Volatile stock markets have led to a high level of share trading in 2022. Some investors may be looking to make gains, while others are capitalising by buying stocks at reduced prices. Over the past weeks, the market has wildly fluctuated in almost daily reactions to a looming armed conflict in Ukraine.The reason why the current geopolitical tensions are so crucial, and why we’re seeing so much volatility is because the threat of armed conflict coincides with one of the highest threats of inflation since World War 2.
The full effect of the sanctions and of the conflict itself on markets is still unknown in this confusing and destructive time. However we can use different methods to see how the market is interpreting the current signals.
Here are some things from RoboMarkets which investors should know about stocks trading in 2022 how the market is reacting to war and armed conflict:
- Stocks that have fallen include travel and leisure stocks and bank stocks.
- Stocks that are benefitting from the armed conflict, unsurprisingly include defense stocks such as military electronics. Oil, gas and petroleum are being driven up due to the rising cost of crude oil due to Russia being one of the largest oil suppliers in the world. Oil prices are a problem since they act like a tax, and can have an impact on economic growth. Investors have also piled into gold in 2022, which is commonly viewed as a safe-harbor commodity during times of market volatility and uncertainty.
- Crypto has been affected, Bitcoin and other cryptocurrency prices dropped the morning of February 24th when Russia attacked Ukranian city Kyiv. Some crypto investors have said Bitcoin’s limited supply makes it like digital gold and have argued that crypto should be a safe-harbor investment and a hedge against inflation. However, in reality Bitcoin prices have been highly correlated with stock prices in recent months
From a market perspective, most geopolitical events are sharp but short-lived, with volatility creating opportunity. From a humanitarian perspective, war is never a good thing. However, from a financial perspective there is plenty opportunity while the market is fluctuating so wildly.