While the capital markets continue to grapple with inflation and the prospect of higher interest rates, tensions between Russia and Ukraine remain contentious.
If tensions between Russia and Ukraine eventually resolve and dissipate, then bullish traders can look to ETFs like the Direxion Daily Russia Bull 2X ETF (RUSL). Geopolitical news will certainly be the driving force behind RUSL, and considering the 24-hour news cycle, anything can push the ETF higher or lower depending on how the markets digest the news.
RUSL seeks daily investment results that equal 200% of the daily performance of the MVIS Russia Index. The index is intended to represent the overall performance of publicly traded companies that are domiciled and primarily listed on an exchange in Russia or that are not Russian companies, but nonetheless generate at least 50% of their revenues in Russia.
Another ETF worth playing is the Direxion Daily Aerospace & Defense 3X Shares ETF (DFEN). Whenever geopolitical conflict heightens, defense stocks tend to push higher amid the possibility of full-blown conflict.
DFEN seeks daily investment results equal to 300% of the daily performance of the Dow Jones U.S. Select Aerospace & Defense Index, which attempts to measure the performance of the aerospace and defense industry of the U.S. equity market.
“Russia’s potential for causing geopolitical risks remains high especially as hostilities have grown and Russian troops are assembled on the Ukraine,” Direxion Investments said. “This would likely create a spike in volatility, which would likely abate. It make also put aerospace and defense front and center.”
Disruptions in the Oil Market
With Russia’s status as a member country of the Organization of the Petroleum Exporting Countries (OPEC), geopolitical factors can certainly play a part in oil prices. That said, traders can also look at the Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares (GUSH).
“Anxiety over potential supply disruptions in the Middle East and Russia is providing bullish fodder for the oil market,” said Stephen Brennock of oil broker PVM.
GUSH seeks daily investment results of 200% of the daily performance of the S&P Oil & Gas Exploration & Production Select Industry Index. The fund, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments and securities of the index, ETFs that track the index, and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index.
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