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The end to the Russia-Ukraine conflict does not seem to be in sight. Rather, the conditions are likely to worsen. A CNN report has highlighted that Russian President Vladimir Putin has appointed a new general to take control and direct the war after the defeat in Kyiv (per U.S. and European officials). Russia is focusing its forces in eastern Ukraine for brutal and aggressive combat that could test and exhaust Ukraine's forces (per a CNN report).
Ukrainian President Volodymyr Zelensky has said that "we are ready" in his recent speech in response to chances of a full-blown attack on Ukraine from Russia, according to a CNN report.
Global leaders have already been strongly condemning the Russian missile strike on a railway station in Kramatorsk and its soldiers' atrocities on the Ukrainians in the town of Bucha. The United States and its Western allies are coming forward in support of Ukraine by pledging to provide them with more military equipment and financial support.
Studying the current market conditions, we highlight a few ETF areas that can see some gains as the Russia-Ukraine crisis worsens:
Commodity ETFs
The Ukraine-Russia war saga continues driving commodity prices. There is no denying that Russia and Ukraine hold important positions as 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. The surging commodity prices can have a far-reaching impact on global economies like the United States and the U.K., recovering from the pandemic-led slowdown and high inflation levels.
Here are some commodity ETFs that investors can keep track of as the geopolitical crisis worsens -- Teucrium Wheat Fund (WEAT), United States Commodity Index Fund (USCI), Invesco DB Commodity Index Tracking Fund (DBC - Free Report) and WisdomTree Enhanced Commodity Strategy Fund (GCC - Free Report) (read: More Rally for Commodity ETFs in the Cards?).
Oil ETFs
Russia’s move is leading to a rise in oil prices as it is among the world’s largest suppliers of oil and natural gas. Russia stands as the world’s second-largest oil producer. European refineries procure most of their crude oil supplies from Russia. Notably, Russia provides about two-fifths of its natural gas supply to Europe. In fact, Russia emerged as the largest natural gas and oil supplier to the European Union in 2021.
The growing number of sanctions on Russia is driving price of the commodity. However, the resurging of COVID-19 cases in China and the imposition of lockdown to control it have led to fears of decreasing demand for oil.
The yellow metal has enjoyed investors’ increased attention amid the Russia-Ukraine conflict. 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 cyberattacks panic. Market experts have warned about the possibility of cyberattacks by Russia in retaliation for Western sanctions. The West has been continuing to isolate Moscow by imposing several sanctions on Russian banks and its sovereign debt along with Putin and Foreign Minister Sergey Lavrov. Notably, cyberattacks can be part of Russia’s war strategy. Several Ukrainian entities have already been hacked. 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), First Trust NASDAQ Cybersecurity ETF (CIBR), Global X Cybersecurity ETF (BUG - Free Report) and iShares Cybersecurity and Tech ETF (IHAK - Free Report) (read: 5 Thematic-ETF Plays Worth Your Attention for Q2).
Aerospace & Defense ETFs
The aerospace and defense space has witnessed growing investor inclination. NATO countries have been extending their support to Ukraine for fighting off the invasion by providing arms, ammunition and other military equipment. The United States has declared a huge military support package for Ukraine. Moreover, Canada has provided military protective equipment, anti-tank weapons systems and upgraded ammunition. Notably, Russia’s attack might 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.
Image: Bigstock
ETFs Areas for April as War Crisis May Worsen
The end to the Russia-Ukraine conflict does not seem to be in sight. Rather, the conditions are likely to worsen. A CNN report has highlighted that Russian President Vladimir Putin has appointed a new general to take control and direct the war after the defeat in Kyiv (per U.S. and European officials). Russia is focusing its forces in eastern Ukraine for brutal and aggressive combat that could test and exhaust Ukraine's forces (per a CNN report).
Ukrainian President Volodymyr Zelensky has said that "we are ready" in his recent speech in response to chances of a full-blown attack on Ukraine from Russia, according to a CNN report.
Global leaders have already been strongly condemning the Russian missile strike on a railway station in Kramatorsk and its soldiers' atrocities on the Ukrainians in the town of Bucha. The United States and its Western allies are coming forward in support of Ukraine by pledging to provide them with more military equipment and financial support.
Studying the current market conditions, we highlight a few ETF areas that can see some gains as the Russia-Ukraine crisis worsens:
Commodity ETFs
The Ukraine-Russia war saga continues driving commodity prices. There is no denying that Russia and Ukraine hold important positions as 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. The surging commodity prices can have a far-reaching impact on global economies like the United States and the U.K., recovering from the pandemic-led slowdown and high inflation levels.
Here are some commodity ETFs that investors can keep track of as the geopolitical crisis worsens -- Teucrium Wheat Fund (WEAT), United States Commodity Index Fund (USCI), Invesco DB Commodity Index Tracking Fund (DBC - Free Report) and WisdomTree Enhanced Commodity Strategy Fund (GCC - Free Report) (read: More Rally for Commodity ETFs in the Cards?).
Oil ETFs
Russia’s move is leading to a rise in oil prices as it is among the world’s largest suppliers of oil and natural gas. Russia stands as the world’s second-largest oil producer. European refineries procure most of their crude oil supplies from Russia. Notably, Russia provides about two-fifths of its natural gas supply to Europe. In fact, Russia emerged as the largest natural gas and oil supplier to the European Union in 2021.
The growing number of sanctions on Russia is driving price of the commodity. However, the resurging of COVID-19 cases in China and the imposition of lockdown to control it have led to fears of decreasing demand for oil.
Against this backdrop, United States Oil Fund (USO), Invesco DB Oil Fund (DBO), United States Brent Oil Fund (BNO - Free Report) and United States 12 Month Oil Fund (USL - Free Report) can be kept an eye on (read:5 Commodity ETFs Enjoying Hot Streak in Q1).
Gold ETFs
The yellow metal has enjoyed investors’ increased attention amid the Russia-Ukraine conflict. 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), iShares Gold Trust (IAU), SPDR Gold MiniShares Trust (GLDM - Free Report) and GraniteShares Gold Trust (BAR - Free Report) are some of the popular ETFs (read: Gold ETFs Continue to Shine After Best Quarter in 2 Years).
Cybersecurity ETFs
Investors are paying great attention to cybersecurity stocks as these have been rallying amid the rising cyberattacks panic. Market experts have warned about the possibility of cyberattacks by Russia in retaliation for Western sanctions. The West has been continuing to isolate Moscow by imposing several sanctions on Russian banks and its sovereign debt along with Putin and Foreign Minister Sergey Lavrov. Notably, cyberattacks can be part of Russia’s war strategy. Several Ukrainian entities have already been hacked. 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), First Trust NASDAQ Cybersecurity ETF (CIBR), Global X Cybersecurity ETF (BUG - Free Report) and iShares Cybersecurity and Tech ETF (IHAK - Free Report) (read: 5 Thematic-ETF Plays Worth Your Attention for Q2).
Aerospace & Defense ETFs
The aerospace and defense space has witnessed growing investor inclination. NATO countries have been extending their support to Ukraine for fighting off the invasion by providing arms, ammunition and other military equipment. The United States has declared a huge military support package for Ukraine. Moreover, Canada has provided military protective equipment, anti-tank weapons systems and upgraded ammunition. Notably, Russia’s attack might 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), SPDR S&P Aerospace & Defense ETF (XAR), ARK Space Exploration & Innovation ETF (ARKX - Free Report) and SPDR S&P Kensho Future Security ETF (FITE - Free Report) (read: Aerospace and Defense ETFs Rallying on Russia-Ukraine War).