1Q 2022 Market and Economic Overview

The first quarter of 2022 was described as eventful. Russia's invasion of Ukraine was described as the first hostile invasion of another territory in Europe in over 75 years, provoking what the report called the most significant European humanitarian crisis since 1945. Coronavirus had not fully disappeared and lockdowns were renewed in parts of China. Inflation was at its highest since the early 1980s and many central banks moved in a more hawkish direction.

On interest rates, the report said that three months earlier no member of the Federal Open Market Committee had expected rates above 2.25% by the end of 2023, whereas almost all now expected at least that level, with some projecting up to 3.75%. Markets priced in 1.75% of US rate rises for 2022. The 30-year/5-year Treasury yield curve inverted towards the end of March for the first time since 2006. The 10-year US Treasury yield was 2.34%, compared with 1.82% at the start of March. The latest US inflation reading was 7.9%, the highest since January 1982, with core inflation at 6.2%, and German inflation was 7.3% in March.

The report described the invasion as producing the biggest commodity price shock since 1973. It stated that Russia accounted for about 2% of world GDP but roughly 11% of global oil supply, 17% of natural gas supply, 11% of wheat production and a tenth of industrial metals production, and that an index of world commodity prices was more than 25% higher than at the start of the year. Global inflation was cited at 7%, and almost every forecasting agency had cut its 2022 and 2023 GDP growth estimates.

In China, stocks had their strongest one-day rally since 2008 on 30 March after the State Council pledged support for the market. The Hang Seng China Enterprises Index rose 12.5%, the Hang Seng Index 9.1% and the CSI 300 4.3%. Equity markets rebounded in the last month of the quarter, after about 30% of S&P 500 constituents and over 50% of Nasdaq Composite constituents had reached correction territory.

Important information: This snapshot summarises MWC Group's market commentary for the period shown and is provided for general information only. It is not investment, tax or legal advice, a personal recommendation, or an offer or solicitation to buy or sell any investment, and it does not take account of your personal circumstances. Views and figures reflect conditions at the date of publication and may since have changed. Past performance is not a reliable indicator of future results. The value of investments and any income from them can fall as well as rise, and you may get back less than you invested. Exchange-rate movements can affect returns. Market data comes from third-party sources believed to be reliable, but its accuracy cannot be guaranteed. Please seek personal advice before making any investment decision. Issued by Manentia Wealth Consulting Group Limited (C80087), licensed by the Malta Financial Services Authority.