March 7-11 | ECB Decisions and the Stock Market: How to Invest Under High Pressure?

Decisions that could affect the stock are currently being made at a rapid pace! In response to Russia’s attack on Ukraine, the European Commission has ordered strict economic sanctions. Russian banks are now excluded from the Swift payment system, preventing Russians from sending international transactions. This measure, proposed by Ursula von der Leyen, President of the Commission, could paralyse Russian assets and isolate its economy.

There are more sanctions, too. Many Air France-KLM and Lufthansa flights have been suspended and some international airspace has been closed to Russian planes. Russian media outlets have been banned on traditional networks and social media.

All eyes on the ECB

Investors and economists are all watching the European Central Bank during this time of crisis. Last week, the ECB’s chief economist, Philip Lane, predicted that the war in Ukraine could reduce economic growth by 0.3-0.4%. And there’s an even more pessimistic outcome; European GDP could drop by 1%. Note, however, that the estimates could change depending on how the conflict plays out.

With this in mind, the ECB will present its new forecasts on Thursday, 10th March. The central bank will discuss monetary policy, interest rates and the future of the APP: the asset purchase program which was used to help get the economy back on track during the pandemic. Pay close attention to the announcements on Thursday as it could affect the direction of the European stock markets.

Diversification and prudence

These are your watchwords for the week! During times of great conflict, you need to be particularly careful with the markets, and therefore your investments. For that reason, it’s a good idea to stick to some universal rules in times like these. Diversification into different asset classes, countries and industries is crucial. It can help protect you against strong fluctuations and stop you from panicking!

We’ve also got a handy guide for situations like this: What To Do When Prices Fall. We discuss two strategies to use during turbulent markets: diversification and dollar cost averaging.

Stock market news

Despite the geopolitical tension, the stock market continues as usual with a few companies reporting their quarterly results this week. Here are two to watch.

  • Adidas: the German sportswear company will publish its quarterly figures on Wednesday 9th March. Despite lots of media buzz thanks to a new sports bra campaign, Adidas is facing a decline in its share value. The stock has dropped 13% since the last quarter. On the other hand, a recent study found that those who invested in Adidas in 2017 enjoyed growth of 73%. It’s always good to zoom out and think long-term.
  • DocuSign: Docusign has thrived since the advent of remote working and the digital transition of the last two years. On Friday 11th March, the American company will reveal its quarterly results. Docusign is expected to report earnings per share (EPS) of $0.48, up 29.73% from the previous quarter. Revenue could come in around $560.8 million, up 30.15% compared to last quarter.

Economic and earnings calendar

Monday – Trade balance in China (January – February). Quarterly figures from Xpeng Motors.

Tuesday –  Industrial production in Germany and Spain (January). GDP data and employment figures in the euro zone (Q4). Quarterly figures from NIO.

Wednesday – Trade balance in Austria (December). Quarterly figures from Deutsche Post, Adidas, Continental, United Natural Foods.

Thursday – Industrial production in Austria (January). Inflation rate in Ireland (February). ECB decision on interest rates. Inflation rate (February) and weekly unemployment figures in the United States. Quarterly figures from GBL, JCDecaux.

Friday – Inflation rate in Germany and Spain (February). Quarterly figures from DocuSign, EssilorLuxottica.

We’ll be back next week with another edition of the BUX Breakdown. In the meantime, have a great week on the markets!

The BUX Breakdown was written by Clémentine Pougnet.

All views, opinions, and analyses in this article should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication.