It is the start of October. Again, a scary start of the month, the third one in a row. This time, Iran attacks Israel. News outlets’ headlines can focus only on the attacks. Another escalation in a horrible war.
Since this newsletter has a financial focus, how does an event like this, with screaming headlines around the world impact financial markets.
Two simple graphs: A week’s overview of 1. everyday closing prices of three indices (AEX, EUROSTOXX50 and the S&P500), and 2. “panic” indices (VIX for the ESTX50, and CNN’s Fear & Greed index).
Closing prices of three financial indices for the days following the Iran attacks, with headlines from news outlets
Panic indicators of three financial indices for the days following the Iran attacks, with headlines from news outlets
Note: CNN’s Fear & Greed index is a value between 0 and 100, with 0 being extreme fear and 100 extreme greed. The VIX is an indication of unrest, where levels around or just above 20% indicate alertness, but is still far removed from panic.
Both graphs show, and should show, a similar picture, that markets were unfazed by these attacks. The stock indices at the end of the week were at a similar level, or slightly lower, than before the attacks started. The panic indices showed that the VIX was slightly elevated, where the CNN’s Fear & Greed index ended at the exact same level as before. This all showed very little worries amongst investors. Although this is not a predictor for what may happen when more attacks will happen, it is a repetition of history, where often actual attacks do not impact financial markets that much. Especially not in the long run.
Sources: CNN, investing.com, iex.nl, Reuters, Amir Cohen (picture), Apple Tree Capital Partners
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