As you may have seen in the news, Israel is at war with Hamas. In this post, we take a look back at about two dozen historical geopolitical crises, including wars and terrorist attacks, for some perspective on how markets might perform.
- The average one-day return at the onset of the geopolitical events we looked at is -1.1%. That makes the S&P 500’s 0.3% gain on Monday (10/9), unusual, as a positive one-day return only occurred four out of the 23 events we studied.
- Around prior geopolitical events, the average drawdown is -4.7%, the average time to reach market bottom is 19 days, and the average time to fully recover losses is 42 days.
- In other words, equities have historically held up well during geopolitical shocks, including wars and other military conflicts going back decades. Even the market recovery from 9/11 took only 31 days.
- Besides the severity of the event, whether the event coincides with recession has been a main determinant of market performance.
- For more details on how stocks have historically performed after major geopolitical crises, click HERE.
Source: LPL Research
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