Investment Update – February 2022

The clash of arms in Ukraine has erupted, and this is being reflected on the stock markets and in energy prices.

There is never a good time for war, but the price of oil and gas coming under even more pressure is the last thing we need right now.

The current energy crisis is still manageable, but the longer it lasts, the greater the impact on purchasing power and the longer inflation will remain (too) high.

It is precisely this higher level of inflation that has the central banks shifting tactics, something they have made abundantly clear in recent weeks.

The monetary tap is shutting off and bond markets are now expecting six rate hikes in the US and negative rates to be eliminated in the euro area.

We still see a strong economy against this backdrop, so such developments needn’t be a cause for concern. It is important that these inflationary pressures cool in the coming months, however, so that central banks are not forced to apply the brakes.

In the meantime, business confidence has risen again and companies are publishing surprisingly good earnings figures. We expect this strong trend to continue once the Omicron restrictions are lifted worldwide.

A strong tailwind, therefore, for risky investments such as shares and corporate bonds, a more difficult environment for government bonds.

In the short term, however, the uncertainty is high. How will the conflict develop? What will the impact be on energy prices? How fast are inflation figures coming down? How will central banks respond? Reason enough to reduce holdings of shares again and to seek temporary refuge in cash.

In addition to this long-term vision, protection and trends on the financial markets are also important aspects. Your personal investment, which you can see in Mobile and Touch, may have a different composition that takes account of your comfort zone.