JPMorgan issued a note on Thursday that examines how financial market flows responded to the onset of the 2022 war in Ukraine and suggests those patterns may be instructive as current geopolitical tensions continue into a sixth day. The analysis, led by strategist Nikolaos Panigirtzoglou, traces a distinct sequence of investor behaviour across asset classes as the crisis unfolded.
According to the note, retail investors showed initial endurance in equities when the conflict began. Panigirtzoglou observed that households largely refrained from selling equity holdings for roughly a month after the start of the Ukraine war, signalling early resilience in stock positions.
By contrast, the bank found that retail reaction in fixed income was far less patient. JPMorgan reports that bond funds were sold promptly after the conflict began, with retail investors cutting exposure to bond funds immediately rather than waiting.
That early patience in equities ultimately eroded, the note adds. JPMorgan says that once it became clearer that the conflict would be prolonged and would likely produce a more persistent oil price and inflation shock, retail investors began to sell both equity and bond funds in a sustained manner after about a month.
Commodities and currencies also reflected a coherent pattern in 2022, according to the analysis. JPMorgan notes that gold purchases tracked oil buying through that period, while the U.S. dollar strengthened in tandem with pressure on the U.S. Aggregate bond index - a dynamic that persisted for as long as that bond index remained under stress.
The bank also highlights shifts in positioning beyond retail flows. More recently, investors have retreated from crowded momentum trades in certain equity markets, specifically Japanese and European shares, along with parts of emerging markets such as Korea and Taiwan. JPMorgan presents these moves as part of the broader flow dynamic that plays out during geopolitical episodes.
JPMorgan frames the comparison with the 2022 Ukraine war as a practical template for anticipating how flows may evolve in future geopolitical crises, without asserting determinism. The note provides a roadmap of observable behaviours - initial equity resilience, immediate bond selling, a pivot to broader liquidation once inflationary risks from energy became evident, and correlated moves in commodities and the dollar - that market participants and allocators may watch as tensions develop.
Impacted market areas: equities, bond funds, commodities (oil and gold), and currency markets, with particular attention to Japanese, European and select emerging market equities.