By Lucy Raitano

LONDON (Reuters) - Inflation will have the biggest impact on global markets in 2022, traders said, while liquidity was the top daily trading challenge for a sixth year, according to an annual survey of institutional trading clients by JPMorgan published on Wednesday.

About 48% of 718 institutional trading clients surveyed at the end of November 2021 highlighted inflation as this year's biggest market mover, displacing the global pandemic, which topped last year's list.

Market expectations of impending interest rate hikes have been rising since late last year, and hopes that the trend would be transitory have receded in recent weeks as major countries have struggled with soaring inflation readings.

Economic dislocation and the pandemic were the next factors seen as having the biggest impact, each polling at 13%.

"The expectation is that this focus and concern will likely lead to more market activity and volatility given that inflation has not been a theme for over a decade," said Scott Wacker, head of FICC e-Commerce sales at J.P. Morgan, "This will continue to reinforce the importance of liquidity and consistency of pricing which continues to play into the hands of electronic trading."

Trading through electronic channels has risen in recent years and traders across all asset classes expect this upward trend to continue for the next two years, the survey found.

"We’ve had two years of pretty unusual circumstances with the pandemic - a lot of clients moved away from the office and to the home environments during a very volatile market environment, it was the perfect storm for increasing electronic trading," JP Morgan's Wacker said.

Mobile trading applications were seen as the main influence shaping markets in the next year, selected by 29% of traders.

Notably, artificial intelligence and machine learning are soon expected to overtake mobile tech as the main influencers, partly because many traders expect to have mobile tech in place by then, JP Morgan's Wacker said.

Nearly half of those surveyed said artificial and machine learning will be the most influential factor shaping the future of trading in three years, followed by blockchain with 24% of the vote.

Currency markets beat their fixed income counterparts in terms of proportion of trading through e-channels, which stood at 69%, according to the survey. FX traders expect this to jump to 85% by 2023.

Rates and credit traders expect increases of 17% in the proportion of trading executed through e-trading channels.