Russia-Ukraine crisis – volatility in financial markets
Energy shock – spike in crude oil and natural gas
Inflation – “transitory” no more
The MSCI AC World equity index fell -4.6% (-3.2% in €).
The US fell -5.2% (-3.1% in €).
Europe fell -8.1% (-7.8% in €), underperforming as its proximity to the war in Ukraine and its exposure to Russian energy exports led to growth downgrades and higher inflation.
Emerging markets were down -6.1% (-4.9% in €), the benchmark negatively impacted by its exposure to Russian assets.
The ICE BofA Merrill Lynch Eurozone > 5-year sovereign bond benchmark fell -7.2% over the quarter, the selloff following rising inflation readings and more inflation-focused central bank policy guidance.
The euro fell to 1.1082 against the US dollar.
Commodities rose 33.1% (36.1% in €). Crude oil prices are up 33.3% year to date, Brent crude oil having peaked close to $140/bbl as the US and UK placed an embargo on Russian oil imports. European gas prices also spiked through the quarter, given Europe’s heavy reliance on Russia for gas imports.
Gold rose 5.9% and was supported by safe-haven demand.