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Understanding Market Reaction to Geopolitical Risks

Understanding Market Reaction to Geopolitical Risks

| February 25, 2022
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You are probably well aware that Russian military forces attacked a broad range of targets across Ukraine last night while Russian President Putin vowed to replace Ukraine’s government. This is something we are watching closely and you will see continued communication from us as things unfold. Here’s some of our thoughts for now…

 

  • We do expect further market volatility as the situation unfolds and elevated uncertainty may persist for several weeks, but if the conflict is contained, we do not expect long-lasting contagion to broader markets.
  • Upward pressure on commodity prices, already impacted by COVID-19-related supply chain disruptions, may see a more sustained impact as economic sanctions play out and will probably be the main source of risk for possible broader economic repercussions.
  • There may be some market opportunities for very active traders during the crisis, but for most investors, we believe understanding the typical market response to geopolitical risks and focusing on where we’re likely to be at the end of the year rather than at the end of next week or month is likely the best response.
  • The mounting geopolitical concerns may complicate the Federal Reserve’s move on interest rates, which has its sights on stabilizing inflation pressures.
  • We do not see a recession this year based on a strong consumer and corporate backdrop, therefore investors could use this volatility as an opportunity. 

 

As always if you need anything from me or if I can support in anyway please let me know…

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