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The Russia and Ukraine conflict has caused a huge impact on the market. Many investors are worried and unsure of the investments. Our investment team weighs in.
This was an eventful week for the markets as the surge in commodities prices added uncertainty over the outlook for inflation, and the continuing war is again piling pressure on stocks which saw global equities retreating. The Russia/Ukraine war is also fostering uncertainty regarding how the Federal Reserve will respond with monetary policy as it is set to begin its rate hike campaign next week.
For the week, most country’s declines weren’t nearly as sharp as those in Europe, where the Russians invasion of Ukraine is. The MSCI All Country World Index declined -2.35% and indexes of some European countries fell more than 10%. MoneyOwl’s equity portfolio tracks the benchmark closely, declining by -2.36%.
Over the weekend, Russian President Vladimir Putin reiterated that the war will continue until Ukraine accepts his demands and halts resistance through demilitarization of the army. The Russia invasion has helped U.S. Crude Oil to rise above $100-per-barrel with fear of supply disruption, the highest level since 2011 and up 25% for the past week.
Safe-haven assets such as Gold and government bonds rallied, Gold topped $2,000 an ounce for the first time in 18 months and U.S. Treasury Yields were sharply lower as the 10-year benchmark yield fell to 1.73%, down 17 bps for the past week. The benchmark bond market index (Bloomberg Barclays Global Agg bond index) rose slightly with a return of +0.002%.
In economic data, US economic data released shows strong Labour market strength with the economy generating the strongest job growth in seven months, beating most economists’ expectations with 678k jobs added in February. The unemployment rate fell to 3.8% – the lowest level since the pandemic began and ahead of a Mid-March Federal Reserve Policy meeting where they are widely expected to begin lifting interest rates.
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