Market update

I hope that this update finds you safe and well after a barrage of storms to hit us over the last few weeks. 

With the ongoing conflict in the Ukraine this is extremely concerning on a humanitarian front, let alone the financial fall out. 

The recent sanctions placed upon the Russian economy will see it very much unable to function normally. The links to China appear to still be open but the main global economy as we know is more toward central Europe and America. 

Their removal from SWIFT and not being able to rise debt will see things impact Russia much quicker now. 

We have seen the interest rate in Russia in effect double to 20% from 9.5% and the value of the Rouble fall around 30% against the Dollar. 

The markets have been choppy and volatile since the start of the year with inflation and the risk of higher interest rates really driving the issue hard. 

The US is suffering from 40-year high inflation rates, and this is going hand in hand with the US Federal Reserve looking to reduce the ongoing monetary supply and raise interest rates. 

The UK has started to play its hand here with regards rates and we will see further increases this year to try and control some of the inflation fears. 

My personal view on this is that interest rates will not control inflation seeing as the pressure is coming from energy costs and supply chain issues, i.e., a lack of product. 

With the conflict in Ukraine this saw gas prices on Thursday rise by 40% and oil jump 8%. Since then, we have seen a calm on Friday before increasing again. 

Oil is now around $110 a barrel and to help put some context here it was $21 a barrel in April 2020. 

What this means for us here is that we expect to see petrol now increasing, some are suggesting it will be £1.75 per litre, and this would be the average price. 

The energy cap may well also increase in the very near future even before the current one is to come into force. 

Putting everything else to one side it is these issues that will really impact us the most right now. 

With higher energy costs this will filter down into all the products we buy as they become more expensive to produce and move. 

We are seeing some extended periods of volatility right now and this is to be expected.  As an example, we saw a fall on Thursday with a recovery on Friday. 

Volatility is always a constant in markets – and taking a longer-term view of this helps build and manage robust portfolios that will provide opportunities and meet investment goals. 

The way in which we invest is across a broad brush of assets and this proves once again that this style of approach is the prudent way forward. 

The view right now is that we will remain invested as we are and there are no planned changes in relation to these events. 

As we saw during the onset of the covid pandemic being patient and measured in any approach provides for better longer-term outcomes. 

We will continually monitor the situation and provide further comment or advice if so required. 

Please feel free to contact us if you have any questions at all.