March 2022

• Global markets remained highly volatile in March as the war in Ukraine intensified inflation pressures and increased uncertainty surrounding global economic growth.
• Central banks accelerated plans for monetary tightening in response to rapidly rising inflation.
• Commodity prices remained extremely elevated, particularly energy, food and industrial metals.
• Equity markets recovered partially late in the month despite ongoing geopolitical risks.
• Bond yields rose sharply as investors anticipated aggressive interest rate increases from major central banks.
• Emerging markets experienced mixed performance amid commodity price shocks and tightening financial conditions.

Asia (ex. Japan)

Asian markets outside Japan experienced mixed performance during March as rising commodity prices, slowing Chinese growth and geopolitical uncertainty affected investor sentiment. Chinese markets weakened sharply at times due to renewed coronavirus lockdowns and regulatory concerns.

However, Chinese authorities later signalled stronger policy support for financial markets and economic growth, helping stabilise sentiment. Semiconductor demand continued supporting Taiwan and South Korea despite broader volatility.

Europe

European equities remained highly volatile during March as investors assessed the economic impact of the war in Ukraine, rising energy costs and supply chain disruptions. Energy-intensive industries faced increasing pressure from surging natural gas and electricity prices.

Despite ongoing uncertainty, markets recovered somewhat late in the month as investors anticipated fiscal support measures and adjusted to the evolving geopolitical environment.

United States

U.S. equities experienced significant volatility during March as investors balanced strong economic conditions against surging inflation and aggressive Federal Reserve tightening expectations.

The Federal Reserve raised interest rates for the first time since 2018 and signalled a faster pace of future increases to combat inflation. Treasury yields rose sharply, particularly at shorter maturities.

United Kingdom

UK equities delivered relatively resilient performance during March due to strong exposure to energy, mining and defensive sectors that benefited from rising commodity prices.

However, inflation concerns intensified significantly as energy and food costs surged, increasing pressure on consumers and raising expectations for further Bank of England tightening.

Japan

Japanese equities remained volatile during March as rising energy prices and global uncertainty weighed on investor sentiment.

The yen weakened sharply as the Bank of Japan maintained ultra-loose monetary policies while other major central banks moved toward tighter monetary conditions.

Emerging Markets

Emerging markets delivered mixed results during March as commodity-exporting economies benefited from elevated energy and raw material prices, while import-dependent nations struggled with rising inflation and capital outflows.

Chinese markets remained particularly volatile due to renewed lockdowns and concerns regarding economic slowdown.

Commodities

Commodity prices remained extremely elevated during March due to ongoing disruptions caused by the war in Ukraine and global supply shortages. Oil prices briefly surged above levels not seen in many years as sanctions and supply fears intensified.

Industrial metals and agricultural commodities also remained highly volatile, while gold prices stayed elevated amid geopolitical uncertainty and inflation concerns.