At the end of the month, financial markets were heavily impacted by the outbreak of war in Ukraine. While January was negative due to tighter monetary policies, February was impacted by the Russian invasion of Ukraine and all indices closed negatively.

The financial markets, frightened by this event, began to deal with the sanctions imposed on the invader. Rising commodity prices and new supply bottlenecks are a serious threat to global economic recovery, all at a time when Covid 19 was coming out of two years. The Fear of global escalation, the threat of nuclear war, and media coverage facilitated by the massive use of social media have overshadowed economic data such as inflationary data.

Expectations of a particularly aggressive FED starting as early as March have, however, been reduced, giving some oxygen to those sectors penalized by rising rates. In fact, the FED raised interest rates by 25 basis points because the crisis and the war in Ukraine could have unpredictable consequences. As this conflict will have a possible negative impact on the European economy, ECB officials are already commenting that the Bank may postpone its tightening measures.

The MSCI world index lost approx. 3.50% to -7.50% since the beginning of the year. A similar situation occurred in America with the main indices closing down for the second consecutive month (SP500 -3.50% and Nasdaq -4.20%), something that has not happened for a long time. However, those who suffered most from this geopolitical problem were European markets, due to the proximity of the conflict and energy dependence from Russia. The Euro Stoxx 50 index ended up at the lowest levels in recent months, losing around 7% for the month. The Swiss market also fell by 3%. The emerging markets index performed better, losing 2.45% (down 4.23% since the beginning of the year), helped by Latin American countries (linked to the export of raw materials) and China, which helped offset the sharp fall in the Russian and Eastern European stock markets.

Although events are highly uncertain, the latest developments will lead analysts to further increase inflation estimates and lower growth forecasts with inevitable consequences on the future actions of Central Banks and the adoption by Governments, especially European ones, of increasingly expansive fiscal policies in an extreme attempt to support consumer demand.