Global markets made a negative start to Q1 2022 as the shock of Russia’s invasion of Ukraine reverberated around the world
European markets fell in Q1 2022 in the wake of the Russian invasion of Ukraine, markets experiencing a technical correction (-10%).
Commodity prices soared given Russia is a key producer of several important commodities including oil, gas, and wheat.
Brent crude and Western Texas intermediate oil prices hit highs in the wake of soaring global energy prices
US headline inflation hit 7.5%, resulting in further tightening by the US Federal Reserve.
Fight against rampant inflation took a decisive turn as the Bank of England (BoE) raised interest rates for the first time in three years.
Elsewhere, Chinese equities were negatively affected by renewed Covid-19 outbreaks, leading to major lockdowns in some major cities.
Bond yields rose sharply (bond prices and yields move in opposite directions), experienced negative returns due to ongoing inflationary pressure.
March 2022 quarter for the US; S&P, Dow Jones, and NASDAQ was the worst period since the first quarter of 2020.
Conversely, Australian markets were buoyed by the increase in commodity prices, miners, oil and gas producers and agricultural names all benefited from higher prices caused by supply concerns.
The Australian stock market managed to produce a positive return for Q1 2022 of +2.2%, driven by strong gains in Energy, Materials and Financials versus the S&P500 of -3.7%.
March 2022 was the worst month in history for the Aussie bond market, down -3.75%.
2022-23 Australian Budget allows for more spending and lower budget deficits, temporary cut to fuel excise, more spending on infrastructure and defence and assistance to home buyers.
Written by margaret.riddiford@atchison.com.au4, May 2022