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D-PIMS Weekly Market Update - Week of 11th to 17th April 2022

Today’s Weekly update:

Over the course of last week shortened by the Easter holidays, market moving headlines were mostly related to the invasion of Ukraine, its effects on inflation and Covid-19:

• On Monday, citing officials, the Times reported that Russia has made a "massive strategic blunder" as Finland and Sweden look poised to join NATO as early as the summer. The United States officials said that NATO membership for both Nordic countries was "a topic of conversation and multiple sessions" during talks between the alliance's foreign ministers last week, attended by both Sweden and Finland.

Ukrainian President Volodymyr Zelenskiy said on Monday thousands of Russian troops were massing for a new offensive in the east, and Russia said it would not halt its military operation in Ukraine for any further peace talks. British intelligence said Ukrainian forces had already repulsed several Russian assaults in eastern regions. Russian forces were also pushing to establish control over the southern port city of Mariupol, the lynchpin between Russian-held areas to the west and east and already devastated by weeks of siege and bombardment.

• On Tuesday, U.S. monthly consumer prices increased by the most in 16-1/2 years in March, as Russia's war against Ukraine boosted the cost of fuel to record highs, cementing the case for a 50 basis points interest rate hike from the Federal Reserve next month. The surge in prices reported by the Labour Department on Tuesday culminated in annual inflation rising at its fastest pace since the end of 1981. But there were some glimmers of hope, with monthly underlying price pressures rising moderately as motor vehicle prices cooled. Economists also believe overall inflation has peaked.

President Vladimir Putin said on Tuesday peace talks with Ukraine had hit a dead end, using his first public comments on the conflict in more than a week to vow that his troops would win and to goad the West for failing to bring Moscow to heel. Addressing the war in public for the first time since Russian forces retreated from northern Ukraine after they were halted at the gates of Kyiv, Putin promised that Russia would achieve all of its "noble" aims in Ukraine. In the strongest signal to date that the war will grind on for longer, Putin said Kyiv had derailed peace talks by staging what he said were fake claims of Russian war crimes and by demanding security guarantees to cover the whole of Ukraine.

• On Wednesday, British consumer price inflation leapt to its highest level in three decades last month, intensifying the pressure on Prime Minister Boris Johnson and his chancellor, Rishi Sunak to ease the cost-of-living squeeze. The annual inflation rate climbed to 7.0% in March from 6.2% in February, its highest since March 1992 and by more than expected by most economists in a Reuters poll, official data showed.

U.S. President Joe Biden announced an additional $800 million in military assistance to Ukraine on Wednesday, expanding the scope of the systems provided to include heavy artillery, ahead of a wider Russian assault expected in eastern Ukraine.

• On Thursday, the flagship of Russia's Black Sea fleet was seriously damaged, and its crew evacuated, following an explosion on board that Ukraine said was caused by a missile strike. The loss of the Soviet-era missile cruiser Moskva would be a blow to Russia's military - on the 50th day of the war - as it readies for a new assault in the eastern Donbas region that is likely to define the outcome of the conflict. Russia's defence ministry said a fire on the Moskva caused ammunition to blow up, Interfax news agency reported, without saying what had caused the blaze.

Britain approved Valneva's COVID-19 vaccine on Thursday, becoming the first European country to clear the use of the French firm's shot in a move that boosted its shares by more than 20%. The go-ahead is the sixth COVID vaccine approval by Britain and comes even though London last September scrapped a 1.4 billion euro deal to buy the Valneva shot, alleging the company was in breach of its obligations under the agreement - which Valneva denied.

Britain's medicines regulator on Thursday also approved the use of Moderna's COVID-19 vaccine in children between 6 and 11 years, as the country bolsters itself for fighting coronavirus infections amid the spread of new virus variants. The Medicines and Healthcare products Regulatory Agency (MHRA) said the approval was granted after Moderna's vaccine, known as Spikevax, met the required standards of safety, quality and effectiveness.

• Over the week, the main global stock markets were down some quite heavily, apart for the Nikkei in Japan. Although after taking the value of the Pound into account, even returns from this market were also down. Markets were concerned about the fading hopes of a peace agreement between Russia and Ukraine and the ongoing effect on the oil price. Over the week, all of the D-PIMS portfolios were down, especially the higher risk portfolios, although they were helped by their US Smaller Company, UK domestic equity and Absolute Return allocations.

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Past Performance is no guarantee of, or guide to future returns.

The comments made above represent our interpretation of events and market views and are in no way a guarantee of future investment performance.