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Archinomics Monthly - March 2022

2 years ago



Global equities overcame a steep sell-off in the first half of March to close the month with modest gains. In the US, the S&P 500 rose 3.6% while Japan’s TOPIX increased 3.2%. European equities lagged, with Germany’s DAX easing 0.3% on fears that Russia could turn off gas supplies to the EU. Chinese shares fell 7.8%. The cities of Shanghai and Shenzen were placed into lockdown, as Covid-19 infection rates surged to the highest levels since the start of the pandemic.


Government bonds tumbled amid fears that central banks will need to be more aggressive in raising interest rates to keep a lid on inflation. The 10-year US Treasury fell 4.2% while the 10-year German Bund declined 3.3% as bond yields in both the US and Germany neared three-year highs. Investment grade and high yield bonds mostly declined, but held up better than government debt.


The US dollar rallied as US policymakers forecast a greater number of rate hikes in 2022 and 2023. The Japanese yen fell to a seven-year low against the US dollar as the Bank of Japan maintained its dovish stance.


Oil prices soared. Brent crude reached a peak of just below $140 a barrel before closing the month 6.9% higher at around $108, as the US said it would release oil from its emergency reserves. Gold prices approached $2,000 a troy ounce, a monthly gain of 1.5% amid demand for safe-haven assets.

Market Volatility

Market volatility

Volatility initially surged as investors were spooked by news that President Putin had placed Russia’s nuclear forces on a heightened state of alert. After rising above 36.0 in early March, volatility later declined with the Vix index falling 31.8% over the month to close at 20.6.

Responsible investing

The EU announced it would ramp up its focus on renewables as it looks to cut its reliance on Russian gas by two-thirds before the end of the year. A growing number of global companies announced they were suspending sales and operations in Russia.

on the

Germany’s mighty manufacturers may be hit by gas rationing if Russia follows through with threats to stop supplying gas to countries deemed to be “unfriendly” unless they pay in roubles.

With the Russia/Ukraine war likely to further increase inflationary pressures in Europe, speculation is growing that the European Central Bank may need to accelerate its plan to end asset purchases and raise interest rates for the first time in more than a decade.

China’s zero-Covid policy is under threat, with the country seeing the highest infection rates since early 2020. Shanghai’s four-day lockdown has now been extended to two weeks, which will further weigh on economic activity. 



The conflict between Russia and Ukraine entered its second month. Russia, which has failed to take Ukraine’s capital Kyiv, says it will now focus on the contested Donbas region. To date, more than four million Ukrainian citizens have left the country, with the majority heading for Poland. 

Inflation continued to accelerate, driven by rising energy and food prices as well as supply chain disruptions. US consumer prices rose 7.9% year on year in February, the highest rate since January 1982, UK inflation hit a 30-year peak of 6.2%  and eurozone inflation reached a new high of 5.8%.

The US Federal Reserve raised interest rates for the first time since 2018 and forecast six more hikes in 2022 plus a further three in 2023. The Bank of England also raised rates to 0.75%, marking its third back-to-back increase since last December.


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