Asset Allocation Outlook March

Last month we said there was still hope for equity investors for 2022. We still think that, although investors will need to exercise patience. The reason is of course the Russian invasion of Ukraine which, aside from unimaginable human suffering and damage to infrastructure, is generating enormous uncertainty. Equity markets fell in February, globally by 2.7%, with Europe (-5.2%) hit harder than the US (-3.1%). That was nothing compared to the Russian market, however, which dived over 30% in a single day and was subsequently closed. The rouble has also plummeted. Investors sought safety in government bonds, causing US 10-year bond yields to fall to 1.7% and German yields to drop back below zero. The big winners were commodities, especially oil, the price of which climbed to 114 US dollars a barrel at the start of March, its highest level since February 2013. European gas prices shot up again.