Despite the increasing recession risks due to the fallout from the Ukrainian conflict, European equities followed peripheral market and gained on the back of improvement in investment sentiment. In the month of July, the European STOXX 600 index gained 7.64% (4.70%in US$ terms). Although inflation in Eurozone is at a new record high, markets are anticipating a gradual easing of the situation. The ECB have announced a 50 bps rate hike in the July meeting, which was larger than expected. The frontloaded monetary tightening was welcomed by markets, the absence of forward guidance from the ECB retains more flexibility in future monetary adjustments. In our view, there is no change in the faster monetary tightening, which will likely exert downward pressure onto the investment market, as financing conditions worsen and valuations compress. Additional economic risks arose from other sources, including the political instability in Italy, as well as the risk of energy crisis due to Russia. Italian Prime Minister Mario Draghi resigned and the President was forced to call an early election, delaying the budget as well as EU Recovery Fund items, additional political uncertainties hits the confidence for both businesses and consumers in the region. To further add fuel to the fire, natural gas supply from Russia have been further cut, raising concerns over the risk of complete cuts in supply in the future, which would threaten the economy in the dependent countries. Both latest developments further increases the risks of a recession in Europe, we would continue suggest investors to underweight the market.