Mar 2022 – Ukraine crisis, erm, boosts equities

We started March in the midst of a war in Europe (or, for my Russian readers, a ‘special military operation’). Scenarios such as a rapid Ukrainian defeat, or alternatively escalation to a nuclear confrontation were being discussed in the media.

We ended March with Ukraine very much still in the fight. In fact Russia has for now given up on taking the capital Kyiv. Nuclear confrontation feels less likely than it did a month ago. But, as with all wars, it’s going to last longer than we feared.

Map showing advancement of Russian invasion into Ukraine, 6 weeks in

All of this is not at all good news for energy costs, supply chains, or the wider economy. It won’t be long before a major European/N American economy reports double digit inflation.

Given this context, it is no surprise that bond markets dipped significantly in March – dropping 3-4% across the board. But there is a welcome surprise of a resounding rise in equity markets in the month.

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