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Stock markets recovered in March as Russia’s invasion of Ukraine stopped short of sparking a wider European conflict.

3 min read


  • Stock markets are back to where they were before Russia’s invasion of Ukraine, turning in a relatively solid performance in March. They recovered despite increasingly aggressive comments from central bankers about rate rises, showing geopolitics to be the main market driver so far this year.
  • Investors are also back facing ongoing concerns, such as inflation pressures and interest rates. And they’re looking at new challenges about future economic growth too, after broad sanctions on Russia from the US and Europe, and rising energy prices.
  • But while the coming months could be challenging, we’re still seeing reasonably solid economic growth and no major global recession this year. We also believe inflation will start to settle in the latter part of the year.


All major, developed stock markets are now higher than they were when Russia invaded Ukraine. When a geopolitical crisis hits and outcomes are uncertain, we’re guided by history, which suggests these events tend to be short-lived in markets. Eventually, the larger macroeconomic backdrop prevails. News around the invasion remains stressful, but the headlines are not always the market.

Monique Wong, Executive Director, Asset Management, Coutts



The value of investments, and the income from them, can fall as well as rise and you may not get back what you put in. Past performance should not be taken as a guide to future performance. You should continue to hold cash for your short-term needs. 


  • Our healthcare investments have performed well thanks to the sector’s defensive characteristics, which make it resilient to weaker economic conditions.
  • Bonds fell in March due to the perceived low risk of the Ukraine invasion escalating, rising energy prices, and central bank comments about interest rate rises. Our relatively low allocation helped our relative performance compared to our benchmarks.
  • Our Chinese government bond holdings were also beneficial as they stayed flat while other bond markets fell – bolstered by continued government and central bank support in the country.  


  • Refocusing on fundamentals

    Geopolitics, energy prices and uncertainty over Chinese government policy – their zero tolerance approach to Covid and regulatory crackdowns worrying investors – have been important market drivers this year. But rising inflation and interest rates have now once again taken centre stage. Both rose in March in the US and UK, although markets were unfazed as geopolitics was the chief concern. While rising inflation will probably keep slowing economic growth, it’s unlikely to stop it completely – our research shows a low chance of a US recession in the next 12 months. While the shock to inflation is a risk, it’s largely due to more demand than supply, and higher prices should eventually reduce that demand. So we still see inflation falling later this year. It’s likely to stay higher than the levels we’ve been used to, however.

  • Government support in China

    China is at a different point in the economic cycle than western countries. While western central banks are reducing support for their economies to control inflation, the Chinese authorities are slowly but surely doing the opposite. And having set themselves an ambitious growth target of 5.5 per cent for this year, with a new Covid wave developing, they’re likely to continue supporting their economy. Pro-market messages from the Chinese government reassured investors in March, and it seems a deal between US and Chinese regulators is being brokered to keep Chinese stocks listed on US markets.

  • A healthy investment

    On a sector level, health care is one of our investment themes and looks set to continue delivering for investors. There’s a long-term driver based on demographics – people are living longer and, as they get older, they need more health care. The sector also has defensive characteristics – we’ve seen so far this year that it tends to endure market volatility better than other industries – which makes it particularly attractive when the economy slows. With uncertainty ahead, health care is a useful diversifier in portfolios and funds.

Coutts investment clients can find out more about the latest market movements and what they mean by contacting their private banker. More on our experts’ views can also be found on our insights page.