Disruptive Tech ETFs Rally on Encouraging Dialogue Between Russia and Ukraine

Disruptive technology-related exchange traded funds rallied on Tuesday as U.S. markets turned risk-on, following positive updates on Russia and Ukraine’s negotiations.

Among the best-performing non-leveraged ETFs of Tuesday, the ARK Innovation Fund (NYSEArca: ARKK) increased 7.0%, the ARK Web x.0 ETF (NYSEArca: ARKW) advanced 5.9%, the ARK Genomic Revolution Multi-Sector Fund (NYSEArca: ARKG) gained 7.0%, and the ARK Fintech Innovation ETF (ARKF) was 7.2% higher.

U.S. markets rallied with growth stocks leading the charge on Tuesday after Russia’s deputy defense minister stated that Moscow has decided to drastically cut military activity around Ukraine’s capital Kyiv and also Chernihiv, fueling hopes that negotiations between Russia and Ukraine were making progress, Reuters reports.

“Today, Ukraine looks better and buyers are back,” Mike Bailey, director of research at FBB Capital Partners, told the Wall Street Journal. “Whether it’s true or not, investors are going with what they see in the headlines.”

Investors have been watching peace talks between Russia and Ukraine, which resumed in Istanbul on Tuesday for the first time in two weeks. Ukraine has indicated that the government was open to a neutral status as part of a peace deal with Moscow.

While the U.S. warned that Russia’s troop movements were a sign that it is re-deploying and not withdrawing, investors jumped onto risky assets, brushing off concerns over the surging inflation and upcoming interest rate hikes that could weigh on the growth outlook.

“Markets seem to have become much more comfortable with the idea that the hiking cycle is here, that it won’t derail economic growth and that equity markets are still the place to be,” Altaf Kassam, head of investment strategy for Europe, the Middle East, and Africa at State Street Global Advisors, told the WSJ.

Other market observers warned of ongoing weakness in the markets that could weigh on further upside potential.

“Over the last two weeks, the S&P has produced one of its sharpest rallies in history, larger than the biggest 10-day rallies in 7 of the S&P’s 11 bear markets since 1927,” according to analysts at Bank of America Global Equity Derivatives Research.

“It has done so despite clearly weaker fundamentals (more hikes, higher inflation, and curve inversion) and the Fed leaning against equity market strength to hike faster,” the analysts said in a note.

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