The devastating events of the past few months have put the financial markets in a tight spot with tremendous global effects. As a trader, you have probably witnessed the impact of these events when it comes to your daily investments. Almost every asset class of the markets have endured shockwaves, making traders unsure of their next move.
While we cannot possibly predict the final outcome of this global crisis, our team at XPro Markets has looked back and made some fundamental conclusions to help you gain a better understanding of what is happening.
So, let’s take a look at some of the most noticeable changes in the markets.
The focus of attention
Since the mid-1950s, oil has been the world's most important source of energy. As of 2014, oil and gas accounted for over 60% of Russia's exports and over 30% of the country's GDP. The rising tensions between Russia and Ukraine have spiked oil and gas to new record highs.
Among the assets most heavily influenced is Brent Crude Oil, after it shattered through the $100/barrel threshold in March. The sanctions imposed on Russia and avoidance of Russian oil by buyers have already led to a drop in output, raising concerns about further losses in the future.
However, recent updates regarding the new lockdowns in China have sparked fears about declining demand for oil from China, the world’s biggest crude importer. This influenced Crude Oil, making it drop below 100$.
A safe-haven surge
Due to the uncertainty of these challenging events, people are seeking to trust their funds in safe-havens, such as precious metals, Gold, and Silver. Despite their high volatility, these assets still appear to be among the most popular options for traders.
As a traditional safe-haven asset, gold has historically provided protection during severe equity market declines and financial turmoil. Consequently, traders tend to turn their backs on riskier asset classes such as stocks and cryptos.
Inflation on the rise
Inflation refers to the gradual increase in the prices of goods and services over time. This essentially means that a dollar bill cannot buy you as much as it did in the past. What causes inflation usually has to do with increased consumer demand or increases in production costs.
The Consumer Price Index (CPI), which tracks data on 80,000 products such as food, energy, medical care, and fuel, is one of the most closely monitored factors of inflation in the US.
Russian and Ukrainian exports account for about 20% of the world's corn and 25% of the world's wheat, which is driving up prices for a number of agricultural commodities. Therefore, the conflict in Eastern Europe could enhance the market's current preferences, including a preference for value names over growth stocks.
What can you do?
As you already know, online trading always comes alongside the risk of losing. Due to the constantly fluctuating prices, you can never be certain of your trading decisions. Especially during a global crisis like the current Russia-Ukraine conflict, it is essential for traders and investors to keep up to date with every economic event that could affect their investments.