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.
For this reason, prioritize your market updates and trading knowledge with XPro Markets’
educational tools and resources.