S&P 500 and TSX price returns around the commencement of U.S.-led military events

Aug 29, 2017 | Richard I. Schaefer


Geopolitical uncertainty shakes up investors' confidence.  In assessing the recent history of U.S. military incursions, we find that while equities tend to suffer drawdowns in the lead-up to the official start of the wars, most of those losses were, in many cases, reversed in short order thereafter.  The upshot is that equity market weakness triggered by negative sentiment attributed to geopolitical events tends to be transitory and is more likely than not to reverse, on condition that the outlook for global growth and corporate earnings remains positive, as is the case at present.