How Conflicts and Wars Affect the Markets 

Tensions between Ukraine and Russia came to a head when Russian troops invaded Ukraine in late February 2022. And if you’ve been following the markets, you’ll have noticed that the potential for war has been weighing on the global economy for weeks. For example, the ever-increasing sanctions on Russia have had a negative effect on global oil prices. Also, we witnessed a sharp sell-off in the S&P 500 while Nasdaq briefly fell into bear market territory. Interestingly, both stock indexes have recovered in a wild trading session never witnessed since the start of the pandemic.

That said, how will the markets respond long-term if the Russia-Ukraine tension evolves into a full-blown war? What can you do as an investor to cushion yourself if things go south?

First, the full effects of the conflict on markets are confusing and still unknown at this time. Second, the markets are constantly moving up and down in reaction to every bit of information coming from Ukraine. So, it makes sense not to make rash decisions based on every information that comes your way. Although the potential for war might tempt you into overreacting and selling your investments, most financial experts advise against that. This is because any reaction you have to the current situation is more likely to hurt you than help you.

Links and Resources

• https://www.investopedia.com/solving-the-war-puzzle-4780889
• https://www.cnbc.com/2022/02/22/russias-ukraine-incursion-could-complicate-the-federal-reserves-interest-rate-decisions.html
• https://seekingalpha.com/article/4488660-how-stock-market-reacts-war-based-crash
• https://www.google.com/amp/s/www.bostonglobe.com/2022/02/22/metro/russian-invasion-ukraine-would-have-global-impact-specialists-say/%3FoutputType%3Damp
• https://www.google.com/amp/s/www.nytimes.com/2022/02/22/business/russia-ukraine-markets.amp.html