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Russia's invasion of Ukraine has affected the investors, making them lose their hard earned invested money in no time. While multiple statements are coming from both Russia and Ukraine's top leadership, including Ukrainian President Volodymyr Zelenskyy and Russian President Vladimir Putin, it seems that war may not end anytime soon.
The major indices are all trading lower following yet another tumultuous overnight session across financial markets, with commodities experiencing extreme volatility. The price of crude oil is back near the $130 per barrel level as President Biden announced a full ban on Russian oil imports, while also broadening the sanctions against the country, and likely releasing more of the National Petroleum Reserve (NPR). Energy stocks hit multi-year highs this morning, and as the price of the crucial commodity is getting close to its all-time high from 2008, the rally in the sector could continue.
The Dow officially entered correction territory today, meaning that the industrial average is now trading 10% below its record high with the Nasdaq shedding over 20% compared to its respective all-time high. The NFIB Small Business Index and the IBD/TIPP economic optimism number both missed expectations, dropping for the second straight month as price pressures continue to weigh on sentiment. Treasury yields are broadly higher despite the weaker-than-expected reports, as the Fed is still expected to raise its benchmark rate next week amid the massive spike in energy prices.
U.S. President Joe Biden has shared new sanctions against Russia, which affected global energy, oil, and gas suppliers. The oil prices went over $100 per barrel for the 1st time after 2014 and hit a 13 year high of $130. Surging oil prices are raising hairs on the necks of investors everywhere, when investors were already concerned about high inflation – and now, those same folks are probably ecstatic about interest rate hikes which would limit the reach of inflation.
Stock Market Loss Deepens
The graph for U.S. stocks markets was in all red, but it bounced back last week – NASDAQ by around 3%, S&P by nearly 1.5%, and The Dow Jones by 0.3%. All three major US markets were in sharp decline, and in fact same trends were noted in markets from all around the globe. While the market bounced back up to some extent last week, the trend was short lived.
The 'special military operation' carried on by the Russian army on the orders of President Putin has resulted in enormous losses for investors. The Nasdaq tripped and fell down some stairs yesterday. It lost -3.62%. The rest of America’s leading indexes also lost more than -2% a piece, adding to their losses. Every index is in bear market territory, while many investors are running to the relative safety of commodities (especially energy commodities.)
Several people have been killed, and multiple explosions were reported across Ukraine. Due to this act, while the market might be showing short-term volatility, the outcomes could be hard for the common man. The oil prices, including Brent crude, are soaring high, exceeding over $130 per barrel.
What Should Investors Do Now?
Rising prices of oil, gasoline, natural gas and even precious metals like Nickel and Palladium and fueling concerns about a slowdown in economic growth. Coupled with a soaring inflation, the dual edged sword is hurting the market.
Apart from utilities and the energy sector, all of the main sectors have been impacted due to the broad-based selloff. Financials have been hit by the meltdown in the European banking sector, with tech stocks, communication services, and consumer-related issues also dropping sharply. Healthcare, materials, real estate, and industrials have fared slightly better, but the worrisome Ukrainian news flow have been hurting stocks across the board.
According to the report, the investors were keen to invest in falling technology stocks, just prior to the invasion. Now, many investors consider the same stocks as riskier assets, and they have started selling the same positions to rotate out of them? The market is still in bear mode, and we advice our members to not panic, but stick to our game plan.
While nobody can predict when the war is going to end, it is recommended to maintain calm and follow the stock market experts before taking any drastic steps as they have successfully navigated similar downturns in the past. The market professionals call it 'short-term' because the market will bounce back, but the stock prices of some segments of the market will recover faster than the others. Some stocks may continue the downward trend. Proper allocation of your hard earned money at this time will be crucial for faster recovery.
For any queries regarding the stocks and managing portfolio, connect with us. Personalized advice can help reverse losses faster and set you up for long term success.
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