[Fredrik]

Hi, with the world going nuts right now – wars breaking out everywhere (Russia/Ukraine, Israel/Palestine), BRIC countries flexing, and all this China/Taiwan tension – I’m trying to figure out how all this chaos affects the markets. Like, which asset classes go crazy during wartime and which way do they usually move?

Trying to make some cash before the nukes drop, lol.

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[Christian Harris]

During times of war, investors typically move their capital from risky assets (like equities) to safer assets (like gold, US Treasury bonds, and other government securities).

This causes fluctuations in the value of both risky and safe-haven assets.

Stocks often experience significant declines as investors fear the impact on global supply chains, trade, and economic growth. However, we’ve yet to see that in the US markets—quite the opposite.

Having said that, companies in the defence sector or those supplying military equipment often see their stock prices rise during wartime due to increased government spending on defence.

Wars, particularly in regions like the Middle East, tend to increase oil prices due to supply disruptions and fears of future shortages. As oil is a critical global commodity, these price spikes can lead to increased inflation worldwide, impacting various sectors and asset classes.

Hope that helps a little?

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[Steve]

Also have a think about which countries are at war.

The size and importance of these nations can really shake up global supply chains, resource availability and trade, potentially causing prices of commodities and stocks to swing.

Wars in key areas can make investors uneasy too, leading to more market ups and downs as people get risk-averse.

Finally, is the conflict just a local issue or something that’s affecting the whole world?  This can really impact how investors in other countries react as well.

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