Geopolitical Uncertainty Weighs On Markets

While the Russia/Ukraine conflict is troubling, investors need not overreact.

Investors have been on a bumpy ride as both domestic and emerging markets have seen continued volatility over the past few months. February was no exception with the broad-market S&P 500 dipping into its first 10% correction in almost two years as geopolitical tensions intensified. The last week of February brought the somber news of escalating conflict in Eastern Europe.

The world continues to watch this very fluid situation between Russia and Ukraine. While the conflict is troubling, investors need not overreact, advises Raymond James Chief Investment Officer Larry Adam. Investors are likely to see the biggest financial impact in the form of increased prices on commodities produced in the region, namely oil, natural gas, wheat, palladium and aluminum.

The situation has added to macro uncertainty and impacted legislative priorities on Capitol Hill, says Ed Mills, Washington Policy Analyst. Generally speaking, defense considerations and supply chain security/domestic manufacturing capability have risen on the congressional to-do list. President Biden’s March 1 State of the Union address will inform the direction of the domestic agenda and potential policy changes.

Investors are factoring in tighter monetary policy. The Fed is expected to start raising short-term interest rates in March and begin reducing its balance sheet later this year. Compared to the start of previous tightening cycles, the U.S. economic outlook is a lot stronger, the labor market is a lot tighter, and inflation is substantially higher, notes Raymond James Chief Economist Scott Brown.

The crisis will weigh on a market already struggling with high inflation and the coming transition to tighter monetary policy, says Mike Gibbs, managing director of Equity Portfolio & Technical Strategy. Gibbs notes that despite the elevated uncertainty, history shows that geopolitical events such as this often create a buying opportunity for long-term investors.


12/31/21 Close

2/28/22 Close

Year to Date

% Gain/Loss
Year to Date




-2,445.70 -6.73%






S&P 500










Russell 2000





Bloomberg U.S.
Aggregate Bond Index





Performance reflects price returns as of market close on February 28, 2022. MSCI EAFE and the Bloomberg Aggregate Bond figures reflect February 25, 2022, closing values.