Waking up to reports this morning of an assault on Ukraine, one’s first thoughts are with potential loss of life and liberty and, sadly, how this may affect the rest of the world.
There was an absolute inevitability that markets would fall sharply first thing. This is the result of uncertainty, more sellers than buyers, resulting in markets falling to find a new balance.
At the time of writing, the fall is in the region of 2%, but this could change as events unfold further.
The reality for clients is that markets go up and markets go down. We will see a resurgence and return of values, although the timescale of this is an unknown.
As we have seen during the last couple of years of the pandemic, previous financial crises and the Iraq wars, patience has been key.
Some other impacts specific to this issue are oil and gas prices rising further, although I would expect central governments to take some steps to limit this.
Gold is already spiking and as a store of value it is useful at times of crisis. Government bonds may benefit from equity valuation volatility.
Similarly, over the slightly longer term of the coming weeks or months, the increasing central government input of funds and liquidity has historically supported markets.
All this analysis reinforces why a sensible, well diversified, global approach to investments is best placed to cushion some of the immediate impacts of events in Ukraine.
We remain confident that this is the sensible and correct approach and do not think short-term reaction to events is necessary.
We will, of course, continue to track events closely as they unfold and will ensure to update clients as appropriate.