Following on from my last note earlier this month ('2022: A list of lists'), as somewhat expected, share market volatility has continued on the back of inflation concerns, rising interest rates, and the Russia/Ukraine situation.

And after today's drop of 1.8% on the S&P/ASX 200, the local market has officially entered into correction territory having fallen 10.4% since its August high of 7632 points. The only 'bright spot' today (for all the wrong reasons) was the energy sector, rising 2.1% as prices climbed on worries of a Russian invasion of Ukraine that could potentially dislocate natural gas and oil supply markets.

So following on from the explosive growth of 2020/21 (post initial Covid-crash), we're, once again, in familiar territory, and I suspect there may be more short-term pain to come as markets, individual investors, governments, and central banks, all slowly adjust to the 'new world' of inflation (a phenomenon we really haven't had to contend with since the 80s). Of course, a Russian incursion into the Ukraine wouldn't help either.

Going forward, if history is a guide, any future volatility probably won't come directly from the removal of pandemic driven policy settings (ie how often rates rise, and by how much), but from speculation and rumours that tend to play on investor fears. It's important to keep this in mind if/when markets appear to be in trouble - the disconnect between illusion and reality never lasts.

Rick Maggi