Equity Markets Continue Volatile Trading

Equity markets continued their volatile trading last week amid ongoing geopolitical uncertainty caused by Russia invading Ukraine, the economic slowdown it will likely cause, and the commodity cost push it will have on prices this summer. The S&P 500 dropped -1.6% on the week, with strength in defense companies, energy, REIT’s, rails, and utilities marginally offsetting declines in technology and banks.  Even so, the SP500 continues to hold around correction territory.

Various market sentiment metrics are now at contrary bullish readings typically seen around correction lows in the markets like late March 2020 and late October 2020 in front of the Presidential election.  The market could use some good news.

The Russian invasion of Ukraine is roiling commodity markets as both countries are big global providers of basic commodities including everything from steel, nickel, and aluminum, and oil to grains and palladium.  While these commodity moves are contributing to additional upward short term spikes in inflation, currently, the bulk of the upward inflation pressure is still expected to produce a very high CPI in 2022, and high but declining in 2023 and after.

For those interested in some data on Russia’s “economic” weight in the world, Goldman Sachs has done some research, and Russia economically, outside of oil, is very small.  The vast majority of Russia’s global economic influence is commodity based which will serve to keep inflation levels higher on cost push factors.

Goldman Oil Data Goldman Oil Data

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Equity Markets Continue Volatile Trading
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Equity Markets Continue Volatile Trading
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Equity markets continued their volatile trading last week amid ongoing geopolitical uncertainty caused by Russia invading Ukraine, the economic slowdown it will likely cause, and the commodity cost push it will have on prices this summer. The S&P 500 dropped -1.6% on the week, with strength in defense companies, energy, REIT’s, rails, and utilities marginally offsetting declines in technology and banks. Even so, the SP500 continues to hold around correction territory.
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