3 events that shaped financial markets in 2022

As 2022 draws to a close, many are reflecting on what has been an interesting year for financial markets.

From political turmoil to war in Europe, there is no doubt we have been living through turbulent times. What were the events that shaped financial markets in 2022 - and what were the positives for investors?

We look back at 3 of the key events which impacted markets: 

1: All change at 10 Downing Street

Political drama proved a key determinant of third-quarter portfolio performance. A disastrous debt-fuelled mini budget sent bond markets into a frenzy, causing concern for the financial stability of pension funds and a short bond buying programme from the Bank of England to stabilise markets.
Knock-on effects rippled through markets with Sterling falling to near parity against the Dollar and the UK-listed real estate sector experiencing significant selloffs.

2: War in Ukraine

Russia’s invasion of Ukraine has been the greatest catalyst of market turmoil in 2022. As the world’s second largest exporter of grain, the initial reaction was a near doubling of wheat prices through the first quarter.
Economic sanctions against Russia followed, leading to a Eurozone-Russia standoff over energy supply. Natural gas prices nearly tripled through to August and crude oil touched US$120 a barrel. Rising food and energy costs fed through, helping to push UK inflation to 40-year highs.

3: Performance of the US Dollar

Few assets managed to produce positive returns in 2022, the US Dollar was one, with performance driven by the safe-haven nature of the currency and widening interest rate differentials against peer countries.
For UK investors holding Dollar assets into 2022, the strong performance of the Dollar against Sterling dampened losses, providing a ballast to portfolios amidst market volatility.
 
Please note that this communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned. The value of investments and any income derived from them may go down as well as up and you could get back less than you invested.