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March 2022 - The Canadian market stands out in an uncertain global context


March 2022 - The turbulence on the global stock markets continued at the start of the month as the Russian-Ukrainian conflict intensified. The sanctions imposed on Russia by the United States and the European Union, combined with fears of supply-chain disruptions, caused the global markets to keep declining as commodities extended their massive rally, which began in late February. The price of oil reached its highest level since the 2008 financial crisis. The strong oil price pushed the Canadian dollar higher against many foreign currencies. Despite the catastrophic human toll, the markets rebounded in mid-March, including the MSCI World and the MSCI USA. These indexes recovered their losses since the start of Russia’s invasion of Ukraine but still remain down on a year-to-date basis.

Closing 31-03-2022 Variation vs 28-02-2022 Variation vs 31-12-2021
Interest rate in Canada (%)
Key rate 0.50 0.25 0.25
Commodities ($ US)
Oil (WTI) $101.22 5.3% 34.4%
Gold $1,942.00 1.6% 7.5%
Currencies CAD Variation CAD Variation
EUR / CAD 0.72 2.7% 3.8%
JPY / CAD 97.28 7.0% 6.9%
USD / CAD 0.80 1.6% 1.4%

Sources: Bank of Canada, Fundata, US Energy Information Administration. 

Even though the Federal Reserve raised its key interest rate as planned, its chair, Jerome Powell, adopted a sharper tone. He said that, if necessary, he was prepared to raise rates more aggressively to control persistent inflation, no longer referring to inflation as transitory. As a result, expectations of rate hikes during the rest of the year increased and continued  to weigh on the bond market and the more growth-oriented stocks. 

The markets’ partial recovery is fragile, and many uncertainties remain, particularly the outcome of the conflict in Ukraine, the increase in COVID-19 cases worldwide and central banks’ ability to contain inflation without undermining economic growth.

Canadian Market 3.8%▲ (MSCI Canada 31-03-22)
Propelled by its strong exposure to the energy and materials sectors, the Canadian stock market stood out during the month, advancing 3.8%, as measured by the MSCI Canada Index. Consumer staples and industrials performed strongly while consumer discretionary ended in negative territory. For the third consecutive month, the bond market ended with a loss as a result of the central banks’ greater determination to curb inflation.

American Market 1.9%▲ (MSCI USA 31-03-22 in CAD)
Even though the U.S. market was affected more by geopolitical tensions in the first half of the month, it rebounded to end the period with a return of 3.5% in local currency, as measured by the MSCI USA Index. With the exception of financials, all sectors advanced, led by utilities and energy. The Canadian dollar’s appreciation against the U.S. dollar reduced the gains slightly, such that the return was 1.9% in Canadian dollars.

European Market 1.5%▼  (MSCI Europe 31-03-22 in CAD)
Even though the European market was affected the most by the conflict in Ukraine, it still ended the month with a slight increase of 0.9% in local currencies, as measured by the MSCI Europe Index. That being said, the return was -1.5% in Canadian dollars, owing to the loonie’s strong appreciation, especially against the euro. The sectors with the best performance were health care, energy and materials, while consumer discretionary, real estate and utilities ended the month lower.


Asian Market 2.1% (MSCI Asia-Pacific 31-03-22 in CAD)
The Asian market was also affected by the conflict in Europe but still rebounded in the middle of the month. In local currencies, the return was 1.2% as measured by the benchmark MSCI Asia Pacific Index. Even so, our currency’s strength against the major Asian currencies reduced the return to -2.1% in Canadian dollars. Australia was the largest contributor to the return, under the impetus of energy and financials.

Emerging Markets 3.7%▼ (MSCI Emerging Markets 31-03-22 in CAD)
Emerging markets ended the month with a loss, returning -2.0% in local currencies, as measured by the MSCI Emerging Markets Index. In Canadian dollars, the result was -3.7%. China and Russia were the main detractors during the month. China is experiencing its worst wave of COVID-19 since the start of the epidemic, and the Hong Kong stock market has recorded its worst days since the 2008 financial crisis, once again because of regulatory pressures. For its part, the Russian market suffered the consequences of the invasion of Ukraine and Western sanctions. It should be noted that, at the end of the month, Russia was no longer part of the MSCI Emerging Markets Index.

Sources: Bank of Canada and MSCI Inc.

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