The markets are still seeing the multi-faceted impact of the COVID-19 pandemic. For 2022, it will continue to be influenced by how the pandemic plays out and how policymakers respond to the challenges.
Gold, oil, services and autos are among the key sectors to watch as 2022 approaches. Rising interest rates, higher inflation levels and continuing supply chain challenges are some of the factors affecting recovery.
Markets are more dynamic than ever and investors need to be ready to change their tactical positions and seize opportunities. Looking to position investments to make gains year over year with minimal risks requires looking at top-performing market sectors.
Crude oil and gold
The Biden administration’s anti-oil agenda is currently limiting oil exploration and production in the U.S. The price of crude oil is surging as the economy recovers and supply restrictions grow.
Gold reached a peak in August 2020 and the price is likely to fluctuate in 2022 due to expectations about future inflation rates.
The future is bright for post-pandemic dividends. Most of the companies that suspended dividends during the pandemic have since returned to paying. The latest edition of the Henderson International 2021 Global Dividend Report shows how profits and dividends fared during the pandemic and how this impacted global dividend cover.
The auto industry
The purchase of used cars has risen, largely due to the limited production of new cars. Both used and new cars, as well as rental cars, have reached record high prices and this trend is likely to continue in 2022.
The electric vehicle sector is sparking a revolution in transportation, with companies like Tesla leading the way. An entire market is starting to develop to support this emerging sector.
The service sector
The service sector, particularly tourism, hospitality and travel, was very hard hit by the pandemic. It is possible that a post-pandemic bounce could be seen in 2022 as pent-up spending gives companies in this sector a tailwind.
Technology-related sectors
Technology-related sectors showed strong performance and digital technologies, in particular, showed steady growth in 2021. There are signs that the semiconductor chip shortage is easing. Remote working has triggered purchases of digital technology as organizations modernize their systems to accommodate the shift.
Labor markets
Labor markets have been tight and many positions are unfilled due to the amount of resignations. The impact of COVID-19 vaccine mandates is also at the forefront of labor market issues.
Crypto markets
The rise of digital currencies is provoking discussions in the U.S. about establishing a central bank digital currency (CBDC) but this would only happen with wide support from Congress and the Executive Branch of the federal government. Cryptocurrencies have proved to be very lucrative over the past decade but remain a very volatile medium of exchange.
In 2022 more big names may consider using bitcoin payments for purchasing products. Both Tesla and Amazon experimented with the idea in 2021. The fact that China banned mining operations and the U.S. treasury imposed stricture regulations has affected crypto less than expected.
Renewable energy
The International Energy Agency estimates that as much as 40 percent more renewable energy will be generated and used in 2022. President Biden’s recent executive order regarding climate change includes a broad range of initiatives that will involve many federal departments and agencies.
The upcoming COP26 global climate summit is likely to drive more investment in sustainable energy and cutting back on emissions. Wind energy is huge and positioning an investment properly in this sector could give massive growth. Three types of sectors to invest in to capitalize on the growing wind sector include construction, maintenance, and distribution.
