Choose your trading platfom

How to trade during risk-off sentiment

In the last few days, fears have risen in stock markets over Russia-Ukraine tension and the US Federal Reserve's hawkish policy. We can see major stock market indices fell and the US dollar is strengthening. This trend is usually described as rsk-off sentiment, which indicates risky assets fall and safety-related assets rise. Therefore, what risk-off assets you could see in this environment?

VIX - it is the index to gauge the risks of the market. VIX surges when investors show concerns and worry, especially in a market crash.

Gold and Silver - precious metals, especially gold, is the safe-haven asset that can hold value in a downtrend market. Silver is not a typical safety asset, but it usually follows in the same direction as gold.

Crude oil (WTI) - not a particularly safe asset, but it is in the current situation and economic cycle. Undersupply is the key factor that has pumped up the oil price, which is why potential disruption from the Ukraine crisis is adding more concerns on the same issue.

JPY - a typical safe-haven currency. This is relating to the bond markets. The government bond price usually goes up with risk-on sentiment.

GOVT - the iShares US Treasury Bond ETF seeks to track the investment results of an index composed of US treasury bonds ranging from 1-30 years' maturities.

Disclaimer: CMC Markets is an order execution-only service. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.