Bloomberg Businessweek March 7, 2022 pp35-36 |FINANCE|”Stocks Track Earnings, Not War Shocks” “History shows that geopolitical crises often have a modest impact on U.S. equities. BOTTOMLINE: The S&P500 has been volatile since Russia invaded Ukraine, but overall losses have been modest so far. That’s fairly typical in market history”
Read Bloomberg Businessweek for all the details.
Summary by 2244
Image a screenshot from MarketWatch.com
Data compiled by LPL Research details the “S&P 500 Response to Geopolitical Events” Looking at the top ten most impactful events: Attack on Pearl Harbor the S&P 500 fell nearly 20% and took 307 days to recover, Iraq Invades Kuwait, -16.8%/189 days, North Korea invades South Korea, -12.9%/82 days, Tet Offensive, -6%/65 days, Munich Olympics, -4.3%/57 days, Gulf of Tonkin Incident, -2.2%/41 days, Saudi Aramco drone strike (2019), -4%/41 days, North Korea missile crisis (2017), -1.5%/36 days, Terrorist attacks on U.S. (2001), -11.6%/31 days., Madrid Bombing, -2.9%/20 days.
The Russian invasion started on 24FEB2022 with the S&P at 4,226 on 23FEB2022 and as of 10MAR2022 the S&P was at 4,212. These data mirror what was compiled by LPL Research that surprisingly to many of us “events such as wars, assassinations, and terror attacks are just not that meaningful to the factors that drive markets’-namely revenue and profit.
While the impact may be minor for America-”a geographically isolated superpower”...wars historically have a bigger impact on markets in countries like Russia (1906), Poland (1939) and Afghanistan (2001). “Russia’s GDP, at $1.67 trillion” is small and Ukraine is even smaller, so these economies and their bordering neighbors may suffer more economically.
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