invaded. Duda’s calls comes ahead of President Biden’s visit to Poland later this week.

PBoC keep Rates Unchanged

This morning saw the PBoC’s keep their base interest rate unchanged at 3.65% as inflation currently sits at 1.8%. The decision came in line with market expectations, as the central bank continued to keep the status quo which it has kept since August 2022. Over the last year, the health of the Chinese economy has been characterised by intermittent municipal lockdowns which have hampered growth and demand and kept inflation in check.

The decision helped the CSI 300 - which tracks Shanghai and Shenzhen’s largest stocks - rose 2.45%. Elsewhere, Japan’s Nikkie 225 closed 0.39% higher while Hang Seng index closed up 0.87%.

Markets Await Tomorrow’s S&P PMI figures

On Tuesday, markets will be focusing on S&P PMI figures which are released across the globe. Three key figures to keep an eye on are those from Germany, the UK, and the US…

• Germany

German services rose for the first time in seven months in January though the country’s manufacturing sector continues to contend with challenging macro-economic conditions. Chiefly amongst these challenges has been rising energy prices and persisting supply chain issues, while recent growth figures indicated the construction sector contracted for the second consecutive year.

• UK

Meanwhile in the UK, Following the most recent UK print, the S&P’s Chief Business Economist Chris Williamson said: “Weaker than expected PMI numbers in January underscore the risk of the UK slipping into recession. Industrial disputes, staff shortages, export losses, the rising cost of living and higher interest rates all meant the rate of economic decline gathered pace again at the start of the year. Jobs also continued to be lost as firms tightened their belts in the face of these headwinds, though many other firms reported being constrained by an ongoing lack of available labour.”

• US

Finally in the US, recent data showed that while US activity was slowing, the rate of decline in the manufacturing sector was easing. Nevertheless, US manufacturing businesses continue to contend with softer demand and an uncertain macro-economic landscape with volatile input costs.?