Lewis Krauskopf and Sujata Rao

LONDON/NEW YORK – After unprecedented Western sanctions pushed Russia into a crisis that triggered a massive oil price rise, money managers have been scanning the global market for bargains.

Markets continued to sway in wild, unpredictable ways on Monday. The rouble fell nearly three-quarters of its value and investors looked for safety in dollar bonds, government bonds, and other major indexes.

Though few expect the volatility to quiet down anytime soon, some were looking for opportunities in stocks they believe may have grown cheap after a weeks-long selloff that has taken the down 9% in 2022 and shaved 7% off Europe’s , as they bet that strong earnings will buoy stock prices.

Fahad Kamal (chief investment officer, Kleinwort Hambros) stated that “On an overall basis the world economic is in reasonable condition, earnings are high and we do not expect a global recession.” His statement said, “The outcome range is wide. But we do invest on several metrics… These things don’t shout panic.

The S&P 500 recently traded at around 19.7 times forward earnings, from around 22 times at the beginning of the year after losing more than $3 trillion in value year-to-date. Refinitiv IBES data also shows that the U.S. is on track for an increase in earnings of 7.8% this year.

Others believed that recent geopolitical uncertainty will reduce central bank monetary tightening, which has been a major factor in stocks’ decline over the past week.

BlackRock strategists, NYSE: said that Ukraine’s crisis had “reduced central banks being able to slam the brakes on inflation.” According to the strategists, they “tactically upgraded equities,” noting that market expectations about rate rises had become exaggerated and created new opportunities for equities.

The market is pricing in approximately 150 basis points Federal Reserve tightening in February. This includes a likely rate rise in March.

UBS Global Wealth Management’s analysts advised clients to boost their exposure to raw material to protect against inflation. The conflict between Russia, one of the world’s largest commodity exporters, and Ukraine has already helped push up oil prices to their highest level since 2014, while U.S. inflation last month grew at its fastest pace in nearly four decades.

King Lip, the chief strategist for Baker Avenue Asset Management San Francisco was moving more client portfolios towards commodities. This was done through Invesco ETFs with varied exposure to commodities. Invesco ETFs are typically expected to gain in inflationary conditions. “We were buying it already because of the inflation hedge and now we just think it is going to have more tailwinds on it because you are going to have supply disruptions,” Lip said.

Many remained cautious. Goldman Sachs, NYSE:), recently cut its projections for the STOXX600 pan-European equity market index and the. This was due to the negative impact of production costs on Europe’s dependence on Russia and on Europe’s GDP. The conflict, which they called “largely one that increases the risk premium than derails the recovery” was a strong issue for corporate balance sheets, according to them.

Michele Morganti, an Investments equity strategist at Generali (MI), predicted another 5.5% decline based upon prevous risks premia spikes in 2008 during the financial crisis. Also, the onset coronavirus epidemic 2020.

Morganti said to clients, “Looking further ahead however there is a sense that it will probably get worse before getting better.” We would not buy any current dips aggressively because markets are still event-dependent.