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Russia’s invasion of Ukraine in late February has shocked the world. The humanitarian impact is significant, as are the economic and financial implications. In response to the invasion, markets fell as investors assessed the potential economic impact of the sanctions imposed on Russia, who remain a key global exporter of commodities.
The prospect of prolonged inflation, expectations of interest rate hikes and the tension between Russia and the West over Ukraine saw negative equity market returns. However, global bond yields rose, with markets projecting up to 5 rates hikes in the US starting in March.
Developed market equities continued to rally in Q4 2021, providing investors with a third consecutive calendar year of positive returns. Investor sentiment was aided by strong corporate earnings growth despite the concern about the spread of the Omicron Covid variant.
Global equities fell in November, with fears over the new “Omicron” variant of Covid-19 weighing on investor sentiment. Bond markets rose with yields falling as investor appetite for riskier assets waned.
Global stock markets mostly gained in October after a weak start. Many registered new highs during the course of the month and were supported by encouraging corporate earnings and an easing of fears around China’s property sector.
Developed market equities were generally unchanged in Q3, with the declines in September erasing gains made earlier in the quarter. Emerging market equities notably under performed amid a sell-off in China.