Geopolitical Events and Stock Market Behavior

Russian invasion of Ukraine is creating global economic uncertainty, causing equity markets to decline.

History illustrates that equity markets decline during geopolitical events due to uncertainty of economic growth, inflation, and interest rates. The current event is creating concern over economic growth as countries coalesce (except for China) to economically squeeze Russia.  The Russian economy is now in freefall with the value of the Ruble relative to the U.S. Dollar down 50% since the beginning of this event.  Russian bonds now yield 20% reflecting capital flight out of Russia.  The following chart illustrates how the S&P 500 Index responded to various geopolitical events.

Richard S. Lawrence, CFA / March 9, 2022

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