Helping Self-Directed Investors Succeed Blog - Two ETFS Influenced By Geo Politics as of January 3rd, 2020

Two ETFS Influenced By Geo Politics as of January 3rd, 2020

January 3rd, 2020

Global equities closed out 2019 strongly with the MSCI All World Index ETF (ACWI) gaining nearly 24% for the year. US Benchmarks performed even better with the S&P 500 Tracking ETF (SPY) jumping nearly 29%. The first day of trading in 2020 started off on a bullish note but the trading week did not end so smoothly as Geo-Politics again took center stage.

Suddenly, investors are grappling with a new uncertainty about the the situation in the Middle East and its likely impact on global equities over the near term. Futures on US Equity Benchmarks are reacting sharply to the negative side but when market opens on Monday things may be different.

With that stated, self-directed investors may want to watch these two ETFS which could be directly influenced by this new developing tension. The S&P Aerospace & Defense ETF (XAR) and the US Oil Fund ETF (USO) have already reacted sharply on Friday after the US Drone strike.

XAR jumped +4.28% this past week which also resulted in a breakout above a short 7-week consolidation. XAR is now at a multi-year high. If the US continues to push forward with military options, companies focused on defense equipment, technology and other services could stand to be benefited. Self-directed investors may want to keep an eye on this ETF while monitoring developments closely.

USO also rose sharply by +2.09% this week,swiftly reacting to oil price moves triggered by these sudden developments in the Middle East. Investors will be very concerned about Crude Oil inventory if the situation escalates further in the region. USO is still in consolidation mode and this week the ETF closed at 5-month highs. Self-directed investors will need to closely watch USO as well.

Self-directed investors should brace for more volatility caused by these uncertanties and hence maintain a cautious stance.

We wish our readers a Happy and Peaceful New Year 2020!

Good Luck and Happy Investing!

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