Legal   |   ADV   |   Privacy   |   CRS

Market Update: March 2022

February saw a continuation of the January volatility, with geopolitics weighing on risk sentiment after Russia invaded Ukraine. Commodity prices are rising quickly, with oil trading well north of $100/barrel, and agriculture and metals prices also increased over the period. Russia is a large supplier of energy (oil and gas) to the global economy, and Ukraine is a significant contributor to the global agriculture market, which is why prices have risen as quickly as they have. Additionally, commodity stocks were already pretty low due to a variety of reasons, so the combination of rising inflation, tight supplies, and geopolitical uncertainty created a potent mix for rising prices.

 

Looking ahead, we expect things to remain choppy for the next couple of months, as geopolitical risk is likely to remain elevated, and the recent rise in commodity prices will flow through to inflation. With that in mind, we continue to recommend a quality focus within both equities and fixed-income, and well-diversified portfolios that include some level of exposure to commodities. As shown in the figure below, energy has been the lone sector in the black so far this year.

 

From a policy perspective, it’s likely that the Fed will raise interest rates at their March meeting by 25 basis points, barring any exogenous shocks between now and then. This would be the first interest rate increase since the onset of the Covid-19 pandemic, and since it has been well telegraphed, we do not expect a market reaction to the interest rate hike itself, as there is likely to be more emphasis on the Fed’s thoughts on the future, given complicating factors such as oil prices and the Russia/Ukraine conflict.

The commentary is limited to the dissemination of general information pertaining to Frontier Wealth Management, LLC’s (“Frontier”) investment advisory services. This information should not be used or construed as an offer to sell, a solicitation of an offer to buy or a recommendation for any security, market sector or investment strategy. There is no guarantee that the information supplied is accurate or complete. Frontier is not responsible for any errors or omissions, and provides no warranties with regards to the results obtained from the use of the information. Nothing in this document is intended to provide any legal, accounting or tax advice and Frontier does not provide such advice. This information is subject to change without notice and should not be construed as a recommendation or investment advice. You should consult an attorney, accountant or tax professional regarding your specific legal or tax situation.