The Cambridge Weekly – 25 April 2022

Finely balanced

Easter week was a bit mixed for investors – and this was not caused by fears that populist Marine Le Pen closing the gap to incumbent French president Emmanuel Macron may have heralded another major political upset in the 2nd and final round of the presidential elections. Nevertheless, at the top level of diversified multi-asset portfolios, the month of April has experienced a relatively mild downdraft from the heights of the recovery at the end of March. Underneath, however, big moves have taken place and some divergences have opened up.

Equity risk in balance: A tale of two outlooks

Capital markets are in a precarious position. The stellar growth coming out of the pandemic has dramatically slowed since last year, while supply-side problems and rampant inflation have continued. Cost pressures looked to be easing as we entered 2022, with global supply bottlenecks opening up. But Russia’s invasion of Ukraine threw a spanner in the works, as have a new round of COVID-related lockdowns in China. More supply-side disruption – whether from the war itself or ensuing sanctions – turbocharged the rally in commodities and brought a prolonged bout of volatility in oil prices.

Equity risk in balance: A tale of two outlooks

Capital markets are in a precarious position. The stellar growth coming out of the pandemic has dramatically slowed since last year, while supply-side problems and rampant inflation have continued. Cost pressures looked to be easing as we entered 2022, with global supply bottlenecks opening up. But Russia’s invasion of Ukraine threw a spanner in the works, as have a new round of COVID-related lockdowns in China. More supply-side disruption – whether from the war itself or ensuing sanctions – turbocharged the rally in commodities and brought a prolonged bout of volatility in oil prices.