Global Markets Newsletter – February 2022

February was a month of inflation due to energy prices rising but mainly it was shadowed by the war in Ukraine after the invasion of Russia. The western world condemned this move and declared political and economic sanctions heading to stop this sudden move from Russia. However, Russia was not touched and continued its invasion with conventional weapons threatening to escalate with nuclear weapons if other countries intervene.

The world economy is at a critical point as these sanctions will affect the energy sector as Russia provides energy to Europe. Prices are expected to rise further and markets increased in volatility with commodities rising.

In the US, economic releases were more or less expected with few surprises. Unemployment was announced at 7.1%, exports and imports increased by almost $4bln at $228,1bln and $308.9bln respectively. Inflation was increased by 0.6% on a monthly basis while on a yearly basis was at 6% (from 5.5%). Retail sales were up by 3.8% and in-dustrial production by 4.08%. In the real estate market, the image was mixed as new home sales increased by 6.7%, building permits up by 0.7% and housing starts were decreased by 4.1%.

In Europe, the Russian invasion among others, led to historical decisions like Switzerland which withheld banking accounts of Russian civilians and Germany which announced €100bln military expenses for the first time after WWII. In the eurozone however economic releases did not surprise investors as retail sales decreased by 3%, GDP for the 4th quarter of 2021 gained only 0.3%, industrial production was up by 1.2% and finally inflation (measured by CPI and PPI) was at 5.1%. European Union is trying to measure war implications to its economy and France is looking ahead for its presidential elections.

Greece, concerning stocks, lost the rally to 1000 units and returned to 870 levels after the Russian invasion and new bond corporate issues were postponed due to new events.

The EUR/USD moved towards the 1.11 mark, and it is expected to continue towards 1.10 in the first half of 2022 depending on interest rates policy.

We hold excess liquidity awaiting proper timing to invest in US stocks in energy and technology sectors.

S&P-500 (3 month graph)
EuroStoxx-50 (3 month graph)
EUR/USD  (3 month graph)

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