Stocks have experienced the fifth-worst start in 95 years this year,
per J.P. Morgan, as quoted on CNBC. The S&P 500, the Dow Jones and the Nasdaq Composite have lost about 6.4%, 4.4% and 11.2% this year so far (as of Mar 18, 2022), respectively.
The global market is currently at a critical juncture. The pandemic-driven supply-chain woes and the resultant red-hot inflation, the Russia-Ukraine war and the consequent supply crunch in the commodity market as well as the central banks’ policy tightening (including the Fed) in the developed world may push the global economy into recession over the medium term, if we go by some analysts. No wonder, stocks have been wavering this year.
China went back to lockdown mode due to a spike in COVID-19 cases. With its key manufacturing city Shenzhen being locked down, the supply-chain woes have compounded. The probability of a U.S. recession next year may be as high as 35%, according to economists at Goldman Sachs Group Inc. per a Bloomberg article,
quoted on Yahoo Finance. There’s a 35% chance that the S&P 500 could fall into a bear market, per Bank of America, as quoted on CNBC. What Won This Year?
Markets this year have been behaving in line with the developments in the Russia-Ukraine war with other factors following the suit. Oil & gas is especially in a sweet spot amid the Russia-Ukraine crisis. Russia is energy-rich. Europe is highly dependent on that country for energy, importing about 40% of its energy requirement. Russia is also the provider of about 35% of Europe’s gas. Hence, the latest Russia-Ukraine tensions have led to uncertainty in the energy market supply chain and sent the commodities soaring.
It’s not only oil that has been getting a boost from the crisis. The disruptive metal industry is also following suit. Ukraine is a major producer of uranium, titanium, iron ore, steel, and ammonia too. The country’s steel makes up around 10% of Europe’s imports. Hence, metals and mining stocks soared.
Wheat prices too rose due to Russia’s incursion into Ukraine. Both areas are rich in wheat production and account for about 29% of the global wheat export market. The latest crisis triggered supply chain woes. No wonder, agricultural ETFs had the upper hand. Overall, commodity investing has been strong this year. This is especially true as commodities are seen as a good hedge against inflation.
Last but the least, several Fed rate hikes were expected this year. As a result, interest-rate-hedged products come across as a winning proposition. Against this backdrop, below we highlight a few ETF areas that have been soaring this year.
VanEck Oil Services ETF (
OIH Quick Quote OIH - Free Report) – Up 45.8%
SPDR S&P Oil & Gas Equipment & Services ETF S) – Up 44.7%
iShares U.S. Oil Equipment & Services ETF (
IEZ Quick Quote IEZ - Free Report) – Up 42.9% Commodities
Elements Rogers International Commodity Index-Energy Total Return ETN (RJN) – Up 43.94%
iPath Series B Bloomberg Nickel Subindex Total Return ETN (
JJN Quick Quote JJN - Free Report) – Up 42.5%
iShares U.S. ETF Trust iShares GSCI Commodity Dynamic Roll Strategy ETF (COMT) – Up 28.1%
Teucrium Wheat Fund (
WEAT Quick Quote WEAT - Free Report) – Up 38.6%
iPath Series B Bloomberg Grains Subindex Total Return ETN (
JJG Quick Quote JJG - Free Report) – Up 29.1% Mining
SPDR S&P Metals & Mining ETF (
XME Quick Quote XME - Free Report) – Up 30.2% Interest-Rate Hedged ETFs
Simplify Interest Rate Hedge ETF (
PFIX Quick Quote PFIX - Free Report) – Up 24.5%
FolioBeyond Rising Rates ETF (
RISR Quick Quote RISR - Free Report) – Up 21.6%