The stock markets were seen under pressure from mass sales after Russia ordered military action on Ukraine. This week, markets worldwide have seen bloodbaths caused by the war scenario and geopolitical tensions between Russia and Ukraine.
Our front-line indexes that were not immune to global concerns suffered, resulting in a decrease of 3.58 percent over the week.
United stocks have fallen nearly 8% to date this year, on track for the worst annual start since 2009, and concerns associated with the escalation of the conflict in Ukraine have shaken markets around the world.
While Wall Street finished higher on Friday, with major indices rising between 1.5% and 2.5%, analysts expected markets to experience sales pressure on Monday. Volatility indicators across markets, already at high levels, are forecast to increase this week.
Moreover, since Russia produces 6% of the world’s aluminium and 7% of its extracted nickel, current stress signals have deteriorated, and prices have risen.
Aluminium prices are at historical highs, and nickel prices are approaching 10-year highs. In addition, as investors sought shelter to preserve their capital, gold prices reached a peak of 13 months.
Since these price increases remain a short-term overrun, monitoring the businesses directly affected before making investment decisions is essential. However, as global concerns ease, these prices are also likely to weaken.
Stocks have experienced unprecedented volatility, with commodities not far behind. Several commodity prices have skyrocketed this week due to Russian sanctions. For example, Brent crude oil exceeded $100 per barrel for the first time since 2014 because of concerns about tight supply and growing demand.
The purchase by investors of derivative contracts to hedge against new losses is likely to increase.
Volatile Market Tips For Investors
To address the strategy of investors in these plummeting markets. We observed the first significant market correction after a strong performance in 2021.
- A correction was due when the geopolitical tension became an excuse. Inflation and rising interest rates are the main concerns of equity markets, and geopolitical tensions increase the risk of inflation as energy prices rise.
- Anecdotally, such geopolitical problems provide long-term investors with a good buying opportunity and we are in structural corrections that should continue in the years ahead, where interim corrections will be part of this journey.
- Capital goods, banking, electricity, information technology, and metals were relatively successful sectors, while the automotive, pharmaceutical, and cement industries experienced a challenging quarter.
- The safe haven assets will be in demand with the United States. Treasury bonds, German Bunds and the Swiss Franc are likely to see major purchases while traders digest the implications of the last round of sanctions.
The market downturn also provides opportunities for savvy investors as it allows for quality stocks at reasonable prices.
Dominant geopolitical tensions will continue to take centre stage and will be the main driving force behind the international market orientation and investor mood. If the current Russian-Ukrainian conflict continues, markets could sink further into the red.
Furthermore, the economic plan will have a worldwide impact. Given the various triggers and increasing uncertainty, investors are advised to be extremely careful in the short term and avoid aggressive trading.