The global economy which had only started recovering in 2021, took a new major hit in 2022. Rising inflation, Russia-Ukraine war and the lingering effects of the COVID-19 pandemic all have a negative effect on the outlook for next year. This is the year-end wrap-up where we look back at the past events and the best performers in each industry.
Russia invades Ukraine
On 24 February 2022 Russia invaded Ukraine causing a large refugee crisis in Europe, with over 8 million Ukrainians fleeing the country. The West responded with countless economic sanctions in an attempt to force Russia into stopping the conflict. Though the sanctions had a tremendous effect on Russia’s economy, they didn’t help achieve the desired effect.
The conflict resulted in an energy crisis after natural gas prices reached record highs. Many European countries have announced their intention to halt Russian gas imports altogether. Meanwhile, Russia reduced or even closed its export pipelines.
Russia is the world’s largest exporter of fossil fuels and a particularly important supplier to Europe. Europe, whose gas supply is so vulnerable to its historical dependance on Russia, faced soaring inflation and is still struggling, on the verge of facing gas rationing this winter.
Uncertainty and the high possibility of an escalation of the conflict keeps the stock market volatile, particularly military and energy stocks. The possibility of the U.S. getting drawn into the conflict still remains. By the end of 2022, it is estimated that the U.S. will have spent $8 trillion on war weapons, which is a significant share of GDP. This is giving a powerful boost to defense and military stocks.
Top energy stocks 2022
| Exxon Mobil Corporation (XOM) +74.3% 1Y change | Schlumberger N.V. (SLB) +72.55% 1Y change | EQT Corporation (EQT) +64.37% 1Y change |
Top defense and military stocks 2022
| Lockheed Martin Corporation (LMT) +41.61% 1Y change | Raytheon Technologies Corporation (RTX) +16.24% 1Y change | Northrop Grumman (NOC) +41.86% 1Y change |
Covid-19 restrictions ease
Almost three years after the beginning of the pandemic, the world is practically back to how it was, with the end of all COVID-19 restrictions in sight. Many countries completely lifted all Covid-19 measures, including lockdowns, travel bans and obligatory vaccination.
The one exception is China, where the government still exercises strict zero-tolerance measures, causing Chinese citizens to rebel against the drawn-out rigid policies.
With that said, most countries are returning to the “pre-Covid” life (as much as the economic crisis allows), which stimulates the long suffering tourism, aviation and entertainment industries.
Top aviation stocks 2022
| Deutsche Lufthansa AG (LHA) +29.3% 1Y change | Airbus SE (AIR) +0.33% 1Y change | Boeing Company (BA) -6.7% 1Y change |
Climate crisis intensifies
The concerns about climate change were raised again as the world experienced record-breaking heat waves. Devastating wildfires, drying lakes and rivers and diminished crop yields are only some of the outcomes of the abnormal temperatures across the whole world.
The energy crisis contributed to the climate crisis, however, it has the potential to accelerate the rollout of cleaner energy as a substitute for fossil fuels. Specifically, solar and wind power are considered a promising sustainable alternative that could help Europe ease the dependence on Russian gas.
Top renewable energy stocks 2022
| First Solar, Inc. (FSLR) +77.49% 1Y change | JinkoSolar Holding Co. Ltd (JKS) +17.18% 1Y change | Daqo New Energy Corp (DQ) +12.47% 1Y change |
Twitter is acquired by Elon Musk
The king of controversial and hype-inducing tweets took the plunge and, after a long back and forth on his decision, finally completed the process of purchasing the company. Musk announced his plans to make the social media platform a place of free speech, which included, for instance, unblocking Donald Trump’s account. Musk initiated several reforms, laying off half of the company’s employees and announcing an “extremely hardcore” workflow, causing another hundred employees to quit voluntarily.
The reaction to Musk becoming the CEO of Twitter was mixed, with some embracing the change and believing that the businessman will promote free speech and improve the social network. Others condemned the way Elon Musk handled the business and expressed fear that the new Twitter policy will only give the green light to hate speech and misinformation.
Top technology stocks 2022
| Activision Blizzard, Inc. (ATVI) +19.05% 1Y change | International Business Machines Corp (IBM) +8.14% 1Y change | Mastercard Incorporated (MA) -2.92% 1Y change |
What to expect in 2023?
With so much uncertainty in the world, investors and traders are still planning out their portfolios for next year. It is not unlikely that energy stocks will remain on the top gaining positions as the demand for crude oil and gas is unlikely to diminish. Defense and aerospace stocks may retain the momentum as well, especially if there is an escalation of the military conflicts around the world.
