As reports of war erupting in Ukraine comes over the TV screens, many clients are wondering how this conflict will affect portfolios and stock markets around the world.

First and foremost our thoughts are with the Ukrainian people for what they are about to go through, with the potential return to an Iron Curtain that they had long thought was behind them.

Returning to markets, so far Global Equities this year have seen falls of -10% even before yesterday and generally the UK has held up. However, with Putin seemingly threatening World War 3 the UK fell -3.63% yesterday (24.02.2022) but surprisingly when the US opened in the afternoon it actually went up!.

So we didn’t see the sell off we may have expected. In fact the biggest faller was the Russian stock market losing 45% and safe haven investments, such as gold and government bonds rose. The only positive for Russia was that the price of oil rose to $104 a barrel.

When we look back at history markets tend to shrug off geopolitical risks quite quickly. There will certainly be uncertainty and some volatility in the coming days and months. As I type the UK FTSE 100 has opened up +1.16% which is positive news.

The most important thing to bear in mind in these difficult times is that diversification of portfolios is the best insurance against this type of volatility. Having fixed interest bonds in a portfolio are always the hedge against falling stock markets. Spread risk widely and sit it out.

My advice to clients that are fully invested is stay so. If you have a lot of money in cash, there may be some buying opportunities along the way, but timing markets is very difficult. Speak to your adviser for a reassuring conversation. There will always be some good news in a portfolio to cheer you up.

Remember its time in the market that counts. These things will bounce back and currently this is a relative blip.

Phil J McGovern FPFS