Blog

Market Update | October 16, 2023

There is a horrific situation unfolding in Israel. The devastating terrorist attacks have already cost thousands of lives and may profoundly affect the region. While the violence might seem far away, behind every headline are real people, families, and communities that will never be the same. 

Let’s take a moment to grieve for the folks who are suffering and dying and hope for a solution that will save lives.

How could an Israel-Hamas war affect the economy and markets?

Given Israel’s key position in the region, it’s likely that we’ll see energy prices impacted by the conflict, which could increase inflation.1

Another concern is that this new conflict highlights how the world is becoming more fragmented.

If the war spreads to involve more major powers, it will inject more uncertainty and tension into a fragile world, and markets will likely react negatively.

What does history teach us about market reactions to geopolitical shocks?

History shows that markets typically view geopolitical crises as temporary setbacks. I’ll note that the past doesn’t predict the future — but it often rhymes. Let’s take a look at some examples from a 2022 study:2

I’d like to note that “geopolitical event” is a very antiseptic phrase for horrors like bombings, wars, invasions, and other terrible attacks, and really fails to encompass the full cost in human misery.

While markets might recover quickly, too many lives will never be the same.

We can hope, pray, donate, and speak out.

And we can focus on what’s in our control: Ourselves, our actions and reactions, and our strategies for uncertain times.

Looking ahead, we can expect more volatility as the crisis unfolds and more data emerges. As we often say, volatility is certain, and we plan for it so we shouldn’t be surprised when it rears its ugly head.

Let’s hug the people we love extra tightly today.

Sources

  1. https://www.bbc.com/news/business-67050612
  2. https://www.reuters.com/markets/asia/live-markets-what-history-says-about-geopolitics-market-2022-02-18/
  3. Chart sources: https://www.reuters.com/markets/asia/live-markets-what-history-says-about-geopolitics-market-2022-02-18/ and http://glenview-insights.com/blog/geopolitical-events-and-stocks/

Leave a Reply

Your email address will not be published. Required fields are marked *

Form ADV Part 2A
Form CRS