REVIEW OF THE WEEK

Farewell and good riddance to the first quarter

In the US, the major indices were higher in March, but they turned in a weak performance for the first quarter. Investors have been worried about rising interest rates, the war in Ukraine and inflation, which was made even worse by disruptions in commodities exports from both Russia and Ukraine.

The Dow Jones was off -4.6% for the first quarter, while the S&P 500 was down -5%. The worst performer in the US by far was the Nasdaq, down -9.1%.

After a horrible first quarter everywhere, shares in Europe gained a little ground in a choppy week of trading, overcoming concerns about the macroeconomic outlook amid strong inflation and the ongoing Russian invasion of Ukraine.

The pan-European STOXX Europe 600 Index advanced 1.06%. Germany’s DAX Index climbed 0.98%, France’s CAC 40 Index tacked on 1.44%, and Italy’s FTSE MIB Index added 2.46%. The UK’s FTSE 100 Index added 0.73%.

On The Portfolio Platform most of the traders had reasonable weeks with most posting profits. The FTSE tracker is now positive on the year after the index has outperformed others around the world.

The FTSE 250 is down -11.21% year to date showing the true situation of the UK economy as we battle with the same inflationary and conflict issues as everyone else.

The SP500 Trader is also now positive on the year having performed well in March. Cambridge Futures is only slightly behind as is FTSE MKT Trader. Hopefully by the end of April we will have some good news to report as accounts gradually make their way back to pre-conflict levels.

Optimism over Russian-Ukrainian peace talks faded somewhat during the week and European Central Bank (ECB) chief economist Philip Lane said that the ECB should be ready to revise policy should macroeconomic conditions deteriorate significantly.

ECB President Christine Lagarde, reiterated at a conference in Cyprus that the eurozone faced slower growth and higher inflation in the short term, but she warned that "the longer the war lasts, the higher the economic costs will be and the greater the likelihood we end up in more adverse scenarios."

Under an “adverse” scenario (including stricter sanctions on Russia, persistent energy supply disruption, and increased geopolitical uncertainty), the ECB projects economic growth of 2.5% in 2022, compared with its base case of 3.7%.

If the conflict can come to an end, and inflation is brought under control, then the world can go back to the recovery we were seeing towards the end of 2021. If it continues, pressure will be felt, and global GDP will suffer.

What will this mean for stocks?

It’s going to be a bumpy ride and we will see some good days and some bad days. Hold tight, and look long term. Our traders may place small short positions in their accounts over the shorter term, but over the year, we would expect to see growth returning and our portfolios doing well.

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