The eyes of the world are directed at the ongoing conflict in Syria. Recently, the US and other western countries launched a joint airstrike in Syria targeting various military facilities, including alleged chemical weapon stashes. It is no secret that events of such global significance can make or break markets.
Moreover, since US President Trump often shares his opinions on Twitter (more often than not in a blunt and straightforward way), he has the ability to raise geopolitical tensions with a single tweet. For example, when Trump recently taunted Russian President Vladimir Putin on the social network, bragging about the superiority of the US military’s missiles, Wall Street tumbled and leading indices suffered significant losses.
However, there are markets that have benefitted from this recent escalation. Oil has had an incredible run over the past year, showing impressive gains and reaching levels not seen since late 2014. Since the Middle East is one of the most oil-rich areas in the world, any conflict there could put global supply in danger, and therefore, cause prices to rise. It is no wonder, then, that following the strike in Syria, prices reached highs not seen in over three years.
Trading markets during volatile times
Alongside oil, other financial instruments that can benefit from the conflict are the ones investors turn to when markets become too volatile. Safe haven assets, such as gold and other precious metals, have been known to climb when stock and currency markets are down, and have experienced several upticks whenever the global conflict escalated. In addition, the VIX index, which measures market volatility, has also shown gains during these times of uncertainty.
Traders and investors can benefit from tumbling markets by utilising short orders. When indices and stock markets go down, short (SELL) positions will benefit their holders. eToro has a special CopyFund investment strategy called PanicMode, which is designed precisely for such times, by opening short positions on stocks and long positions on precious metals.
Lastly, the ever-volatile cryptocurrency market could also present an alternative for investors during these times. Since cryptocurrencies operate somewhat independently from other markets, they are considered a new form of safe-haven by some investors and could potentially show gains when other markets are tumbling.
Your capital is at risk. This is not investment advice. CFD trading.
The conflict in Syria is ongoing and even when the war ends, it will take some time to rebuild the battle-torn country. While markets around the world are impacted by this globally significant event, the biggest toll is no-doubt being paid by the Syrian people. However, global trading never pauses, even in the face of such conflicts, and therefore, traders and investors should adjust their strategies accordingly.
Cryptocurrencies can fluctuate widely in prices and are therefore not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework. This content is for educational purposes only and is not investment advice. Past performance is not an indication of future results. Your capital is at risk.