Skip to main content Skip to site footer

You are using an outdated browser. Please upgrade your browser to improve your experience.

Archinomics Monthly - February 2022

2 years ago



Global equities took fright as Russia invaded Ukraine. EU markets fell the most, with the Eurostoxx 50 losing 6.0%. In the US, the S&P 500 declined 3.1% as the US central bank moved closer to hiking interest rates. The UK market held up relatively well, with the FTSE 100 returning -0.1% helped by its significant holdings of oil companies and miners. Chinese shares fell as the property sector continued to show signs of distress.


Government bonds sold off on expectations of aggressive central bank action in raising interest rates, before attracting buyers as the invasion of Ukraine began. The German Bund yield traded in positive territory for the first time in almost three years, while the US Treasury yield climbed above 2.0% for the first time since August 2019. In general, investment grade and high yields bonds underperformed government markets as investors favoured lower risk assets.


The US dollar, Japanese yen and Swiss franc – currencies that are regarded as safe havens in times of crisis – rallied. The euro and sterling weakened, as Europe is the region that is most exposed to the growing crisis in Ukraine.


Energy prices soared on fears that the Russia/Ukraine war would severely disrupt oil and gas supplies. Russia is a key exporter of both oil and gas, as well as industrial metals such as aluminium, copper, nickel, platinum and palladium. With Russia and Ukraine jointly accounting for around a third of the world’s wheat exports, wheat prices touched a 13-year high.

Market Volatility

Market volatility

Volatilty continued to increase in February, spiking on news that Russia had invaded Ukraine. The Vix index rose 21% over the month to close at 30.2, a level last seen in the early days of the pandemic.

Responsible investing

Some of Europe’s largest asset managers stepped up efforts to use their power as shareholders to link executive pay to climate targets. US companies, including Apple, Disney and Starbucks, have also added environmental and social targets to executive bonuses.


Russia invaded Ukraine, causing shock waves around the world. Major economies responded with sweeping sanctions, including preventing Russia’s central bank from using its reserves and banning certain Russian lenders from the global payments system Swift. 

Inflation in developed markets continued to rise. In the US, inflation rose to 7.5%, the highest level in 40 years, while UK inflation hit a 30-year high of 5.5% and eurozone inflation reached 5.1%, the highest on record.

Major central banks moved closer to hiking interest rates to tackle rampant inflation. ECB president Christine Lagarde acknowledged that inflation risks are “tilted to the upside” and declined to rule out a rate rise later this year.


on the

The Russia/Ukraine war raises fears that supply disruptions might further exacerbate inflation. The EU is particularly vulnerable as it relies on Russia for around a quarter of its oil and a third of its gas supplies.

The US Federal Reserve is widely expected to announce an increase in interest rates in March, with a 50 basis point hike now a remote possibility. The Bank of England is predicted to raise rates once again.

Markets will remain nervous as investors wait to see whether the Russia/Ukraine war can be contained or will spread. Higher energy costs are likely to dampen economic growth and raise inflation and forecasts for 2022 are likely to be adjusted. 


We use cookies to give you the best possible experience of our website. If you continue, we'll assume you are happy for your web browser to receive all cookies from our website. See our cookie policy for more information on cookies and how we manage them.