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Wall Street was downbeat last week due to mounting inflationary pressures, rising rate worries and geopolitical tensions. The S&P 500, the Dow Jones, the Nasdaq Composite and the Russell 2000, declined 1.6%, 1.9%, 1.8% and 1.0%, respectively.
As far as rates are concerned, the benchmark treasury yield started the week with 1.98%, hit a high of 2.05% and then closed the week at 1.92%. Increasing chances of Russian invasion of Ukraine led to the rise in safe-haven demand, which in turn dragged down U.S. treasury yields and boosted the price safe-haven U.S. government bonds.
Against this backdrop, below we highlight a few inverse/leveraged ETF areas that won last week.
Natural gas has been gaining this year. It is already up 23.4% in 2022. If Russia tensions grow, gas prices in Europe — which soared to new highs last year — will go up further, per Capital Economics, quoted a CNBC article. Russia is the provider of about 35% of Europe’s gas. Europe is highly dependent on Russia for energy, importing about 40% of its energy requirement. In the Unted States, the colder weather has also boosted the price.
As gold bullion ETF GLD gained 1.4% last week on its safe-haven appeal. Gold prices shot up last week due to a fall in rates triggered by a safe-haven demand. Also, rising inflation helped gold prices to rally as the yellow metal is viewed as an inflation-hedging asset. Since mining companies act as a leveraged product of the underlying metal, mining ETFs gained handsomely.
White Metal
Sprott Physical Platinum and Palladium (SPPP - Free Report) – Up 6.3%
Palladium price has been rising, prompted by a global shift from diesel to gasoline and hybrid vehicles that led to higher demand for the metal and resulted in the speculation of supply deficit. Notably, Russia is rich in palladium too. Russia's Nornickel is the world's largest palladium producer.
Hence, the Russia-Ukraine tensions are adding to the palladium price rally. Meanwhile, Platinum is also used in the automobile industry in order to control emissions. Plus, upbeat sentiments about the global economic recovery have also been aiding the metal.
Nickel
iPath Series B Bloomberg Nickel Subindex Total Return ETN – Up 4.3%
Nickel prices jumped to their highest since Jan 21 as worries about low inventories and possible sanctions against key producer Russia caused supply fears. The European Union may impose a stringent package of sanctions as soon as needed, as Russian troops inch closer to Ukraine, the EU's top diplomat Josep Borrell said on Thursday, as quoted on miningweekly.com.
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4 Winning ETF Areas of Last Week
Wall Street was downbeat last week due to mounting inflationary pressures, rising rate worries and geopolitical tensions. The S&P 500, the Dow Jones, the Nasdaq Composite and the Russell 2000, declined 1.6%, 1.9%, 1.8% and 1.0%, respectively.
As far as rates are concerned, the benchmark treasury yield started the week with 1.98%, hit a high of 2.05% and then closed the week at 1.92%. Increasing chances of Russian invasion of Ukraine led to the rise in safe-haven demand, which in turn dragged down U.S. treasury yields and boosted the price safe-haven U.S. government bonds.
Against this backdrop, below we highlight a few inverse/leveraged ETF areas that won last week.
Natural Gas
US Natural Gas Fund (UNG - Free Report) – Up 10.5%
iPath.B Natural Gas Subindex ETN – Up 9.7%
Natural gas has been gaining this year. It is already up 23.4% in 2022. If Russia tensions grow, gas prices in Europe — which soared to new highs last year — will go up further, per Capital Economics, quoted a CNBC article. Russia is the provider of about 35% of Europe’s gas. Europe is highly dependent on Russia for energy, importing about 40% of its energy requirement. In the Unted States, the colder weather has also boosted the price.
Gold Miners
Sprott Gold Miners ETF (SGDM - Free Report) – Up 6.8%
Vaneck Gold Miners ETF (GDX - Free Report) – Up 6.4%
As gold bullion ETF GLD gained 1.4% last week on its safe-haven appeal. Gold prices shot up last week due to a fall in rates triggered by a safe-haven demand. Also, rising inflation helped gold prices to rally as the yellow metal is viewed as an inflation-hedging asset. Since mining companies act as a leveraged product of the underlying metal, mining ETFs gained handsomely.
White Metal
Sprott Physical Platinum and Palladium (SPPP - Free Report) – Up 6.3%
Palladium price has been rising, prompted by a global shift from diesel to gasoline and hybrid vehicles that led to higher demand for the metal and resulted in the speculation of supply deficit. Notably, Russia is rich in palladium too. Russia's Nornickel is the world's largest palladium producer.
Hence, the Russia-Ukraine tensions are adding to the palladium price rally. Meanwhile, Platinum is also used in the automobile industry in order to control emissions. Plus, upbeat sentiments about the global economic recovery have also been aiding the metal.
Nickel
iPath Series B Bloomberg Nickel Subindex Total Return ETN – Up 4.3%
Nickel prices jumped to their highest since Jan 21 as worries about low inventories and possible sanctions against key producer Russia caused supply fears. The European Union may impose a stringent package of sanctions as soon as needed, as Russian troops inch closer to Ukraine, the EU's top diplomat Josep Borrell said on Thursday, as quoted on miningweekly.com.