Welcome back to our latest edition of Market Insights with Sanjeev Kaushik.
In this edition, we break down why some world events send markets spiraling while others barely leave a dent.
From trade wars to pandemics, we will unpack the patterns, the surprises, and the lessons investors can use to keep their cool and their portfolios intact when the headlines heat up.
Let’s dive in…
1. Investor’s Guide to Global Market Shocks
If you have ever scanned the morning headlines and then flinched at your portfolio, you’re far from alone. Market drama sparked by U.S.-Israel strikes on Iran, or tariff shocks in April, might seem like doom signals yet markets absorbed them, paused, and rebounded. Growth forecasts remain broadly intact, and equity indices continue finding new highs.
So what gives? Why do some events trigger cascading sell-offs while others vanish from the market’s radar within days? It turns out, there are patterns and they can help explain (and maybe soothe) investors’ nerves.
1.1 The Data Speaks: A Pattern Emerges
Goldman Sachs studied market movements surrounding major geopolitical shocks since 2008 — like Arab Spring, the invasion of Ukraine, the COVID-19 pandemic, and current trade conflict flare-ups. They tracked how key asset prices (equities, currencies, bonds, commodities) moved over the five days leading up to each event and the ten days following.
Their findings weren’t what most investors might expect. Rather than sudden military escalations causing market havoc, it’s the events that disrupt the mechanics of the global economy, particularly those that slow growth or stoke inflation, that leave lasting scars.
COVID-19
The pandemic set the gold standard. Markets fell rapidly in March 2020, then crawled towards recovery. Economic shutdowns, disrupted supply chains, and sweeping policy responses meant the damage was not just acute; it was lingering.
Trade Wars
Close behind were the global tariffs rolled out during the Trump era and recent U.S.–China trade tensions in 2025. These are different but related phenomena: They reshape the flow of goods, upend tariffs and sourcing patterns, strain supply lines, and force tough calls from central banks and fiscal policymakers.
Structural Uncertainty
The single biggest daily drop since 1987 occurred the day the WHO declared COVID–19 a pandemic. It wasn’t the virus itself, it was the unknown. Would this last two weeks or two years? Would working habits change forever? Suddenly, uncertainty weighed more heavily than the known risks.
Political Surprises
Remember the shock of the 2016 Brexit vote? The sudden change in a country’s trajectory rattled perceptions and valuations, particularly in currency markets. Surprise electoral outcomes or referenda like these tend to spark volatility.
1.2 Not Every Crisis Moves the Market
A curious finding: Not every big geopolitical event rattles markets. The U.S. withdrawal from Afghanistan in 2021, for instance, had minimal immediate impact. Why? Because the global economy hardly shifted. Afghanistan plays a small role in global trade, bond markets, or commodities flows.
But that doesn’t mean there were zero broader effects. Analysts now see that move as laying groundwork for later geopolitical shifts, such as Russia’s full-scale invasion of Ukraine, by sowing doubts about Western resolve.
Similarly, U.S. inaction in Syria in 2013 did not rattle markets at the time but may have emboldened other actors and indirectly influenced migration and politics in Europe.
It’s Not Just the Event — It’s What Comes After
Markets often underestimate how prolonged a conflict or crisis can be. Early 2025 optimism about a near-end to the Russia-Ukraine war, with some forecasting a 65% chance of resolution, was premature. The war continued. Markets listened, but the worst signals come when expectations miss reality.
Furthermore, not all asset classes react equally. Corporate credit markets (where companies issue bonds and loans) tend to hold firm unless default risk dramatically rises. Short-term military flare-ups, like Chinese drills near Taiwan or Houthi attacks in Saudi Arabia, often don’t move credit spreads. Investors seeking quality credit remain resilient.
But when systemic risk begins raising doubts about a country or sector’s health, such as Greece’s debt crisis; yields climb, borrowing costs rise, and new vulnerabilities emerge.
1.3 The Diminishing Shock Effect
Markets learn — but slowly. The first tariff shock in April triggered a pronounced reaction. By later announcements, though, the shock factor had diminished. Repetition breeds familiarity and less reaction.
“Time is more important than timing,” as the saying goes. Investors absorbed the idea that these risks can be priced in, even if they care deeply about them.
1.4 Five Takeaways for Investors
World events can grab headlines, but not every story moves the markets in a meaningful way. The real test for investors is knowing what truly matters, what to ignore, and how to position for resilience. Here are five clear lessons:
- Real disruption matters more than media drama
Not every news flash shakes markets. The real impact comes when events disrupt trade flows, supply chains, or inflation not just when they dominate headlines. - Uncertainty stings more than clarity
Unknowns, like the early days of COVID-19 or sudden policy shifts, often spark the sharpest reactions. Markets dislike ambiguity far more than known challenges. - Predictable instability has less impact
The first shock often triggers the biggest sell-off. But when similar events repeat, familiarity reduces the market’s reaction over time. - Diversify across asset classes
Stocks, bonds, credit, and commodities don’t all respond the same way to shocks. A balanced portfolio can soften the impact of sudden swings. - Think long term, not just timing
Instead of trying to catch every dip, focus on building a portfolio that can withstand turbulence and grow over the years.
