The first quarter of 2022 was unusually tough for investors. Bond and equity markets were both knocked in January by central banks becoming increasingly concerned about inflation and starting to signal a faster pace of interest rate rises and stimulus withdrawal than they had, last year, guided markets to expect. This proved particularly painful for US equities and the technology sector specifically. Investment strategies that had performed well in recent years by investing in the fastest growing companies in the world, regardless of valuations, fell sharply at the beginning of 2022.
Meanwhile, value-focused strategies, investing in unfashionable sectors like energy, mining and financials, and the UK stock market generally, performed well.
Russia’s invasion of Ukraine in late-February provided a further shock to financial markets, with equity investors suffering greater losses until markets troughed in the second week of March. However, while equity markets then staged a rebound, bond markets continued to retreat as central bankers, particularly at the US Federal Reserve, signalled faster and faster paces of interest rate rises.
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