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6 ETF Areas Rallying Amid the Russia-Ukraine Crisis
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The Russia-Ukraine saga continues to spark a rally in some sectors. Wall Street, in the meanwhile, is facing the brunt of the attacks as investors are closely monitoring the developments. In fact, last week was the fourth consecutive losing week for the Dow Jones Industrial Average.
Studying the current market conditions, we highlight a few ETF areas that have been showing strength amid the Russia-Ukraine war:
Aerospace & Defense ETFs
Russia’s attack on Ukraine has led to increasing investor inclination toward the aerospace and defense space. NATO countries have been extending their support to Ukraine for fighting off the invasion by providing arms, ammunition and other military equipment. In fact, Ursula von der Leyen, president of the European Commission, has announced to finance the purchase and delivery of arms to Ukraine, amounting to about €450 million. Even the United States and Canada are extending their support to Ukraine. A military support package, totaling €350 million for Ukraine, has been declared by the United States. Moreover, Canada has provided military protective equipment, anti-tank weapons systems and upgraded ammunition.
Russia’s attack might also push other countries to strengthen their military capacity and increase defense budgets. For instance, Germany has announced to raise its defense spending to 2% of gross domestic product from about 1.5% in 2021.
Oil is witnessing an astonishing rally amid the Russia-Ukraine crisis. The international benchmark, Brent crude, has touched its highest mark of $139.13 (since July 2008) before reaching $129.75 per barrel. The chances of imposing a ban on imports on Russian oil and natural gas by the United States and its allies largely led the rally. In this regard, U.S. Secretary of State Antony Blinken has mentioned that “We are now talking to our European partners and allies to look in a coordinated way at the prospect of banning the import of Russian oil while making sure that there is still an appropriate supply of oil on world markets. That’s a very active discussion as we speak,” as stated in a CNBC article.
The coronavirus vaccine rollout is gradually helping control the spread of the outbreak across the globe. The optimism surrounding the gradual reopening of global economies and increasing demand is painting a rosy picture for cyclical sectors. The progress in coronavirus vaccine rollout presents a strong case,favoring a faster return to normalcy and economic recovery.
Oil prices have been rising since the beginning of 2022. The upside in crude oil prices is triggered by factors like easing Omicron variant concerns, supply shortages, and geopolitical tensions in Eastern Europe and the Middle East.
Against the bullish energy sector backdrop, let’s take a look at some energy ETFs that are worth adding to your portfolio for boosting returns: Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) , Vanguard Energy ETF (VDE - Free Report) , Fidelity MSCI Energy Index ETF (FENY), The Energy Select Sector SPDR Fund (XLE) and iShares U.S. Energy ETF (IYE) (read: Russia-Ukraine Crisis Powers Rally in Energy ETFs).
Agriculture ETFs
There is no denying that Russia and Ukraine hold important positions as agricultural producers in the global commodities market. Thus, the escalation in tensions has sparked a rally in a broad range of commodities. The latest developments can also slow down production activities and impact the export of commodities and goods. This is true as the tensions have led to supply-disruption fears in an already-tight commodity market.
It is important to note that Russia stands as the largest wheat exporter. Ukraine also occupies a spot among the four major wheat exporters (according to JPMorgan). Bank of America states that Russia is responsible for 17% and Ukraine for 12% of the 207-million-ton international wheat trade. Ukraine, in the meanwhile, is famously called the “breadbasket of Europe.” Ukraine is also a large exporter of corn, rye, barley along with cooking oils.
Another space enjoying investors’ increased attention amid the Russia-Ukraine crisis is the yellow metal. According to Kenneth Lamont, senior fund analyst for passive strategies at Morningstar, “There are a couple of things playing into the gold story. I think it’s people hedging their risk and also the added bonus that it has historically provided some level of inflation protection,” as stated in a Financial Times article.
Considering the current scenario, gold prices have been rising. The inflationary backdrop in the United States is favorable for gold as the metal is viewed as a hedge against inflation.
Investors are paying great attention to cybersecurity stocks as these have been rallying amid the rising panic of cyberattacks. Market experts have warned about the possibility of cyberattacks by Russia in retaliation to Western sanctions. The West has been continuing to isolate Moscow by imposing several sanctions on Russian banks, its sovereign debt along with Russian President Vladimir Putin and Foreign Minister Sergey Lavrov. Notably, cyberattacks can be part of Russia’s war strategy. Several Ukrainian entities were hacked last week. Also, the increasing adoption of revolutionary technologies is exposing businesses, governments and organizations to cyber risks.
Investors seeking to tap the boom in the cyber security market could consider the following ETFs: ETFMG Prime Cyber Security ETF (HACK - Free Report) , First Trust NASDAQ Cybersecurity ETF (CIBR - Free Report) , Global X Cybersecurity ETF (BUG) and iShares Cybersecurity and Tech ETF (IHAK) (read: Why Cybersecurity ETFs are Rising amid Russia-Ukraine Crisis).
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6 ETF Areas Rallying Amid the Russia-Ukraine Crisis
The Russia-Ukraine saga continues to spark a rally in some sectors. Wall Street, in the meanwhile, is facing the brunt of the attacks as investors are closely monitoring the developments. In fact, last week was the fourth consecutive losing week for the Dow Jones Industrial Average.
Studying the current market conditions, we highlight a few ETF areas that have been showing strength amid the Russia-Ukraine war:
Aerospace & Defense ETFs
Russia’s attack on Ukraine has led to increasing investor inclination toward the aerospace and defense space. NATO countries have been extending their support to Ukraine for fighting off the invasion by providing arms, ammunition and other military equipment. In fact, Ursula von der Leyen, president of the European Commission, has announced to finance the purchase and delivery of arms to Ukraine, amounting to about €450 million. Even the United States and Canada are extending their support to Ukraine. A military support package, totaling €350 million for Ukraine, has been declared by the United States. Moreover, Canada has provided military protective equipment, anti-tank weapons systems and upgraded ammunition.
Russia’s attack might also push other countries to strengthen their military capacity and increase defense budgets. For instance, Germany has announced to raise its defense spending to 2% of gross domestic product from about 1.5% in 2021.
In this regard, investors can consider ETFs like iShares U.S. Aerospace & Defense ETF (ITA - Free Report) , SPDR S&P Aerospace & Defense ETF (XAR - Free Report) , ARK Space Exploration & Innovation ETF (ARKX) andSPDR S&P Kensho Future Security ETF (FITE) (read: Russia Attacks Ukraine: ETF Areas Grabbing Investor Attention).
Oil ETFs
Oil is witnessing an astonishing rally amid the Russia-Ukraine crisis. The international benchmark, Brent crude, has touched its highest mark of $139.13 (since July 2008) before reaching $129.75 per barrel. The chances of imposing a ban on imports on Russian oil and natural gas by the United States and its allies largely led the rally. In this regard, U.S. Secretary of State Antony Blinken has mentioned that “We are now talking to our European partners and allies to look in a coordinated way at the prospect of banning the import of Russian oil while making sure that there is still an appropriate supply of oil on world markets. That’s a very active discussion as we speak,” as stated in a CNBC article.
Against this backdrop, United States Oil Fund (USO - Free Report) , Invesco DB Oil Fund (DBO - Free Report) , United States Brent Oil Fund (BNO) and United States 12 Month Oil Fund (USL) make great investment choices (read: Oil Rallies Amid Russia-Ukraine Crisis: ETFs to Bet on).
Energy ETFs
The coronavirus vaccine rollout is gradually helping control the spread of the outbreak across the globe. The optimism surrounding the gradual reopening of global economies and increasing demand is painting a rosy picture for cyclical sectors. The progress in coronavirus vaccine rollout presents a strong case,favoring a faster return to normalcy and economic recovery.
Oil prices have been rising since the beginning of 2022. The upside in crude oil prices is triggered by factors like easing Omicron variant concerns, supply shortages, and geopolitical tensions in Eastern Europe and the Middle East.
Against the bullish energy sector backdrop, let’s take a look at some energy ETFs that are worth adding to your portfolio for boosting returns: Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) , Vanguard Energy ETF (VDE - Free Report) , Fidelity MSCI Energy Index ETF (FENY), The Energy Select Sector SPDR Fund (XLE) and iShares U.S. Energy ETF (IYE) (read: Russia-Ukraine Crisis Powers Rally in Energy ETFs).
Agriculture ETFs
There is no denying that Russia and Ukraine hold important positions as agricultural producers in the global commodities market. Thus, the escalation in tensions has sparked a rally in a broad range of commodities. The latest developments can also slow down production activities and impact the export of commodities and goods. This is true as the tensions have led to supply-disruption fears in an already-tight commodity market.
It is important to note that Russia stands as the largest wheat exporter. Ukraine also occupies a spot among the four major wheat exporters (according to JPMorgan). Bank of America states that Russia is responsible for 17% and Ukraine for 12% of the 207-million-ton international wheat trade. Ukraine, in the meanwhile, is famously called the “breadbasket of Europe.” Ukraine is also a large exporter of corn, rye, barley along with cooking oils.
Following are some commodity ETFs that investors can keep track of as the geopolitical crisis worsens: Teucrium Wheat Fund (WEAT - Free Report) , Teucrium Corn Fund (CORN - Free Report) and The VanEck Agribusiness ETF (MOO) (read: Best-Performing ETF Areas of February: Up At Least 20%).
Gold ETFs
Another space enjoying investors’ increased attention amid the Russia-Ukraine crisis is the yellow metal. According to Kenneth Lamont, senior fund analyst for passive strategies at Morningstar, “There are a couple of things playing into the gold story. I think it’s people hedging their risk and also the added bonus that it has historically provided some level of inflation protection,” as stated in a Financial Times article.
Considering the current scenario, gold prices have been rising. The inflationary backdrop in the United States is favorable for gold as the metal is viewed as a hedge against inflation.
Gold ETFs mostly move in tandem with gold prices. The SPDR Gold Shares (GLD - Free Report) , iShares Gold Trust (IAU - Free Report) , SPDR Gold MiniShares Trust (GLDM) and GraniteShares Gold Trust (BAR) are some of the popular ETFs (read: Top ETF Stories of February That Deserve a Watch in March).
Cybersecurity ETFs
Investors are paying great attention to cybersecurity stocks as these have been rallying amid the rising panic of cyberattacks. Market experts have warned about the possibility of cyberattacks by Russia in retaliation to Western sanctions. The West has been continuing to isolate Moscow by imposing several sanctions on Russian banks, its sovereign debt along with Russian President Vladimir Putin and Foreign Minister Sergey Lavrov. Notably, cyberattacks can be part of Russia’s war strategy. Several Ukrainian entities were hacked last week. Also, the increasing adoption of revolutionary technologies is exposing businesses, governments and organizations to cyber risks.
Investors seeking to tap the boom in the cyber security market could consider the following ETFs: ETFMG Prime Cyber Security ETF (HACK - Free Report) , First Trust NASDAQ Cybersecurity ETF (CIBR - Free Report) , Global X Cybersecurity ETF (BUG) and iShares Cybersecurity and Tech ETF (IHAK) (read: Why Cybersecurity ETFs are Rising amid Russia-Ukraine Crisis).