Predicting the market is IMPOSSIBLE

The stock markets have recovered the losses suffered since the president Vladimir Putin sent Russian troops to Ukraine on February 24.

The European Benchmark, the Stoxx Europe 600, has managed to reverse the losses suffered since the Russian invasion of Ukraine on February 24 and today stands at 460 pointswhile the S&P 500 is now trading higher than where it closed the day before the attack at 4,530 points.

Let us remember that the Stoxx 600 fell 10.6% from before the invasion, on February 24, to the lowest point on March 7. Despite this recovery, the European selective continues to lose 5.57% so far this year.

Investors are increasingly convinced that the crisis in Ukraine will not lead to a direct military conflict between Russia and the West because leaders on both sides have been talking and trying to reach an agreement, which means that there is no breaking of bridges despite everything.

As we said at the beginning of the war actions, the intervening countries represent the 2% of global GDPa very low weight for dismissal of damages in terms of recession.

How to protect our investments in a war scenario

The real economic problem lies in its role as Major providers in a number of commodity markets. Russia and Ukraine together account for around 30% of world exports of wheat, 20% of corn, mineral fertilizers and natural gas, and 11% of oil. A resolution of the conflict reverses the pressure on the prices of these products.

War scenarios tend to repeat the same pattern

That with the appearance of a war scenario the market falls and immediately recoversIt is more common than we might think.

The Vietnam War and the two Gulf Wars are examples of conflicts that lead to extremely brief declines followed by long upward trajectories. When the Soviet Union invaded Afghanistan in 1979, the index fell 3.8% for 12 consecutive days.

On average, the S&P 500 has been 6.5% in negative territory 3 months after an armed conflict (either global or smaller), and about 13% positive 12 months after said conflict. This time it hasn’t even been a month.

On a historical basis, the implication here is that the way Ukraine is developing as an armed conflict won’t have much of a long-term impact on overall stock market development.

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