Geopolitical tensions fuel market uncertainty


At the close of 2021, no one expected to talk about war only a few months later. But as concerns over the Omicron strain subsided and growing levels of inflation became apparent, an escalation in geopolitical tensions emerged.

In late February 2022, the tragic situation caused by Russia’s invasion of Ukraine added further uncertainty to markets. Western nations reacted by imposing sanctions as optimism about a quick diplomatic resolution faded after peace talks stalled and fighting continued.

Key economic insights from around the globe


Early in the quarter, the fast-moving Omicron strain continued to wreak havoc with physical mobility, supply chain disruptions and staff shortages, particularly in the services sector. The ‘hot’ property market also slowed somewhat over the quarter as stretched affordability, better supply and a fear of interest rate rises coming sooner than later took effect. In March 2022, the east coast of Australia was hit by devastating floods.

Despite all this, Australia’s economy showed signs of a healthy and strong recovery in the March 2022 quarter, led largely by improved consumer spending.

At its first board meeting of the year, the Reserve Bank of Australia (RBA) outlined its views on key employment and inflation goals which included the ending of its quantitative easing program - originally adopted in 2020 to deal with the economic impacts of COVID-19. However, as the quarter progressed, inflation started to rise – primarily driven by rising fuel costs, supply chain disruptions and the housing market – which, at this stage, has not initiated movement on the RBA cash rate, which remains on hold at 0.10%.

Furthermore, with the RBA admitting it wants to see a resolution of the global supply chain disruption and stronger wages growth, analysts predict it will hold firm until August 2022, after which we’ll potentially see four rate hikes before the end of the year.

The 2022 Federal Budget, announced in March 2022, was largely uneventful given the looming Federal Election. However, it did provide some relief for cost-of-living pressures, incentives for small businesses to further digitise and additional spending on defence and disaster relief.


Conversation in the US was dominated by inflation, interest rates, corporate earnings, and the downstream impact on share markets. With inflation close to 8% – well above the US Federal Reserve’s (Fed) 2% target – it was no surprise when the Fed announced a 0.25% hike in March 2022, the first since 2018. The Fed has also been vocal in its planned use of more aggressive future rate hikes, and to be nimble in responding to economic data and the evolving global outlook.


While most of the world is learning how to live with the COVID-19 pandemic, China is still pursuing its zero-case COVID-19 policy that includes locking down entire cities. The effect of the pandemic, business closures and the soaring cost of raw materials forced the People’s Bank of China (PBoC) to slash key lending rates for businesses and consumers to cushion the slowdown in economic activity. Over the quarter, inflation pressures eased, but the PBoC reaffirmed its commitment to increase its support in areas where the economy is weak.

Japan’s economy showed some signs of recovery despite ongoing challenges from the COVID-19 pandemic and supply issues. However, its central bank left monetary policy unchanged amid fresh concerns over the Ukraine crisis and ongoing market instability.


No one could have foreseen war arriving on Europe's doorstep. But Europe and the UK face the most immediate economic risk from the conflict in Ukraine given their geographical proximity and reliance on its energy trade with Russia.

Despite this, the European Central Bank (ECB) remained cautious, adopting a wait and see approach. It kept the cash rate on hold but stepped further back from its quantitative easing activity. This suggests that at this stage the ECB is more concerned about economic growth than the current inflation number which is well above its 2% target due to the ongoing energy crisis, and the economic impacts from the situation in the Ukraine.

In contrast, the Bank of England raised the cash rate twice to 0.75% during the quarter. It has warned of further increases in the coming months after inflation forecasts rose from 7.25% to over 8% following the economic impacts of the invasion of Ukraine. British consumers are also feeling the pinch from higher living costs, caused in part by higher taxes and the impacts from COVID-19, and have reacted with reduced confidence levels and decreased household spending.

How did markets react?

The beginning of the quarter looked quite different to the end. Most major markets started the quarter in the red, returning a negative result in January 2022. In fact, global markets had their largest January fall since the global financial crisis, and the largest one month fall since March 2020.

But the Australian market bounced back in February and continued this trend in March, despite the global economic and geopolitical headwinds. The S&P/ASX 300 outperformed global markets in March 2022, rising 6.90%, led by the Information Technology and Energy sectors.

Other global markets were more mixed. The US market delivered positive returns in March 2022, but Europe remained either negative or flat and in China, the fall in Chinese shares heavily impacted emerging markets.

With inflation continuing to be the hot topic of the last few months, and interest rate rises (with more on the way), bond market returns were down. As a quick reminder, there is an inverse relationship between bond yields and bond prices. That is, rising interest rates lead to falling prices and hence negative returns for bonds.

Overall, investors still sought comfort in safe-haven investments like US government bonds, gold, and the US dollar. Commodities benefited from the share market uncertainty, with the price of oil and gold rising rapidly.

Performance returns by asset class as at 31 March 2022

Asset Class

3 months

1 year

3 years (pa)

5 years (pa)

Growth assets





Australian shares





International shares





Emerging market shares





Australian listed property





Global listed property





Defensive assets





Australian bonds





International bonds










Source: BTIS. Australian shares - S&P/ASX 300 Accumulation Index, International shares - (unhedged) MSCI World ex Australia Net Return in AUD, Emerging market shares - MSCI Emerging Markets EM Net Total Return Index (AUD), Australian property - S&P/ASX 300 A-REIT Accumulation Index, Global property - FTSE EPRA/NAREIT Developed Hedged in AUD Net TRI,   Australian fixed interest - Bloomberg AusBond Composite 0+ Yr Index, International fixed interest - Bloomberg Barclays Global-Aggregate Total Return Index Value Hedged AUD, Cash - Bloomberg AusBond Bank Bill Index. As at 31 March 2022. Past performance is not a reliable indication of future performance.

What does this mean for your super?

MySuper investment options

Members in the BT Super and BT Super for Life 1970s, 1980s, 1990s and 2000s Lifestage investment options have around 90% of their super invested in growth assets (shares and property), and while global share markets were weak in the March quarter, our one-year returns continued to be solid, with members earning between 7.11% and 7.38% for the 12 months ending 31 March 2022. The medium and long-term returns also continued to be solid. 

Members in the BT Super and BT Super for Life 1960s Lifestage investment option, with around 60% invested in growth assets, were impacted by global market headwinds with this option delivering 4.21% for the 12 months to 31 March 2022. 

The 1940s and 1950s Lifestage investment options have a higher proportion invested in defensive assets, such as bonds, to help cushion these members’ account balances should negative market events happen. However, as inflation pressures build and interest rates rise, bonds have suffered a rare period of negative returns, which has impacted these options. However, our one-year returns continued to be in line with the product design, with the 1940s option returning 1.07% and the 1950s returning 1.90% for the 12 months to 31 March 2022.

Returns for BT MySuper Lifestage funds as at 31 March 2022

Investment option name

3 months

1 year

3 years (pa)

5 years (pa)

7 years (pa)

10 years (pa)

BT MySuper 1940s Lifestage







BT MySuper 1950s Lifestage







BT MySuper 1960s Lifestage







BT MySuper 1970s Lifestage







BT MySuper 1980s Lifestage







BT MySuper 1990s Lifestage







BT MySuper 2000s Lifestage







Note: Performance figures are calculated to 31 March 2022 in accordance with the APRA reporting standards. Total returns are calculated using withdrawal prices appropriate for the month end and take into account management costs and monthly administration fee and take into account earnings tax up to a maximum of 15%. Past performance is not a reliable indicator of future performance. *The BT MySuper 2000s Lifestage investment option has been open for less than 10 years.

Choice investment options

While many of our BT Super and BT Super for Life members are invested in our MySuper Lifestage investment options, many of our members have chosen to personalise their super by selecting their own mix from our broader menu of 38 investment options.

These members would see a range of returns over the quarter and the one-year period, depending on how they’re invested. Over the quarter, most asset classes had negative returns meaning it is likely most investment options had low to negative returns for the quarter. As always, over the longer term, investment options with higher allocations to growth assets are likely to have higher returns than those investment options with higher allocations to defensive assets.

Next: Market volatility and how it affects your super

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Things you should know

The information is prepared by BT Funds Management Limited ABN 63 002 916 458 (BTFM) the trustee of the following: BT Super for Life, BT Super for Life Westpac Group Plan and BT Super part of the superannuation fund Retirement Wrap ABN 39 827 542 991.

This information has been prepared as general advice only and does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness, having regard to your personal objectives, financial situation and needs before acting on it. Read the Product Disclosure Statement (PDS) to see if these products are right for you by visiting or The issuers of the products named in this article can be found in the relevant disclosure documents. Read the disclosure documents for your selected product before deciding. Target Market Determinations for our products can be found here. Past performance is not a reliable indication of future performance. All examples are illustrative only. Your portfolio value and performance will depend on the investment options you have selected and the time over which they are invested. 

Investment returns are historical. Investment returns can move up or down and past performance is not necessarily indicative of future performance. Future performance is not guaranteed. Performance differences between the investment options and respective underlying funds exist due to factors such as valuation timing differences, differences in fees and charges, distributions (as cash may be retained for liquidity purposes) and higher cash holdings. More information on the asset allocation and risk exposures of each fund can be found in the PDS.

BTFM is a member of the Westpac Banking Corporation ABN 33 007 457 141 (Westpac) group of companies. An investment in these products is not an investment in, deposit with or any other liability of Westpac, any division of Westpac or any other company in the Westpac Group. Westpac and its related entities do not stand behind or otherwise guarantee the capital value or investment performance of the products or any related assets of the products.