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D-PIMS Weekly Market Update - Week of 14th to 20th March 2022

Today’s Monday update:

Over the course of last week, market moving headlines were mostly related to the invasion of Ukraine and Covid-19:

• On Monday, Business Secretary Kwasi Kwarteng said Britain will donate more than 500 mobile generators to help Ukraine and weaken Russia's attempts to cripple its power supply, adding that they would be enough to power 20,000 buildings. "Sending portable electricity generators to Ukraine will help keep essential services running, weaken (Russian President Vladimir) Putin's attempts to cripple Ukraine’s power supply, and help support the extraordinarily brave Ukrainian response to the Kremlin’s war waging," Kwarteng said in a statement.

The U.S. and China planned to hold their first high-level, in-person talks since Russia’s invasion. It comes as U.S. officials said Moscow in the early days of the war asked Beijing for military equipment, which they said raised concerns that China could undercut Ukrainian forces’ defence efforts.

• On Tuesday, three European prime ministers headed to Kyiv by train for the first visit of its kind since the war began, even as buildings there were ablaze and rescue workers were trying to pull survivors from the rubble of fresh Russian bombardment. "It is our duty to be where history is forged. Because it's not about us, but about the future of our children who deserve to live in a world free from tyranny," said Polish Prime Minister Mateusz Morawiecki, who crossed the border with Czech Prime Minister Petr Fiala and Janez Jansa of Slovenia.

In the latest hint at compromise, President Volodymyr Zelenskiy said on Tuesday that Kyiv was prepared to accept security guarantees that stop short of its long-term objective of the NATO alliance membership, which Moscow opposes. Peace talks between Russian and Ukrainian delegations via a video link restarted on Tuesday after a pause on Monday, the first time a round of talks ran to a second day.

China posted a steep jump in daily COVID-19 infections on Tuesday, with new cases more than doubling from a day earlier to hit a two-year high, raising concerns about the rising economic costs of its tough measures to contain the disease. A total of 3,507 domestically transmitted cases with confirmed symptoms were reported across more than a dozen provinces and municipalities, up from 1,337 a day earlier, the National Health Commission said.

Manufacturers of everything from flash drives to glass for Apple iPhone screens are warning of shipment delays as they comply with Chinese controls to curb the spread of COVID-19, further straining global supply chains.

• Russia said on Wednesday that a neutral Ukraine with its own army along the lines of Austria or Sweden was being looked at as a possible compromise in peace talks with Kyiv. "This is a variant that is currently being discussed and which could really be seen a compromise," Kremlin spokesman Dmitry Peskov was quoted as saying by RIA news agency.

The Federal Reserve on Wednesday raised interest rates for the first time since 2018 and laid out an aggressive plan to push borrowing costs to restrictive levels next year in a pivot from battling the coronavirus pandemic to countering the economic risks posed by excessive inflation and the war in Ukraine. The U.S. central bank's Federal Open Market Committee kicked off the move to tighten monetary policy with a ¼% increase in the target federal funds rate, lifting that key benchmark from the current near-zero level in a step that will ripple through a variety of other rates charged to consumers and businesses.

• On Thursday, the Bank of England raised interest rates in a bid to stop fast-rising inflation becoming embedded, but with households facing a huge hit from soaring energy bills, it softened its language on the need for more increases. Eight of the nine Monetary Policy Committee (MPC) members voted to raise the Bank Rate to 0.75% from 0.5%, their third hike in as many meetings and taking rates back to their pre-pandemic level.

• Over the week, the main Global Stock markets were up, particularly Japan. Markets were helped by signs of compromise in the Ukraine/Russia peace talks and the US federal reserve’s first rate rise being smaller than feared. Over the week, all of the D-PIMS portfolios were well up, especially the higher risk portfolios. They were helped by their Japan and domestic UK 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.
 

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