Catch the important Q1 market highlights before you step into the next financial quarter

The past quarter was full of surprises – from the biggest NASDAQ crash to a 5-year high Inflation. Read the market highlights of Quarter 1

Financial markets highlights in the first quarter of 2022

• Gold reached around its all-time highs at 2070 dollars per ounce for the second time after starting the pandemic.
• NASDAQ index plunged over 38% - the biggest crash since 2008.
• Oil prices skyrocketed 85% from 78 dpb (Dollar per barrel) to 131 dpb.
• Nickle jumped over 250% in one day on London Stock Exchange, the most significant price fluctuation in the history of financial markets ever.
• Inflation peaked up to five-decade highs.
• In March, the Japanese yen dropped to almost 7-year lows against other major currencies.

Inflation fears weigh on global growth

In the first quarter of 2022, the financial markets were full of surprises. While rising uncertainties about global economic growth were among the main drivers of trends. In the context of near-zero interest rates and extensive bond redemption and liquidity injection programs from central banks, the stimulus packages eventually led to the highest inflation figures in five decades with inflation in the U.S. and Europe exceeding 7%.

A constant rise in general goods and services prices has prompted central banks to use their tools to curb inflation since the beginning of 2022. The divergence in economic policies among the central banks has changed investors' perception of economic growth estimates for each country.

Starting of rate hikes cycle

For the first time in three years, the Federal Reserve raised interest rates in the first quarter of this year. With the Fed's determined plan to combat inflation, the dollar index moved closer to its two-year high against other major currencies. It is expected that the bank will continue raising interest rates to 2% for the rest of the year. By contrast, the European Central Bank's relatively passive stance led to the euro tumbling to its lowest rate in two years as the ECB's big concern is slowing down economic growth in the light of high energy prices. At the same time, the Bank of Japan's unwillingness to adopt immediate contractionary policies contributed to the yen reaching its seven-year low against the greenback.

Geopolitical tensions and commodities markets

Meanwhile, geopolitical tensions with Russia's invasion of Ukraine and unprecedented financial sanctions from western countries also shocked the markets.

The combination of inflation expectations, supply disruption concerns, and Russia's significant role resulted in major shocks for commodities markets, extending to energy, agriculture, and precious metals. The oil price rose 85% to $130 a barrel, and the price of natural gas doubled. Corn and wheat prices reached record levels. The nickel price rose 250% in one day, a record in the history of financial markets.

Gold broke out of its two-year high and reached a new high of $ 2070 on the back of investor risk aversion.

Worst quarter for equities since the beginning of the pandemic

The Dow Jones Industrial Average closed the first quarter down 4.6% and the S&P 500 down 4.9%. The Nasdaq also dropped 9%. This was the worst period for the three major averages since the first quarter of 2020, when the Covid pandemic hit the U.S., and the S&P 500 plunged 20%. High inflation in the United States, the start of the Fed's rate-hiking cycle, and the invasion of Ukraine by Russia all contributed to equities' struggles this quarter.

Markets are expected to be driven by concerns about slowing economic growth amid high energy prices and continued inflation in the second quarter.