How a Russia-Ukraine conflict might hit global markets？

Stock futures fell slightly Tuesday morning, reversing much sharper declines earlier, as traders monitor brewing tensions between Russia and Ukraine. Oil prices rose, with West Texas Intermediate futures jumping 4.5% to $95.19 per barrel. How a Russia-Ukraine conflict might hit global markets？How to hedge your stock portfolio to reduce market risk？

Russia-Ukraine conflict

Russian President Vladimir Putin said Monday that he would recognize the independence of two breakaway regions in Ukraine,potentially undercutting peace talks with President Joe Biden. Putin later ordered forces into the two breakaway regions.

That announcement was followed by news that Biden was set to order sanctions on separatist regions of Ukraine, with the European Union vowing to take additional measures.

Affected by this news, the global market reacted violently. At17:30 SGT, US stock index futures fell across the board, Dow futures fell 0.93%, Nasdaq futures fell 1.7%, S&P 500 index fell 1.05%, Russian related ETFs plunged more than 16%, and crude oil gold rose across the board.

How a Russia-Ukraine conflict might hit global markets？

Below arecharts showing where a potential escalation of tensions could be felt across global markets:

The Historical Performances of S&P 500 Index After Geopolitical Events

As our Chart of the Day shows, the S&P 500 fell 5% on average in 20 major geopolitical events dating back to the attack on Pearl Harbor in 1941. However, the S&P 500 recovered those losses in fewer than 50 calendar days on average.Safe Asset

A major risk event usually sees investors rushing back to safe assets,such as VIX index, US Treasury bonds, Japanese government bonds ,Yen ,and Gold,and so on.

Crude oil &Natural gas

Correspondingly, the war has a long-term impact on crude oil, and the "supply premium" that may be caused by the situation in Russia and Ukraine has become a key variable affecting the trend of oil prices in the short term. After the conflict between Russia and Ukraine, European and American countries will definitely sanction Russia, which will hinder Russia's crude oil exports. According to IEA statistics, Russia's daily crude oil output accounts for 11% of the global crude oil output, which undoubtedly makes the current crude oil supply worse.

In addition, the conflict between Russia and Ukraine will also affect the supply of natural gas. Nord Stream Natural Gas Pipeline is an offshore natural gas pipeline operated by Nord Stream AG. Nord Stream No.1 Pipeline was laid in May 2011 and put into use in November of the same year. The logic of natural gas is the same as that of crude oil. If sanctions are imposed, Russia's natural gas exports to Western Europe through Ukraine and Belarus will be greatly reduced, and the price of natural gas may return to the level of the fourth quarter. The situation in Russia and Ukraine may trigger a "supply premium".

Agricultural

Although Russia is located in the north, it is also a big agricultural country. Four major exporters - Ukraine, Russia, Kazakhstan and Romania - ship grain from ports in the Black Sea which could face disruptions from any military action or sanctions.Ukraine is projected to be the world's third largest exporter of corn in the 2021/22 season and fourth largest exporter of wheat, according to International Grains Council data. Russia is the world's top wheat exporter. read more

How to hedge your stock portfolio to reduce market risk？

Returning to trading, How to hedge your stock portfolio to reduce market risk？ The most direct way is to trade futures, crude oil, gold and agricultural products futures.$MGCmain(MGCmain)$ ,$Gold - main 2204(GCmain)$, $SGCmain(SGCmain)$ ,$Brent Last Day Financial - main 2204(BZmain)$ $Light Crude Oil - main 2204(CLmain)$  Tiger App supports futures trading, but if you don't open futures trading, you may wish to look at ETFs.

Gold ETF

Gold ETF is an ETF linked to tracking the fluctuation of gold spot and futures. Buying such ETF is equivalent to buying gold spot itself. In general, gold in the spot market will fall, and ETFs that do more gold will fall

• ​$SPDR Gold Shares(GLD)$ Gold ETF-SPDR tracks the spot price of gold (Loco-London gold), which is more than one time. It has the best liquidity, and the daily turnover is extremely large, which is suitable for trading on the right side. Once the trading direction changes, it can be taken out immediately.
• ​$iShares Gold Trust(IAU)$ Gold ETF-iShares tracks the spot price of gold (refer to the global gold reserves), which is long. The trading volume is moderate, and the price difference range of buying and selling orders is reasonable.
• ​$ProShares Ultra Gold(UGL)$ Gold ETF-ProShares tracks the spot price of gold (London gold), which is more than twice. It is more suitable for intraday trading, and futures such as gold are traded 24 hours a day, so the risk of holding positions overnight is not small.
• ​$ProShares UltraShort Gold(GLL)$ Gold ETF-ProShares tracks the spot price of gold (Loco-London gold) and shorts it twice. Like UGL, it is not suitable to hold positions overnight.

Gold mining company ETF

In addition to gold ETFs, there are gold ETFs-which track a package of gold miners (the weighted average of the market capitalisation of gold miners)-which include both gold miners and gold processors.

​$VanEck Gold Miners ETF(GDX)$The ETF tracks the market value weighted index of global gold mining companies listed on NYSE and Nasdaq. The main commodities tracked are gold accounting for 85.30%, rare metals accounting for 10.26% and comprehensive mining accounting for 4.45%. Component stocks include: Goldcorp GG, Newman Mining NEM, Barrick Gold Company ABX, Randgold GOLD, etc. (Note that the target and composition will be adjusted over time).

​$VanEck Junior Gold Miners ETF(GDXJ)$Doing long gold index (small-cap company) American exchange gold index, the ETF tracks the market value weighted index of global gold and silver mining companies, and its composition accounts for the same proportion as that of global gold and silver mining companies$VanEck Gold Miners ETF(GDX)$Different. Among them, the proportion of gold is 72.93%, the proportion of rare metals is 14.86%, and the proportion of comprehensive mining is 12.41%. (Note that the target and composition will be adjusted over time). Mainly small-cap companies, the top ten components include OceanaGold, Northern Star, Evolution Mining and so on. Do more than twice.

​$Direxion Daily Gold Miners Index Bull 2X Shares(NUGT)$2 times long gold mine index, tracking index: NYSE Arca Gold MineRS Index (GDM), or NYSE Gold Mining Index, tracks the world's "big" gold and silver mining companies, including Gold Corp, Newman Mining and Barrick Gold.$Direxion Daily Gold Miners Index Bear 2X Shares(DUST)$The target of tracking is the same as$Direxion Daily Gold Miners Index Bull 2X Shares(NUGT)$Same, but in the opposite direction, 2 times short.

Silver ETF

• ​$iShares Silver Trust(SLV)$Besides, there is a silver mark, which is a bit like goldSPDR Gold Shares$(GLD)$It is an ETF of physical silver, and it also exists in the vault in London. The fluctuation direction is the same as the fluctuation direction of spot silver price, and it is more than doubled

• ​$ProShares Ultra Silver(AGQ)$The target tracks the fluctuation direction of spot silver price (London silver) in the same direction as the fluctuation direction of spot silver price, which is more than 2 times

• ​$ProShares UltraShort Silver(ZSL)$The target tracks the fluctuation direction of spot silver price (London silver) in the opposite direction to the fluctuation direction of spot silver price, and 2 times short

Foreign exchange ETF

Dollar-related ETFs

• ​$Invesco DB US Dollar Index Bullish Fund(UUP)$Long dollar, short basket of currencies USDX, (short sterling, Swiss franc, Canadian dollar, Japanese yen, Swedish kronor, and euro) extremely high liquidity
• ​$Invesco DB US Dollar Index Bearish Fund(UDN)$Short the dollar, long the USDX contract, short the dollar against six other currencies (sterling, Swiss franc, Canadian dollar, Japanese yen, Swedish kronor, and euro) liquidity is good.

Euro-related ETFs

• ​$Invesco CurrencyShares Euro Trust(FXE)$EURO ETF-CurrencyShares trades EURO/USD, tracking EURO deposits/guarantees
• ​< a href= "https://laHu8.com/S/ULE "> $ProShares Ultra Europe (ULE) $ProShares Ultra Euro$(ULE)$Double the euro against the dollar, suitable for short-term operation (also holds options, futures, forward contracts and other assets, and the trading volume is scarce)
• ​$ProShares UltraShort Euro(EUO)$Double short the euro (volatile, suitable for daily settlement, popular with investors, good liquidity)

Euro-related ETN

• Ero Copper Corp$(ERO)$IPath EUR/USD Exchange Rate ETN is an ETN that is long against the US dollar. Due to the influence of European overnight lending rate, it has good liquidity, but it also has the risk of closure.
• Morgan Stanley Market Vectors Double Short Euro$(DRR)$Market Vectors Double Short Euro ETN double-shorts EURUSD ETN
• Morgan Stanley Market Vectors Double Long Euro$(URR)$Market Vectors Double Long Euro ETN Double Euro-Dollar ETN (Big bid-ask spreads, difficult to trade, bet against Morgan Stanley, long-term liquidity problems, sometimes no trading on the day)

Yen-related ETF

Yen is a safe haven currency because of its large economic volume and stable economic structure. Usually, when a risky event occurs, the yen will rise sharply.

• Double short the yen$ProShares UltraShort Yen(YCS)$​
• Double the yen$ProShares Ultra Yen(YCL)$​

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You can also pay attention to the military industry unit

Top Ten Strongest Military Stocks in US Stocks + Defense ETF Tracking

• $Lockheed Martin(LMT)$ Its core business is aviation, electronics, information technology, aerospace systems and missiles. For example, fighters such as F-16, F-22 and F-35 (JSF)
• $Boeing(BA)$ The world's largest manufacturer of civil and military aircraft and the largest contractor of NASA
• $General Dynamics Corp(GD)$ Provide wheeled armored combat and tactical vehicles to the US military and its allies
• $Northrop Grumman(NOC)$ The largest manufacturer of nuclear-powered submarines, the largest IT supplier of the US Department of Defense, the largest radar manufacturer and the largest naval ship manufacturer in the world.
• Other military-related companies include United TechnologiesRaytheon Technologies Corporation$(UTX)$Precision partsPrecision Castparts Corporation$(PCP)$Rockwell Collins Corp.Rockwell Collins$(COL)$Textron Group (Marsh)Textron$(TXT)$, L3 Communications HoldingsJX Luxventure$(LLL)$The ETF-ITA code for tracking the U.S. aerospace and defense industries is$iShares U.S. Aerospace & Defense ETF(ITA)$​

Finally, I hope all the friends who have read this article can make a lot of money in stock market