Axiome Quarterly Q1 2022

Just as the global economy was saying goodbye to the COVID-19 pandemic, the world faces a second “shock” from Russia’s invasion of Ukraine. Unprecedented sanctions have been placed on the Russian economy by Western governments and Russian stocks have been dropped from global index providers and most managed funds. Oil and especially European gas prices have surged in response to the conflict, along with commodity prices more generally. More than a glimmer of hope has been provided by Ukraine’s strong resistance and the roll back of Russian armed forces from Kiev at the time of writing. Partly in response, market performances were stronger in the month of March than over the quarter as a whole. While these are uncertain times, Russia and Ukraine are not large contributors to the global economy and history suggests that recovery from small scale conflicts is rapid. That said, the war has clearly raised global inflation and inflationary risks at a time when central banks were already behind the curve in terms of getting on top of surging inflation rates.