Amid higher interest rates and lower spending, real returns may prove elusive

IT has been a rather eventful and dramatic year so far in financial markets. Although equity markets have rebounded significantly from their lows in the past two weeks, global equity markets are still down year to date. European equities are among the worst-performing equity markets, declining by 9 per cent year to date, given their higher vulnerability to the growth slowdown and other risks from the war in Ukraine.

Over the past 80 years, the median sell-off in approximately 30 geopolitical and domestic US political events was around 5 - 7 per cent over a 3-week period, and markets generally recover their losses over the following 3 weeks.

The US and European markets seem to be following that same pattern this year, with markets having recouped most of their losses since the war started.