Militarily Russia is a great power, but economically it’s a dwarf. Russia’s GDP is barely higher than that of Spain. In U.S. terms, its economy is smaller than New York’s and slightly larger than Florida’s. Apart from agricultural and energy commodities, international trade with Russia is relatively small.
Nevertheless, the war in Ukraine will continue to fuel inflation worldwide. This is now affecting virtually all areas of life. Since supermarkets have to be supplied with goods on a daily basis, discounters such as Aldi have already started to raise prices on a large scale.
These 8 Sectors Are Benefiting From The Current Crisis
The war in Ukraine is moving closer to the NATO border. Uncertainty is spreading, including on the stock markets. Still, there are sectors that are bucking the general trend and benefiting from the current crisis. These include:
- Alternative energy
- Precious metals
- Agricultural machinery
- Oil & gas
- Defense (As Garrett explained early last week)
These Sectors Are Now Coming Under Pressure
The major indices have been in a downtrend since the Russian invasion. However, there are sectors that are under particular pressure. These include:
- Luxury goods
- European financials
European banks in particular have been hit by the current crisis. Partly because of interest rates, which are still low in the EU, and partly because of the impact of sanctions, as some European banks have become heavily involved in Russia.
These are companies that are particularly cyclical. A poor economic situation combined with weakening demand and high energy prices affects manufacturers of consumer goods. These include, for example:
- Automotive stocks
- Technology stocks
You Should Also Have These Sectors In Your Portfolio Now
By the way, the non-cyclical sectors that are holding steady or even making gains during the crisis include:
- US financials
In conclusion, the war in Ukraine has brought geopolitical risks on the stock market into focus. The big unknowns include not only the Kremlin clique, but also the hitherto dubious role of China.
The gloomy scenario of a further escalation is not yet priced in on the stock markets. However, it makes sense for you as an investor to restructure your portfolio according to the crisis winners and losers listed above.