March was dominated by news of the fighting in Ukraine and its inevitable consequences, such as the rising cost of energy, and the inevitable shortages that are likely to follow. The EU concluded a deal with the US to reduce its dependence on Russian gas, but the month ended with Vladimir Putin, demanding that companies and countries wanting Russia’s gas, open an account with a Russian bank and pay in roubles. China, significantly increased its purchases of liquid natural gas from Russia during the month.

In the UK, Chancellor Rishi Sunak presented his Spring Statement, as the rising cost of living threatened to overwhelm him, and North Korean leader Kim Jong-un launched his ninth ballistic missile of the year.

Many of the markets we cover in the market commentary had a reasonably good month, or at least managed not to lose ground. The one big faller was China’s Shanghai Composite index, as the month ended with the city in lockdown due to Covid.

As always, let us look at world events in more detail, beginning in Ukraine.


Russia began its invasion of Ukraine on February 24th. Most observers, including Vladimir Putin, expected the fighting to be over quickly. However, the conflict continues, with UK Prime Minister Boris Johnson warning it could continue well into next year, such is the strength of the Ukrainian resistance.

The war is reportedly costing Russia $1 billion a day, more than the $800 million a day it receives for oil and gas. Sanctions are clearly having an impact, but so far, they have done little to stem the fighting.


Chancellor of the Exchequer Rishi Sunak presented his Spring Statement on March 23rd, and announced a cut in income tax, but stated that the planned rises in National Insurance would remain in place.

Twenty-four hours later, Sunak conceded that inflation would average 7.4 per cent this year, with many pundits expecting it to exceed ten per cent at some point. The Office for Budget Responsibility, says that it expects real household incomes to fall by 2.2 per cent this year, which is the biggest fall since comparable records began in the 1950s.

Meanwhile, the UK economy grew by 0.8 per cent in January as the Omicron variant eased, and the Office for National Statistics, stated that it had grown by 1.3 per cent in the final three months of 2021. This is ahead of the one per cent it had previously estimated. The number of UK workers on payrolls rose by 275,000 between January and February, to a record 29.7 million.

Shop price inflation reached its highest rate since September 2011, with shoppers reportedly rushing to discounters like Aldi and Lidl to beat rising prices. Amazon looks set to provide further competition to the likes of Tesco and Sainsbury’s, as it announced its decision to close book stores to concentrate on groceries in the UK.

The Bank of England, duly increased base rates to 0.75 per cent, in a bid to keep inflation under control.

The month ended, with Nationwide announcing that house prices were rising at their fastest rate for seventeen years, with the average house in the UK now costing £265,312, up £33,000 in the past year.

The FTSE-100 index of leading shares coped reasonably well, rising one per cent in March to close at 7,516. The pound was down two per cent against the dollar, ending the month trading at $1.3138.


Europe spent last month exploring ways to reduce its dependence on Russian gas. In the wake of the Fukushima disaster in Japan, Germany had made the decision to close its nuclear plants by the end of 2022, but March opened with the news that the country was having second thoughts, with Reuters reporting that ‘“Germany is weighing whether to extend the life of its nuclear reactors in the face of uncertainty over Russian gas supplies”.

By the end of the month, Germany and Austria were apparently making plans for gas rationing, with Russia demanding that payments be made in roubles, as it looked to shore up its currency.
Germany, which gets roughly half its gas and a third of its oil from Russia, immediately urged consumers and companies to reduce demand, in anticipation of possible shortages.

Given the uncertainty over how long the conflict in Ukraine will last, the EU signed a deal with the US for liquified natural gas. The move will see the US provide the EU with gas equivalent to ten per cent of the amount it currently gets from Russia, by the end of this year. The agreement was seen as a start, but clearly more will need to be done if the EU is to significantly reduce its reliance on Russian energy.

In company news, Tesla finally received a conditional permit to begin work on its Gigafactory in Germany, which apparently ran to 536 pages. Staying in Germany, Deutsche Bank CEO Christian Sewing suggested there should be no further sanctions on Russia.

Renault courted controversy on Monday 21st, when it resumed manufacturing in Moscow. Two days later, production was swiftly suspended, following a public rebuke from President Zelenskyy.

Europe’s two major stock markets managed to emerge from the month unscathed, with both the German and French stock markets unchanged in percentage terms at 14,415 and 6,660, respectively.


Figures for February, showed that US employers had added 678,000 jobs as the Omicron variant continued to ease. This was well ahead of expectations and 200,000 more jobs than January, as unemployment eased to 3.8 per cent.

Meanwhile, the Federal Reserve raised interest rates for the first time since 2018, lifting its benchmark rate by 0.25 per cent, and signalling that there would be more rate rises later in the year. The move is, of course, designed to head off inflation, which has now reached a forty-year high of 7.9 per cent, as food and fuel costs continue to increase.

As experts warned that rates in the 2.5 per cent to three per cent range, could crack the economy and the housing market, Goldman Sachs cut its growth forecast for this year to 1.75 per cent, and warned that the US economy had a thirty-five per cent chance of going into a recession.

The Biden Administration continued to roll back tariffs imposed by Donald Trump, with the tariffs on UK steel and aluminium shipments the latest to be eased, following earlier deals with the EU and Japan.

On Wall Street, both the US indices we cover in the market commentary had good months. The Dow Jones index rose two per cent to end the month at 34,678, while the more broadly based S&P500 index was up four per cent, to 4,530.

Far East

The indices in China and Hong Kong had poor months, those in Japan and South Korea moved upwards.

The reason for the fall in China was, of course, the outbreak of Covid which forced Shanghai, described as the beating heart of the Chinese economy, to go into lockdown. The move was seen as so important that it saw oil prices drop by $4.50 a barrel, as demand was expected to reduce.

That, however, was not the only bad news for China. Port congestion was reported to be at a five-month high and crop conditions were described as the worst in history. This has largely been blamed on the unusual floods of last autumn. However, Ukraine is one of the world’s largest exporters of corn and wheat, so if China starts to stockpile these products, then prices could go up as a result.

Despite the impact of the Omicron variant, Beijing has set a target of five to 5.5 per cent growth for the Chinese economy this year. The consensus, at least before Shanghai went into lockdown, was for 5.2 per cent. Interestingly, one of the ways the Chinese leaders hope to achieve this is through tax cuts, with Bloomberg reporting that China is betting on $1.5 trillion of tax cuts to boost growth.

China, has pursued an official policy of neutrality over the conflict in Ukraine, and bought twice as much natural gas from Russia in February, as it did in the same month in 2021. The government also seems to be encouraging Chinese companies to fill the gap in the Russian market, as western companies withdraw.

The month opened and closed with bad news for the Japanese car industry. March started with Toyota having to halt all production in Japan due to a cyberattack at a leading supplier. The month ended with an admission, that the country’s car makers were continuing to struggle with rising costs for raw materials, and the ongoing shortage of semiconductor chips.

Seven hundred miles away in Seoul, South Korea had a new leader as Yoon Suk Yeol became President-elect. He has promised to take a harder line on North Korea, and to rebuild the South’s military alliance with the US.

On the region’s stock markets, China’s Shanghai Composite index fell six per cent in the month to 3,252, while the Hong Kong market dropped three per cent to 22,062. Despite the problems for the car manufacturers, the Japanese index rose five per cent to 27,821. The South Korean market ended the month up two per cent at 2,758.

Emerging Markets

The month started with Canada banning oil imports from Russia, and sanctions continued to be imposed on oligarchs and banks.

Although China has maintained a position of supposed neutrality regarding the Ukraine conflict, it was reported that gas flows to China, via the Siberia pipeline, have increased since the conflict started.

A pressing question was, would the West’s sanctions cause Russia to default on its debt? The oil and gas industry accounts for fifteen per cent of the country’s economic output, over a third of the government’s revenue, and around fifty per cent of Russia’s exports. In the middle of the month, Russia claimed it had made a key interest payment of $117 million on two dollar-denominated bonds. The investors took a rather different view, claiming they had not been paid. Russia will be in default if it has not made the payments by April 30th.

The Russian stock market may not have been in default, but it was very definitely closed for much of the month. It had closed on February 28th and there was a partial reopening on March 24th, with just 33 stocks trading, when the market went up roughly twenty per cent due to the surging oil and gas prices. All stocks on the Moscow exchange were finally trading by March 28th, with the market ending the month at 2,704. Technically, that is nine per cent up on its last trading day in February, but it is perhaps more realistic to look at the Russian market’s year-to-date performance. It has fallen twenty-nine per cent from the 3,787 at which it closed 2021.

The Indian market was up four per cent to 58,569 and the Brazilian stock market did even better, rising six per cent to end the month at 119,999.