Trucker protests against vaccine mandates and Russia’s attack on Ukraine with swift sanctions from the west blindsided investors in February. Here’s a summary of the notable events that steered the markets.
COVID-19 and market developments
- U.S., Canadian and global equities ended the month essentially flat as geopolitical tensions, high inflation and anticipation of interest rate hikes contributed to volatility and constrained performance.
- In bond markets, U.S. and Canadian yields initially rose on inflation news and worries about tightening monetary policy by central banks, before falling when Russia invaded Ukraine.
- CI Global Asset Management launched its latest crypto offering – the CI Galaxy Multi-Crypto ETF – which invests in a range of digital assets including bitcoin and ethereum for increased diversification.
- Canadian house prices continued going up, compounded by sales listings trending lower since January and housing construction labour and material shortages due to supply chain disruptions.
- Already high as a result of ongoing supply chain chaos, after Russia invaded Ukraine, the price of oil surged to US$100 a barrel for the first time since 2014, before dipping slightly at month end.
- Following the trucker protests in Ottawa, the provinces of Alberta, Saskatchewan, Manitoba, Ontario and Quebec announced the immediate ending or speeding up of the lifting of COVID-19 restrictions.
- Two of Canada’s top five banks, CIBC and Scotiabank, revealed plans to start bringing workers back to Canadian offices in March. National Bank also allowed 50% of its staff back on February 28.
- U.S. inflation climbed again, to 7.5%, its highest level since February 1982, as strong consumer demand and ongoing supply chain disruptions pressured prices. This led to President Biden releasing a statement acknowledging inflation was “elevated” but that it was forecast to subside by end of the year.The Fed called inflation “a severe threat” in January,stating it will raise rates soon, probably in March, as the economy no longer required pandemic-related emergency stimulus.
- In Canada, inflation surpassed 5% for the first time in 30 years and the tenth consecutive month above the Bank of Canada’s 1-3% target range. According to Statistics Canada, prices rose across all major components with housing contributing the most. The Bank of Canada opted to hold interest rates in January but aligning with the Fed noted it could be ready to start hiking rates in the spring.
How does this affect my investments?
No doubt events in Ukraine are alarming and will continue to negatively impact investor sentiment in the short-term. However, hopefully, over time peace will be restored and the post pandemic recovery can take centre stage again. Tightening monetary policy including imminent rate hikes by central banks, have likely already been priced in by markets and inflation should cool as supply chains normalize and consumer and oil prices ease. Economic fundamentals and corporate earnings remain healthy.
Regardless of where we are in the market cycle, it’s important to take a disciplined approach to investing and stay focused on your long-term financial goals. We recommend you maintain a diversified mix of asset classes in your portfolio to maximize potential returns and minimize risk. Regularly reviewing and rebalancing your portfolio also helps you remain on track.
We are here to support you in achieving your financial goals. Please do not hesitate to contact us.
The information in this letter is derived from various sources, including CI Global Asset Management, CI Financial, Globe and Mail, Daily Mail, Toronto Sun, National Post, Wall Street Journal, Bloomberg, Reuters, TNC News and Statistics Canada as at various dates. This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources and reasonable steps have been taken to ensure their accuracy. Market conditions may change which may impact the information contained in this document. Before acting on any of the above, please contact me for individual financial advice based on your personal circumstances.
Assante Capital Management Ltd. is a Member of the Canadian Investor Protection Fund and Investment Industry Regulatory Organization of Canada.