Worries around interest rates and the Ukrainian conflict, which have dominated much of the year, continue to trouble investors in the final days of 2022.

While the decision of both the US Federal Reserve and Bank of England to increase interest rates by 50 basis points at their latest meetings had been widely anticipated, the finer details had a negative impact on sentiment.

Despite a softer-than-expected reading of inflation for November, Fed officials made it clear the current level of interest rates is not sufficient and continued to forecast the rate moving above 5% in 2023 and staying at that level for some time.

There was also the news that US retail sales saw their biggest drop in 11 months in November. This demonstrates the economic pain already being felt thanks to the Fed’s actions.

These problems pale into insignificance up against the more existential threat being faced by Ukraine with a key adviser to the country’s president Volodymyr Zelensky warning Russia may escalate the war in a mass-infantry winter offensive.

Whether Mykhailo Podolyak’s warning to the New York Times of a renewed assault on the capital Kyiv was simply intended to check any complacency among Ukraine’s Western allies or based on solid intelligence remains to be seen. However, it is an unwelcome reminder that a big geopolitical risk weighing on markets has not gone away.