Economic consequences of Russia’s strikes on Ukraine

February 25, 2022 | Elinesky Schuett Private Wealth Management


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In our economic update this week, we discuss the Ukraine/Russia situation and the implications for the Canadian markets. First and foremost, our thoughts and prayers are with any of our clients, family, friends, and colleagues who may be impacted one way or another by developments in the region. While we have a responsibility to focus on the investment implications of such a crisis, it’s important to recognize the human toll these conflicts can have.

 

In addition to our economic commentary, this week’s newsletter also includes the latest issue of Global Insight Weekly and a special report, Spheres of influence: The bigger reason geopolitical risks are affecting market, that both focus on the geopolitical fall-out from Russia’s strikes on Ukraine.

With the personal tax filing deadline inching closer and closer, we thought you might be interested in the article, What to do with your tax refund. Since the beginning of the year we’ve been sharing tax related articles in our newsletter – we hope that you are finding them useful, but please don’t hesitate to contact us if you have any questions about the information you have read. We are also happy to connect you with one of our trusted accounting professionals to discuss your personal or corporate tax situation.

Leanne Kaufman, President and CEO of RBC Royal Trust, has penned a number of articles recently that focus on the things you should consider when it comes aging. Over the past two weeks we’ve shared her pieces Dealing with the potentially high cost of caregiving now can reduce headaches later and Worried about your health as you age? Create a care plan. This week we’re featuring her latest article that talks about your life after retirement, Many people will live a full adult life after retirement. Are you ready? Your link to the article is below.

As always, we end our weekly newsletter with a few good news stories from in and around our community.


Economic update

Geopolitical tensions between the Ukraine and Russia have been bubbling to the surface for some time, but they took a meaningful turn over the past few days with Russia embarking on an invasion of its neighbour that is broader in scope than expected. First and foremost, our thoughts and prayers are with any of our clients, family, friends, and colleagues who may be impacted one way or another by developments in the region. While we have a responsibility to focus on the investment implications of such a crisis, it’s important to recognize the human toll these conflicts can have.

Global financial markets have responded in a somewhat expected and orderly fashion in recent days. Volatility has increased and global equities have sold off. Government bonds have modestly risen, while the U.S. dollar and commodities like gold have benefitted from a general flight to safety.

From a Canadian perspective, bond markets are behaving as expected, although the gains have been limited. The Canadian equity market on the other hand has, not surprisingly, sold off. However, it has been arguably more resilient than others through recent days, which continues a trend that we have witnessed year-to-date. This can be attributed to the Canadian market’s sizeable exposure to commodities, and in particular energy, precious metals, industrial metals, and agriculture. These areas were already benefitting, to some extent, from tight global supply and an inflationary backdrop. The geopolitical developments now add to these inflationary concerns given both that Russia and the Ukraine are large players on the global stage with respect to commodity production. Meanwhile, the loonie has sold off, but we attribute that to a general flight towards the U.S. dollar, regarded as the world’s safest currency, rather than it reflecting any concern pertaining to Canada.

Our firm’s global investments team has provided some very thoughtful commentary over the past few weeks that explains the broader geopolitical issues that have been at play for some time between Russia, the United States, and the North Atlantic Treaty Organization (NATO). Moreover, their work addressed the implications for stronger potential ties between Russia and China. The team also produced an updated reflection on the invasion of Ukraine that is now underway and the implications for the investment outlook. We believe both of these updates are worthwhile reads and you will find the links to them below, Global Insight Weekly and the Special Report: Spheres of influence.

We are likely to remain in a period of elevated volatility and markets may remain vulnerable in the near-term as developments in Europe unfold. But, history has taught us that military conflicts tend to have a market impact that is limited in magnitude and time. As a result, we are unlikely to shift around portfolio allocations in a meaningful way. However, we remain vigilant, flexible, and willing to take action should the need arise.

Global Insight Weekly 
RBC Wealth Management’s Global Portfolio Advisory Committee provides its current analysis of how the war in Ukraine is impacting financial markets.

Text: Special edition Global Insight WeeklyRisks become realities: Consequences of Russia’s strikes on Ukraine. The “looming” geopolitical threat has become a reality, cascading uncertainty over markets. While the situation is fluid, history shows the equity market impact could play out in short order even if the conflict lingers. We look at what the real risks to the market are, and what investors should be alert to as events unfold.

Read the full update online: Global Insight Weekly

 

Spheres of influence: The bigger reason geopolitical risks are affecting market

chess pieces and globe in pageIn this special report, we discuss how the crux of the current tensions goes beyond Russia and Ukraine, and examine equity market vulnerabilities in past geopolitical hostilities.

Read the special report online: Spheres of influence

What to do with your tax refund 
Strategies to optimize the use of your income tax refund

Close-up of man's hands typing on a calculatorAs a result of registered retirement savings plan (RRSP) contributions, interest expenses, tax shelter deductions or various other tax deductions and credits, you may be expecting, or have recently received, an income tax refund from the Canada Revenue Agency (CRA). If you receive a tax refund, it may be a good opportunity to determine if you can use some or all of it to improve your financial well-being. This article discusses some strategies that may help you use your income tax refund wisely and assist you in meeting your financial goals.

Download your copy of the article here: What to do with your tax refund (pdf)

In case you missed one of our recent tax articles, the list below includes the articles that we’ve shared recently.

If you have questions about 2021 tax reporting from Elinesky Schuett Private Wealth Management, please contact Brittany Beach at brittany.beach@rbc.com or 519-822-2024. Brittany will be your first point of contact for all 2021 tax package questions.

 

Many people will live a full adult life after retirement. Are you ready?

According to Leanne Kaufman, President and CEO of RBC Royal Trust, in order to age healthily, we must think beyond traditional retirement planning.

Three men in a garden crouching down to look at something Not long ago, people largely focused on and planned for what life would look like in their early age retirement, but improving health outcomes have extended our time horizons, and evolved our expectations of what the future can bring us. Increasingly, we want to pursue passions, remain productive and contribute meaningfully to our communities.

Read the article online: Many people will live a full adult life after retirement. Are you ready?

International Women's Day event - Hyperlink to event page with details.

 

Community Corner

Each week, we like to share a few good news stories from in and around the community. We hope that they brighten your day!

As always, we are available to connect with you personally. Please don’t hesitate to contact us at 519-822-2024 or elineskyschuett@rbc.com.