How Will the War In Israel Affect the Markets?

Keystone Financial Group |

Today, we're sharing a few thoughts on the situation unfolding in Israel, and how it may impact the economy and markets in other parts of the world.

The devastating terrorist attacks have already cost thousands of lives and may profoundly affect the region.

While the violence might seem far away, we must remember that behind every headline are real people, families, and communities that will never be the same.

Let us all take a moment to grieve for the folks who are suffering and dying and pray 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.

We like to say 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

Bar Chart titled "Markets Typically Recover Quickly From Geopolitical Events: S&P Performance After 29 Historic Geopolitical Events"

We'd also 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 likely expect more volatility as the crisis unfolds and more data emerges.

We will continue to keep an eye on things and keep our clients informed of important changes that may arise. In the meantime, let us all make sure that we appreciate the ones we love and all of the blessings in our lives!

Want to discuss your plan in light of recent events? Contact our office to schedule a time to chat.


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