The Russia-Ukraine war has been exacerbating supply chain disruptions. This, along with the resurgence of COVID-19 cases in several countries, could mar the basic materials industry’s growth this year. However, since economists do not expect the economy's health to deteriorate, the industry should be able to maintain its growth even if at a slower pace than it achieved last year.
Furthermore, supportive federal policies, some of which will be funded by last year’s infrastructure spending bill, should drive the industry's growth in the coming months. Investors’ interest in this space is evident in the Materials Select Sector SPDR Fund’s (XLB) 8.5% returns over the past month compared to the SPDR S&P 500 Trust ETF’s (SPY) 5.2% returns.
