Australia’s share market has climbed at a remarkable pace since Russia’s brutal invasion of Ukraine with an agricultural stock doing particularly well.
While war and human misery can diminish the risk appetite of investors, some companies are benefiting from sanctions on President Vladimir Putin’s authoritarian regime.
American defence companies have seen their share prices surge by as much as 18 per cent in just six days but in Australia, a grain grower has done well out of the geopolitical turmoil.
With Russia losing export markets for wheat, GrainCorp has been a major beneficiary with its share price climbing by 8.1 per cent to $8.52, in the six days starting with the February 24 Ukraine invasion.
Australia’s share market has remarkably climbed since Russia’s brutal invasion of Ukraine with an agricultural stock doing particularly well. While war and human misery can diminish the risk appetite of investors, some companies are benefiting from sanctions on Vladimir Putin’s authoritarian regime (pictured is a Ukrainian reservist taking part in a training exercise)
Saxo Bank Australian market strategist Jessica Amir said the global price of wheat had soared by 10 per cent since the Ukraine invasion, helping agricultural stocks.
‘With global economies and companies blocking Russian trade after its military invaded Ukraine, commodities once heavily sourced from Russia are seeing huge price jumps,’ she said.
During the same six-day period covering four trading days, Australia’s broader share market has climbed by 1.5 per cent.
The benchmark S&P/ASX200 rose from 6,990.6 to 7,096.5 points as of Tuesday and early on Wednesday afternoon was 0.2 per cent firmer at 7,111.8 points.
Australia’s defence stocks, however, haven’t had the same boost as American military hardware companies.
Perth-based ship builder Austral’s share price went backwards, from $1.95 to $1.93, during the first six days of the Ukraine war.
With Russia losing export markets for wheat, GrainCorp has been a major beneficiary with its share price climbing by 8.1 per cent to $8.52, in the six days starting with the February 24 Ukraine invasion (pictured is GrainCorp employee at Goondiwindi in southern Queensland)
Saxo Bank Australian market strategist Jessica Amir said the global price of wheat had soared by 10 per cent since the Ukraine invasion, helping agricultural stocks
Conversely, American aerospace and defence company Northrop Grumman has seen its share price surge by 18.1 per cent rising by $US70 in six days to $US456.10.
Lockheed Martin, the manufacturer of US fighter jets, saw its share price surge in six days by 15.4 per cent, climbing by $US60.90 to $US456.61.
Australian Prime Minister Scott Morrison has vowed to spend $70million on providing the Ukrainians with ammunition and small missiles while US President Joe Biden has committed $US350million ($A482million) on defence aid.
Ms Amir said this made defence stocks a good investment.
‘It’s worth nothing Australia, the United States, and several European nations, including Germany all drastically increased their military spending to support Ukraine fighting against Russia,’ she said.
‘This is a historical shift and means equities in these sectors could benefit over the longer term.’
Reserve Bank of Australia Governor Philip Lowe noted on Tuesday ‘the war in Ukraine is a major new source of uncertainty’.
Australian Prime Minister Scott Morrison has vowed to spend $70million on providing the Ukrainians with ammunition and small missiles while US President Joe Biden has committed $US350million ($A482million) on defence aid (pictured is the damage from shelling at Kharkiv in northeastern Ukraine)
‘Inflation in parts of the world has increased sharply due to large increases in energy prices and disruptions to supply chains at a time of strong demand,’ he said.
‘The prices of many commodities have increased further due to the war in Ukraine.’
Diversified mining giant BHP has seen its share price climb by 7.4 per cent to $48.08 since the Russian invasion of Ukraine.
Petroleum explorer Woodside has seen its share price climb y 7.8 per cent to $30.27, with crude oil prices now above $US100 a barrel for the first time since July 2014.
