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European Stock Futures Higher amid the War in Ukraine Bradley Moss Mar 14, 2022
 

Markets are currently dominated by headlines regarding the ongoing war in Ukraine, the biggest humanitarian disaster in Europe after World War II. As the conflict grinds on, prices of gasoline, wheat, and a number of other essential commodities are on the rise, thus creating prerequisites for gloomy prospects. As financial sanctions against Russia are restricting international trade, futures prices are soaring up.

Various landmark events throughout history serve to indicate the inevitable connection between the state of geopolitical events and their market impact.

Nathan Mayer Rothschild, a prominent English-German banker and financier, known for his great entrepreneurial skills, had been able to accumulate massive wealth relying on his maxim: “Buy on the sound of cannons, sell on the sound of trumpets.”

Rothschild traded in gold and securities during the Napoleonic Wars, and his personal net worth was estimated to amount to 0.62% of British national revenue. He is obviously implying that investments in the stock market are to be done upon the beginning of war conflicts, and subsequently, shares are to be sold upon their end.

Historical Evidence

Historical evidence from conflicts of varying scale indicates that stock markets plummet in the months leading up to a conflict, but quickly recuperate once confrontations begin. When a conflict breaks out suddenly, however, there is a negative reaction on the stock exchanges. Generally, the lowest point of indices is reached upon the three–month mark of the conflict breaking out.

In a 2015 research, analysts at the Swiss Finance Institute examined U.S. military operations following World War II and concluded that when there is a prewar period, a surge in the chance of war tends to reduce stock values, whereas the eventual beginning of a war tends to enhance them. 

An appropriate example to manifest the correlation between geopolitical and military conflicts of varying magnitude and their direct influence over the stock market is the S&P 500 index. The stock market rebounds quite rapidly following the original geopolitical concussion in the vast majority of situations, with a low point between one and three months after the initial panic. In most cases, within a year from the commencement of the conflict, figures seem to settle down.

The Current State of European Stock Futures

As per data, published on reuters.com, regarding European stock futures, we may examine their performance, valid as of March 11, 2022, in the table below.

 

Future

Expiration

Last

Change

% Change

FTSE 100 Index Futures

March 18, 2022

£7,194.50

+127.50

+1.80% 2:00 AM GMT+2

CAC 40 Index Futures

March 18, 2022

€6,361.00

+156.50

+2.52% 2:23 PM GMT+2

AEX Index Futures

March 18, 2022

€683.95

+12.29

+1.83% 2:31 PM GMT+2

EuroStoxx 50 Futures

March 18, 2022

€3,753.50

+113.00

+3.10% 2:29 PM GMT+2

DAX 30 Futures

March 18, 2022

€13,915.00

+504.00

+3.76% 2:23 PM GMT+2

As mentioned on BestBrokers, some of the stock indices, which are followed meticulously on a daily basis by investors, with regards to the European stock market include FTSE 100 in the United Kingdom, CAC 40 in France, DAX 40 in Germany, and IBEX 35 in Spain. Other popular European stock market indices are Euro STOXX 50, FTSE Euro 100, and S&P Europe 350.

Investing in the Stock Market

Those interested in trading the stock market may feel insecure due to not knowing where to start. They should take into consideration several different aspects of this highly dynamic market segment. A good starting point would be to set feasible investment objectives and have a clear idea of your risk tolerance to avoid financial frustration.

To profit from stocks, individual traders should invest some time and effort into familiarizing themselves with the specifics of the market. They should choose a reputable trading broker, holding the relevant regulatory licenses and offering diverse trading tools, sufficient educational resources, and competitive commission rates. There is always a certain degree of risk associated with the stock market, but by implementing a proper strategy, market participants may eventually maximize their profits over time.


 
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