The Ukraine-Russia situation is volatile, to say the least. Stocks have been down on dismal news, such as when Russia took over the defunct Chernobyl nuclear power station, likely a symbolic move. Then, this week, as Ukraine made promises not to join NATO, a key bargaining point for Russia, stocks quickly popped.
For newer investors, this can cause dismay. It’s hard to figure out what to do in these volatile times. But there are some key points to keep in mind. Some investors fear the conflict will develop into a long insurgency that could become very long-winded. But that doesn’t mean there aren’t opportunities in the stock market.
Some of the volatility in the market is Investors that are clearly getting exhausted with the conflict.
One way to tell this is by looking at the volatility index, or the VIX. The VIX is a measure of the stock market’s volatility. It’s a tool to see how much the market is going up and down.
Since the start of 2022, the VIX is up over 90%. And as of this week, it’s the highest it has been all year. Russia-Ukraine is leading to uncertainty, oil prices are shooting up and higher interest rates are being implemented across the globe to combat inflation.
There are still some promising sectors in the market – like oil
The energy sector, for example, looks encouraging as countries avoid Russia’s vast oil capacity. It means higher oil prices, but more profits for energy companies.
Oil is now up to $118, and many analysts think the price is going to go up even higher in the near-term. This is making oil-centric companies like Shell (SHEL), ExxonMobil (XOM) and Chevron (CVX) perform well in these trying times.
Minerals like nickel are expected to get more expensive
In particular, Ukraine is a large miner of nickel. The element is a critical component for a number of manufactured products, from cars to electronics.
The price of nickel has skyrocketed – it’s up over 70% in the past week and has surged over 160% in the past year. War in Ukraine has stopped nickel mining production for the time being and there’s no telling when it will start up again.
Companies focused on nickel mining will be in demand
A supply shortage in nickel will force manufacturers that need it to look for new sources. This will help various companies that have mining operations.
One of the biggest nickel mining companies in the world is Vale SA (VALE). The company may not have excess nickel capacity to fill supply, but it can charge more for what it has. Other mining companies in the space include BHP Group (BHP) and ArcelorMittal (MT).
The auto industry is going to get hit by BOTH oil and nickel prices
This may lead consumers to switch to electric vehicles. EV companies like Tesla (TSLA), Rivian (RIVN) and Nikola (NKLA) may be options for consumers. But the problem is that the battery technology also requires nickel to produce EVs, which could hurst costs for these manufacturers.
In the end
Since the start of 2022, the S&P 500, a benchmark index that tracks some of the most well-known US publicly traded companies, is down more than 10%.
While some sectors of the U.S. stock market have gone down – such as tech, financial services and consumer – there are still opportunities in the market for patient and long-term investors. Make sure to keep coming back to the blog for more updates and investing news!