The week in review

Two unknown outcomes preoccupied the markets during the week of 14 February in the form of Russia’s military intentions, and the slightly less opaque plans of interest rate policymakers.
Published 22 February
4 1⁄2 mins

What’s happened in markets?

FTSE All Share-2.01-1.441.44-0.1215.075.994.78
Euro Stoxx 50-1.94-4.16-6.74-4.9813.4911.057.55
S&P 500-1.52-4.85-7.24-8.5712.6818.0815.14
Japan Topix-1.95-2.72-5.32-3.411.228.826.87
MSCI Asia Pac.-0.74-1.73-4.47-1.02-15.669.269.38
MSCI Emerg. Mkts.-0.68-0.75-2.890.05-11.508.688.37
Jo’burg All Shares-0.021.918.043.6619.5615.3311.56
UK Gov’t Bonds1.69-1.86-4.65-4.29-
US Gov’t Bonds0.05-0.71-2.70-3.03-3.232.852.36
Global Corp. Bonds-0.44-2.42-4.48-4.67-
Emerg. Mkt. Local0.481.360.920.93-
Figures in the respective local currencies as at the end of trading on 18/02/2022.

Inflationary pressures continued to push higher without affecting key economic indicators during the week of 14 February 2022.

The US producer price index (PPI) registered a year-on-year rise of 9.7%, significantly above the 9.1% expected, while the increase in the PPI typically spells yet more change in the consumer price index (CPI).

CPI in the UK also outstripped expectations as it climbed by 5.5% year-on-year in January – a 30-year high – and up from the 5.4% in December. The labour market also continued to recover with unemployment dipping to 4.1%.

The growth trajectory continued to be underscored by data being released during the week of 21 February in the form of the flash purchasing managers’ index releases, which will be published this week from around the globe. Already out were the Eurozone’s IHS Markit’s flash composite PMI, seen as guide to overall economic health, jumped to a five-month high of 55.8 in February, up from 52.3 in January and all above the 50 mark which signals economic expansion.

Against this backdrop, it was unsurprising that the latest Federal Reserve (Fed) meeting minutes released left little room for doubt about an imminent US interest rate hike. The only real uncertainty is whether March will see a 25 or 50 basis-point rise.

The coming week may, however, provide further indications on a Fed rate rise and the latest thinking at the Bank of England, with speeches anticipated from both the Fed’s Bank of Atlanta president, Raphael Bostic, and the UK central bank’s governor, Andrew Bailey.

Notable news in the corporate world was the controversy around Tim Cook’s pay deal. An investors’ advisory group has urged Apple shareholders to oppose the US$99m package for the CEO.

The news came as most of the S&P 500 members have now announced earnings. Results to date reflect the strong economic background, with 77% of companies reporting earnings per share above analyst estimates – roughly in line with the five-year average. Moderna and eBay will be among the big names to report in the week of 21 February.

Meanwhile, the world’s eyes are still trained on the tensions between Russia and the West over Ukraine. The extent of any invasion, and the response of western countries, will determine the impact on markets and energy prices in particular.

As such, energy stocks have continued their surge and were, once again, the week’s best-performing sector (+4.0% over the past 30 days, with oil at +7.3%), while consumer staples was the only other sector to deliver a positive performance (+0.1%).

Overall, stocks in developed markets continued to lag (-3.6%) due to their sensitivity to interest rate shifts, while emerging markets ended only marginally up (+0.2%). In terms of style, growth stocks (-4.5%) fell further than value stocks (-1.9%), while small capitalisation stocks (-2.8%) performed slightly better than large capitalisation stocks (-3.3%). The hawkish (pro interest rate increases) rhetoric from central banks also put pressure on the bond markets.




UK GDP (QoQ)1.0
UK PMI60.255.3
UK CPI (YoY)5.5
EU GDP (QoQ)0.3
EU PMI55.853.0
EU CPI (YoY)5.15.1
US GDP (QoQ)6.97.0
US PMI59.960.6
US CPI (YoY)7.5


What’s happened in portfolios?

While we anticipate a volatile year in 2022 for equities, it remains a favourable environment for the asset class. Our focus on value stocks, and on the UK and Europe – where economies are reopening and values are relatively unstretched – has contributed to relatively good performance.

Capital in fixed income is taking a hit, but again our emphasis on short duration, high yield and investment grade has led to relative outperformance. The debate internally on this asset class focuses on when we start to add to duration, i.e. buying longer-dated paper. This could happen soon, for example, when we believe elevated interest rates have been priced in.

Among real assets, TRIG (The Renewables Infrastructure Group) reported a robust performance for 2021, driven by higher inflation and energy prices. The company’s net asset value was up by 3.5% over the end of 2020. TRIG is now targeting a dividend of 6.84p per share, up 1.2% on the 2021 dividend.

Alternative portfolios are not currently matching that kind of outperformance. For example, shares in Hipgnosis – which owns half of worldwide rights to Neil Young’s catalogue – took a hit as a result of the spat between the singer and Spotify

However, we remain confident about the overall prospects for real assets and alternative strategies. Both bring welcome protection from inflation to client portfolios, while private equity is of particular interest to tap into the re-opening of economies.

What's happening this week?

23 Feb • EU Consumer Price Index (January) | 24 Feb • US Gross Domestic Product (Q4) | 25 Feb • UK GfK Consumer Confidence (February)

Clients of Nedbank Private Wealth can get in touch with their private banker directly to understand how their portfolios are responding to market events, or call +44 (0)1624 645000 to speak to our client services team.


If you would like to find out more about how we manage clients’ investments, please contact us on the same number as above. Or you can get in touch using the links to the forms towards the end of this page.

Sources: Nedbank Private Wealth and (1) Bloomberg and (2) Reuters.

The value of investments can fall, as well as rise, and you might not get back the original amount invested. Exchange rate changes affect the value of investments. Past performance is not necessarily a guide to future returns. Any individual investment or security mentioned may be included in clients’ portfolios and is referenced for illustrative purposes only, not as a recommendation, not least as it may not be suitable. You should always seek professional advice before making any investment decisions.

Access more of our insights


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