Investing

The first quarter of 2022 was one of the toughest in decades for investors with a neutrally balanced portfolio, writes Bloomberg on the basis of its own data. The S&P 500 fell by 4.9 percent, US treasuries lost 5.6 percent and investment grade even fell by 7.8 percent. 

Japanese shares were hot in the 1980s, but the bubble has deflated mercilessly in the decades that followed. The high point that was reached in 1989 was never reached again. Especially funds in value shares seem to have fallen victim to the disinterest of investors in recent years. Now Japanese value stocks are hitting back.

Japanese value stocks in particular performed relatively well in 2021 and have continued to strengthen in the first two months of this year. The 1980s marked the heyday of the Japanese stock market.

Economic growth in the EU will be “severely affected” by the disruption triggered by Russia’s invasion of Ukraine, the European Commission has warned. Investor confidence in Germany, Europe’s largest economy, is falling sharply. The multiplicity of problematic macro factors is large and uncertainty about raw materials dominates. “In Europe it will be touch and go.”

Beyond the suffering and humanitarian crisis from Russia’s invasion of Ukraine, the entire global economy will feel the effects of slower growth and faster inflation, the International Monetary Fund said on Wednesday.

“We live in a more shock-prone world,” IMF Managing Director Kristalina Georgieva (pictured) recently said at a press briefing in Washington. “And we need the strength of the collective to deal with shocks to come.”

Financial markets do not always react in the same way to news. There are times when the stock market seems immune to both bad news and good news. Investors keep calm and make investment decisions based on fundamentals. The market works. At such times, it is relatively easy for analysts. They analyse the fundamentals, the market reacts.

European emerging-market bond funds pose limited contagion risk to the broader financial system in light of the conflict in Ukraine, rating agency Fitch said on Monday. The funds have low exposure to Russia, Ukraine and Belarus, which should limit the risk of a large increase in redemptions. 

Despite volatility sparked by Russia’s invasion of Ukraine at the end of the month, global inflows into equity funds and exchange traded products increased in February to 99.6 billion dollars from 74.4 billion in January, BlackRock said on Thursday in a note to investors.

Fixed income products again saw a resumption of inflows, of 16 billion dollars, compared to net outflows in February. 

Russia’s invasion makes it more difficult for central banks to keep inflationary pressures at bay. Rising commodity prices weigh on the cost of living in the US and Europe. Restrictive effects of the Ukraine war on economic recovery are also increasing, but a full-fledged stagflation scenario so far appears premature, one investment strategist told InvestmentOfficer.

Conventional stock market wisdom says investors should buy when the cannons roar and sell when the stock market hears the clarion call. The cannons are literally roaring today. But does this reasoning hold true?

Author Ben Carlson has written extensively on the relationship between war and stock market performance. However, the relationship between geopolitical crises and market performance is not as obvious as you might think, he argues.

The difference between US 10-year and 2-year yields has fallen to around 45 basis points. That is a flattening of the US yield curve of almost a full percentage point in the last four months. It raises the question of whether a new recession is imminent.