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Top 3 markets acting strange in 2022

By:
on Dec 21, 2022
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  • Oil is barely up despite an energy crisis in 2022
  • Gold failed to act as a hedge against inflation
  • European equities outperformed US ones

Christmas is just around the corner, and this time of the year is an excellent opportunity to look back at what happened in 2022. Sure enough, this was a challenging year for fundamental traders (i.e., those looking at macro events as guidance for their investments).

After all, a war started in Europe. Moreover, inflation dominated headlines in the major economies. Furthermore, there was an energy crisis. Finally, the Japanese yen depreciated so fast that the Bank of Japan intervened. Twice.

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In light of these developments, markets should have reacted in a certain way. Yet, they did not, so here are three markets that acted strange in 2022, given what was happening on the global stage.

Oil is only up marginally despite an energy crisis

An energy crisis dominated the year as nations, particularly in Europe, had to find new energy sources. After Russia invaded Ukraine in February, oil spiked higher, trading well above $100/barrel.

Yet, despite the energy crisis continuing throughout the year (and the war, too), oil prices have given up most of their annual gains. In fact, oil is barely up YTD, despite the ongoing energy crisis.

Gold is negative on the year despite a war in Europe

Gold is the favored asset to go in times of trouble (or, at least, it used to). A war broke at the outskirts of Europe, but gold is negative on the year.

Moreover, inflation reached multi-decade highs in major economies. It is likely that investors will not see zero interest rates for a long time from now on. Yet, gold, which is supposed to act as a hedge against inflation, disappointed investors in 2022.

European equities outperformed the US ones

Finally, one of the biggest shocks comes from the equity market. Hit hard by the energy crisis, the old continent reacted to diversify its dependence on Russian energy.

It imposed sanctions on Russia, but those took their toll on European economies too.

Yet, despite the war and the energy crisis, investors favored European equities instead of American ones, as European equities outperformed their US peers.

To sum up, investing is not easy and macro ideas need time to unfold.