High Asset

Investors Dash to Haven Assets During Ukraine Crisis Market Turmoil


The Ukraine crisis is turbocharging a dash for haven investments around the globe.  

The Russian invasion and the ensuing jump in commodities prices have sent investors barreling into gold and government bonds and scooping up bets that will pay out if they keep rising. 

The turbulence has unleashed a frenzy of trading tied to one of the biggest exchange-traded funds tracking gold, while investors have also poured money into government bonds, stemming a flood of withdrawals from earlier in the year. The WSJ Dollar Index, which measures the greenback against a basket of 16 other currencies, closed Monday at its highest level since June 2020. The dollar is seen as a haven because of its status as the world’s reserve currency. 

Within the stock market, many investors are turning to shares of utilities and other defensive companies. Shares of utilities companies within the S&P 500 are up 3.4% so far this month, while the broader index has fallen 4.6%, extending its decline for the year to 12%.

Investors say they are facing one of the most uncertain economic outlooks of the past few decades, and there is little clarity on how the Ukraine situation will be resolved. Some have grown concerned about the possibility of a prolonged bout of inflation alongside low economic growth like the stagflation era of the 1970s. Adding to the anxiety, the Federal Reserve is poised to begin raising interest rates this week and likely won’t provide support for markets as it has in recent years. 

Eddie Perkin,

chief investment officer of equities at Eaton Vance, said he has trimmed exposure to financial stocks lately, concerned that a potential economic slowdown could crimp profits at banks. Mr. Perkin said he is still thinking through the long-term implications of the conflict in Europe.

“It feels a little early to be buying the dip to me,” Mr. Perkin said. “I don’t see a conclusion to the situation in Ukraine anytime soon.” 

In addition to monitoring the Fed meeting Tuesday and Wednesday, investors will parse earnings reports this week from home builder

Lennar Corp.

, retailer

Dollar General Corp.

and shipping company

FedEx Corp.

for clues about the economy’s trajectory.

The rush for shelter comes as commodity prices around the globe have soared, stoking inflation fears. Oil prices rocketed to trade at times last week above $130 a barrel, the highest level since 2008, while prices of wheat and corn have recorded some of their biggest moves in history. 

These fears have weighed on stocks lately and triggered intense volatility across other markets as well. The Nasdaq Composite tumbled into a bear market last week, down more than 20% from November’s record. The Dow Jones Industrial Average posted a correction, a fall of at least 10% from a recent high, for the first time since the onset of the Covid-19 pandemic. 

Hans Olsen,

chief investment officer at Fiduciary Trust Co., said his firm last week sold stocks and increased positions in cash to prepare for the possibility that the mix of high oil prices and expected interest-rate increases stifles economic growth.

“If it tips the economy into a recession, we’re going to want the cash, one, to buffer the portfolio, and two, to take advantage of better values down the road,” he said. 

He isn’t alone:

JPMorgan Chase

strategists estimate that as of last week, investors had increased cash positions to the highest level since March 2020. 

To be sure, many investors believe the U.S. economy is in a strong enough position to withstand the jump in energy prices. The unemployment rate fell in February to 3.8%, edging closer to the 50-year low of 3.5% from right before the Covid-19 pandemic, while consumer spending rose briskly to start the year. 

Some investors haven’t assumed a defensive posture. Individual investors, for example, have been buying shares of travel companies including

United Airlines Holdings Inc.,

Delta Air Lines Inc.


Carnival Corp.

while broadly buying the dip in the stock market, according to data from VandaTrack. That suggests they expect demand for travel to hold up despite higher fuel prices and any broader economic headwinds.

But if oil prices remain high, that could weaken consumer confidence and cause households to think twice about discretionary purchases. Even before oil reached its recent highs, there were signs of growing caution. The University of Michigan Surveys of Consumers, for example, said its gauge of consumer sentiment fell in February to its lowest level in more than a decade. On Thursday,

Goldman Sachs

economists said they were expecting slower growth this year because of the Ukraine crisis and rising oil prices. 

Within the stock market, sectors that are traditionally considered defensive have been holding up better than the S&P 500 as a whole. The utilities group, second in performance in March behind the energy segment, is seen as defensive because customers give priority to gas and electric bills even when they trim other spending. The same concept applies to the healthcare group, which is down slightly this month. Shares of utility

American Electric Power Co.

have risen 4.5% in March, while shares of hospital operator

HCA Healthcare Inc.

are up 4.4%. 

Individual investors have been buying up shares of United Airlines Holdings and other travel companies, indicating they expect demand to hold up despite higher fuel prices.


Jose M. Osorio/Zuma Press

Utilities stocks also boast a chunky dividend yield, allowing investors to earn bondlike income. The S&P 500 has a dividend yield of 1.39%, compared with 3.03% for its utilities sector, according to FactSet. The yield on the benchmark 10-year U.S. Treasury note has been hovering around 2%.

Many traders have flocked to options on one of the biggest exchange-traded funds tracking gold, sending activity to the highest level since February 2020 while bullish trades in particular have skyrocketed,

Cboe Global Markets

data show. Activity in calls, which give the right to buy shares at a specific price by a stated date, hit the highest level on record last week. Investors have also poured money into the

iShares 20+ Year Treasury Bond ETF,

giving the fund four consecutive weeks of inflows after significant outflows to start the year.


How have you adjusted your investing during the Ukraine crisis? Join the conversation below.

Investors had shunned some of these trades in recent months. Gold prices edged lower last year and started 2022 with declines before soaring in February and continuing their ascent this month. Treasury yields had risen in recent months as investors positioned for the Fed to lift interest…


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