Does war have an impact on stocks market ? Over the last century there have been several wars including world war 2. | Arshnoor Singh

Does war have an impact on stocks market ? Over the last century there have been several wars including world war 2. So how do wars impact stocks?

Major wars do impact stock markets. First, it creates uncertainty and dampens market sentiments. Wars can also take a toll on economic activity. For example, the rise in crude oil prices after the Russian invasion of Ukraine had lower down the U.S. GDP in 2022.

During the world war 2 there was minimal decline in US stocks market initially. However, from the beginning of the war in 1939 to its eventual end in 1945, the Dow Jones(one of the major players of stocks in US market) gained almost 50 percent.

US stock markets bottomed in April 1942 and then they were in a general uptrend. As the Allied forces continued to build their lead, stock markets reacted positively.

Stocks are less volatile during wars. While it might sound counterintuitive analysis by Mark Armbruster, CFA shows that stocks are less volatile during times of war. The Vietnam war is an exception here where the volatility was in line with historical averages.