Despite another stellar earnings season and positive data on retail sales, the geopolitical uncertainties kept investors on tenterhooks.

As if the monetary policy was not hefty enough, the brewing geopolitical crisis further weighed down the markets last week.

In response, investors sold equities and flew to the safety of Cash & Gold, which has been up by more than 5.00% since January. 

The markets flattered to deceive the second week in a row, as S&P 500 fell 1.5%, Nasdaq by 1.70%, and the DOW fell the most by 1.80%.

The YTD numbers for the indices are as follows; S&P 500 -8.60%, Nasdaq -13.30%, and the DOW -8.6%.

Europe

Closer to the crisis's center, European markets also bore the burnt, as the Euro Stoxx fell 1.86%. However, the UK was up by 1.92%

The UK Prime minister Boris Johnson stated on BBC last week that evidence suggests Russia is planning "the biggest war in Europe since 1945." US President Joe Biden also said that the US had reason to believe that Russian forces were "planning to and intend to attack Ukraine in the coming week, in the coming days."

However, Indian Brokerage house Brokerage Edelweiss believes that it does not expect "even a local conflict of any meaningful scale" emerging out of these geopolitical tensions.

"Worse case, Russia will initiate localised aggression and bring the western world on the negotiation table extracting a concession that NATO will not invite Ukraine for 3 or 4 decades to join them," said Edelweiss in a note to clients.

China

Chinese markets were the lone green in a sea of red, as the markets rose on supportive comments from government officials and lower-than-expected inflation. The Shanghai Composite Index added 0.8% for the week, and the CSI 300 Index gained 1.1%.

India 

Indian equities were down on global cues and persistent selling by the FIIs. The Sensex fell by 0.55% and the Nifty by 1.37%.

Amidst the rising crude oil prices and a potential rise in interest rates, it is difficult to rule out the possibility of the rupee sliding further.

Outlook

"When is the selling going to stop?" is perhaps the question; everyone is looking for an answer.

Well, it depends how far below the markets continue to slide? If they breach January's lows, we could see extended selling pressure, leading to bear market territory. 

As suggested a few times in previous letters, 2022 is a year to protect the downside by trimming risk and diversifying your portfolio. Gold, Bonds, defensive sectors, value stocks, International equity, emerging markets, and more importantly, cash are some options to consider. 

On the other hand, for those waiting on the sidelines and those with a long-term investment outlook, it is also a year to fish for deep value amidst the crisis. 

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