Is this time to buy when everyone else is selling? Quite often military invasions turn out to be dips that are bought. Geopolitical risk tends to have far less of an impact on stock markets than you may otherwise think. The recent Russian military action in Ukraine has caused risk assets, like global stocks, to sell off sharply. However, are these just great opportunities for buying medium term?
The German DAX is heading towards a period of strength now from March 24 through to May 01. Over the last 34 years, the DAX has seen gains in 25 of those years between the dates above. The average return has 3.70% and the maximum loss has been 6.64%. Is this now the perfect time to buy into the dip in the DAX or should traders wait to see where the DAX bottoms out first? Is there yet another twist in this Russia/Ukraine crisis still to come?
Major Trade Risks:
- The main risk here is any worsting of the geopolitical risk from western imposed sanctions on Russia, or escalating open conflict between Ukraine and Russia.
- If NATO countries are attacked then the risk tone will rapidly worsen even further.