The first quarter of 2022 will be remembered for many things by investors, such as the start of the Federal Reserve tightening cycle, but most likely it will be the Russian invasion of Ukraine that defined the time for many financial market participants.
While the immense humanitarian cost of the conflict is likely to linger for much longer than the impact it had on financial markets, the conflict brought to bear a series of significant developments for investors, such as spikes in commodity prices, upward revisions to the inflation trajectory and downward revisions to the global growth outlook.
In Australia, the macro-economic backdrop continued to surprise on the stronger side of expectations, with the unemployment rate dropping to 4 per cent in the quarter and activity data rebounding strongly.
Indeed, the consensus 2022 GDP forecast was lifted another 40 basis points through the quarter, reflecting the stronger than expected performance of the domestic economy.
On the policy side locally, there were a number of key developments.
On monetary policy, the RBA ended its quantitative easing program in February and communicated that a decision on the trajectory of the balance sheet will be made at the next Reserve Bank of Australia board meeting in May.
The cash rate was left unchanged at 0.1pc through the quarter, although the RBA did start to sound incrementally more hawkish over the first couple of months of the year.
Fiscal policy came in the form of the 2022 Budget in late March; on this front, the government delivered a budget for the times.
Fiscal policy will deliver "cost of living" stimulus worth around 1.3pc of GDP over the next six months, a significant impulse given the already evident strength in the economy.
Most major equity markets registered losses in the first quarter, with stocks having to first absorb geo-political conflict; second, higher interest rates; and third, an outlook for slower growth in coming years as monetary policy is normalised.
US major indices all finished the quarter down, with stocks and sectors that are "long duration" in character tending to under-perform as interest rates moved higher.
Large caps also out-performed small caps in the US, with the Russell 2000 registering a 7.8pc decline in the quarter compared to the S&P500's 5pc decline.
Outside of the US, other major indices also struggled in the first quarter of 2022.
Among this backdrop, the Australian market was a notable out-performer, aided in part by the boost provided by higher commodity prices with energy and materials two of the three top sectors in the quarter.
At the other end of the spectrum, the IT, health care and consumer discretionary sectors were the worst performing for the quarter.
As sectors that are generally seen as sensitive to either rising interest rates or headwinds to household disposable income, there were reasons aplenty in the quarter for these sectors to under perform.
Also in news:
Have you signed up to The Land's free daily newsletter? Register below to make sure you are up to date with everything that's important to NSW agriculture.
Sign up for our newsletter to stay up to date.