Hopes of an end to the Iran war have been raised by President Trump who has declared that a peace deal between the combatants could be made “quickly.”
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Trade NVDA with leverageUS media outlet Axios reported that Trump believes he is getting close to a 14-point memorandum of understanding with Iran, which could create a framework for talks over Iran’s nuclear ambitions.
“They [Iran] want to make a deal. We’ve had very good talks over the last 24 hours and it’s very possible that we’ll make a deal up there,” Trump said. “I think we won.”
Iran officials were more cautious, saying that the conflict, which began in late February and has rattled economies around the world, could be coming to a close.
However, let’s stay positive and look at three ETFs that could pop if and when a peace deal is announced.
JETS ETF
U.S. airlines have faced severe turbulence as a result of the Iran war. Attacks on energy facilities throughout the Gulf and the closure of the Strait of Hormuz have seen oil prices soar and with that a hike in jet fuel costs.
Because of U.S. airlines’ policies not to hedge these costs, they threaten to have a huge impact on margins. This is already being seen in a number of airlines cutting routes.
The impact of higher prices and inflation on consumer confidence could also mean people deciding to forego long-haul and overseas holidays this summer.
A peace deal, therefore, could alleviate some of these concerns and boost airline stocks.
The U.S. Global Jets ETF (JETS) is designed to provide exposure to the commercial passenger airline industry. It comprises the most prominent passenger airlines, alongside key airport operators and aircraft manufacturers. It has 50 holdings including Delta Air Lines (DAL) and American Airlines (AAL).
Its share price is down 7% in the year-to-date and off 15% in the last three months.
SOXX
Semiconductor stocks have also had their struggles during the conflict. Despite being buoyed by demand for chips to power the AI revolution, the war has raised concerns over supply chains and the availability of key materials. That’s down to production being hit by a lack of helium as gas facilities get blasted in the Gulf. This has tightened the supply of helium, which is a natural gas byproduct and pivotal in semiconductor manufacturing, sending prices higher.
Helium is essential in creating the right conditions for semiconductor manufacturing. That includes creating a stable vacuum environment during the lithography process, as well as cooling semiconductor materials and reducing thermal stress that could damage the integrity and quality of the chips. A peace deal would take this helium headache away.
The iShares Semiconductor ETF (SOXX) offers investors a strategic opportunity to tap into the growth and innovation inherent in the semiconductor industry, a critical backbone of modern technological advancement.
It has 31 holdings including Nvidia (NVDA) and Broadcom (AVGO). It is up nearly 37% in the last three months, a slowdown compared with the 154% growth in the last year.
SPDR Gold Shares
The gold price has been surging over the last 12 months driven higher by lower interest rates, central bank demand and investors seeing it as a safe haven during times of geopolitical crises.
However, the gold price has struggled during the conflict as higher oil price increases the risk of higher inflation and higher interest rates to combat those.
The hope is that a peace deal will take the heat out of the oil price and deter the Federal Reserve from hiking interest rates. Gold could also return to that safe haven status in a volatile world as there are still plenty of other conflicts of concern around the globe including Ukraine.
The SPDR Gold Shares ETF (GLD) is uniquely positioned within the Physically Held niche, meaning that it is backed by actual gold bullion stored in secure vaults. It is up just over 4% in the year-to-date, but down 11% in the last three months.
