Equities flat for the week amidst Ukraine turmoil – Weekly Investment Review 07 March 2022

Global stock markets finished the week slightly higher, as the narrative
continues to be dominated by the ongoing war in Ukraine. In the US, tech
and consumer discretionary stocks ended the week lower but other sectors,
namely energy, moved higher as the oil price surged. The EU, UK, and US all
imposed severe sanctions on the Russian financial system including the
freezing of Central Bank Reserves. In response, the headline Russian
interest rate was shifted dramatically from 9.5% to 20% as the Russian Ruble
weakened significantly against key currency pairs throughout the week.
Whilst economic developments took an understandable back seat last week
there were some key releases and commentary. February’s non-farm payroll
data showed the US economy had strong momentum throughout the month
as the headline figure saw 678,000 jobs added versus a consensus of
400,000. January also saw its numbers revised higher as the unemployed
rate fell to 3.8%. US factory orders and ISM manufacturing survey releases
were both seen as positive. Fed Chair Powell testified to Congress mid-week
and stated the Fed would ‘move carefully’ in relation to policy as the war in
Ukraine develops. The market now fully expects a 0.25% rise in interest rates
at next week’s meeting, as the possibility of a 0.50% move continues to fade.
In Europe, inflation pressures continue to gather pace with the annualised
figure for February coming in at 5.8%, versus an already elevated 5.1% figure
in January. Energy continues to be the main driver of higher inflation, and the
imposition of sanction on key figures in, and parts of, the Russian economy is
likely to keep price pressures as a key item on the agenda to worrying
investors in the months ahead.