February 2022

• Global markets declined sharply in February following Russia's invasion of Ukraine, which triggered major geopolitical uncertainty and intensified inflation concerns globally.
• Energy, commodity and defence-related sectors outperformed significantly amid fears of supply disruptions and escalating conflict.
• Equity markets experienced sharp volatility as investors assessed the economic and geopolitical implications of the war.
• Central banks remained focused on combating inflation despite increased geopolitical risks and slowing growth concerns.
• Emerging markets delivered mixed performance, with commodity exporters benefiting while others faced capital outflows and rising uncertainty.
• Oil, natural gas and industrial commodity prices surged dramatically following the invasion.

Asia (ex. Japan)

Asian markets outside Japan weakened during February as Russia’s invasion of Ukraine increased global risk aversion and intensified concerns regarding inflation, supply chains and slowing global growth.

Chinese markets experienced additional pressure due to ongoing domestic growth concerns and regulatory uncertainty, though authorities continued signalling support for economic stability. Semiconductor demand remained supportive for Taiwan and South Korea despite broader market weakness.

Europe

European equities declined sharply during February as the outbreak of war in Ukraine created severe uncertainty for regional growth, energy supplies and financial stability. Banking, industrial and consumer sectors experienced significant volatility.

Energy prices surged across Europe due to the region's heavy dependence on Russian natural gas supplies, intensifying inflation concerns and increasing expectations of economic disruption.

United States

U.S. equities weakened during February as geopolitical tensions and rising commodity prices intensified inflation fears and increased market volatility. Technology and growth sectors remained under pressure from rising bond yields and tightening monetary policy expectations.

The Federal Reserve maintained its plans to begin raising interest rates in March despite growing geopolitical uncertainty, as inflation remained at multi-decade highs.

United Kingdom

UK equities delivered relatively resilient performance during February compared with some global peers, supported by strong gains in energy, mining and defence-related sectors.

However, investors remained concerned regarding rising living costs, inflation pressures and the broader economic consequences of the conflict in Ukraine.

Japan

Japanese equities declined during February as rising energy prices, global volatility and geopolitical uncertainty weighed on investor sentiment.

The weaker yen provided some support for exporters, while the Bank of Japan maintained its highly accommodative monetary policy stance despite rising global inflation pressures.

Emerging Markets

Emerging markets delivered mixed results during February as commodity-exporting economies benefited from surging energy and raw material prices, while import-dependent economies faced increased inflation and financial pressures.

Investor sentiment weakened broadly amid rising geopolitical uncertainty and tightening global financial conditions.

Commodities

Commodity prices surged sharply during February following Russia's invasion of Ukraine. Oil and natural gas prices rose dramatically due to fears of supply disruptions involving one of the world’s largest energy exporters.

Industrial metals and agricultural commodities also rallied strongly as investors anticipated severe disruptions to global supply chains. Gold prices strengthened significantly as safe-haven demand increased amid escalating geopolitical uncertainty.