Why are the stock markets tanking?

Question

It looks like the outbreak of war has made the stock markets go down quite a bit.What is the theory behind this?Is it just because the productivity of Russia and the Ukraine will go down? Or is there some other rationale here?

llampx · Accepted Answer

If the markets followed the news, they would crash and stay down. Why in the middle of the COVID uncertainty did they start rising again in March 2020? Nobody knows. And nobody knows the "why" of the markets, just the "what" - and the news is just made up afterwards to fit the market's movements.If in one week or one month Ukraine is still invaded and the markets are up, what does that mean?

theandrewbailey · Answer

Stock markets hate geopolitical instability of any kind.Productivity of the entire world was almost destroyed with COVID lockdowns (and still has not recovered), but stock markets have been hitting record highs since.

gostsamo · Answer

You have actual risks for food, fuel and the based on them products. Also, during the covid crisis, the central bank were trowing money like an russian oligarch in a nightclub while FED and likely ECB will raise the base interests to contain the inflation.

rtcoms · Answer

War brings uncertainity. Stock markets don't like uncertainity.

sharemywin · Answer

Don't forget the fed is raising interest rates because of inflation.And the fed hasn't been really good at navigating that process.so if cheap money is gone what's going to prop up the stock market.

crate_barre · Answer

There were probably outflows already in progress, this is just accelerating the outflow.

zzleeper · Answer

If the US does what they should, they should completely blockade Russia from any access to the West, including SWIFT blockade, trade embargo, complete visa revocation, etc. This is not that useful (sp not compared to doing it 10 years ago) but still helps to reduce Putin's ability to keep waging war as it cripples Russia's economy.BUT that of course has a cost to the West. Less business, risk of recession, risk of stagflation, etc. and that definitely tanks the economy. Until yday Bloomberg estimated the SP500 was trading at a 10% discount due to war concerns (my take is only ~5%) and overnight it has fallen only 2%, so I don't think a 2% fall over the largest war Europe has seen since WW2 is particularly large.

tamaharbor · Answer

If I knew, I would be rich.

Why are the stock markets tanking?

It looks like the outbreak of war has made the stock markets go down quite a bit.
What is the theory behind this?
Is it just because the productivity of Russia and the Ukraine will go down? Or is there some other rationale here?

Stock markets hate geopolitical instability of any kind.
Productivity of the entire world was almost destroyed with COVID lockdowns (and still has not recovered), but stock markets have been hitting record highs since.

You have actual risks for food, fuel and the based on them products. Also, during the covid crisis, the central bank were trowing money like an russian oligarch in a nightclub while FED and likely ECB will raise the base interests to contain the inflation.

War brings uncertainity. Stock markets don't like uncertainity.

Don't forget the fed is raising interest rates because of inflation.
And the fed hasn't been really good at navigating that process.
so if cheap money is gone what's going to prop up the stock market.

There were probably outflows already in progress, this is just accelerating the outflow.

If I knew, I would be rich.