The reaction of financial markets to Russia’s invasion of Ukraine: evidence from gold, oil, bitcoin, and major stock markets

ABSTRACT

Political observers predicted the Ukraine invasion by Russia for many days, but they could not precisely anticipate the scheme and timing of the invasion. This paper investigates the effects of the Russian invasion of Ukraine on the global commodity and stock markets using an event study methodology. The empirical results of this study suggest that this invasion unevenly affected the financial markets. More precisely, our results suggest that the onset of war has put pressure on global gold and stock markets. Furthermore, it seems that the only asset that could be considered a safe haven for investors after the outbreak of the invasion was oil.

KEYWORDS:

• Gold price
• oil price
• bitcoin
• stock indices
• event study

JEL CLASSIFICATION:

• G10
• G14
• G15
• H56

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ One reason for using longer event windows is that it could capture delayed market reactions. However, we estimated longer windows, up to 30 days, but the results are not statistically significant. It seems that after 10 days, the response of the markets to the war vanishes (results available upon request).

² We have also considered as an alternative a larger estimation window of 750 trading days to increase the number of non-event observations to draw a more sensible interpretation of the results. This does not affect our general findings (results available upon request).

³ We have also considered the constant mean return model as an alternative, and the results are similar to our general findings (results available upon request).