A1998
Title: The financial impact of war on commodities
Authors: Durga Chandrashekhar - American University of Sharjah (United Arab Emirates) [presenting]
Stephen Chan - American University of Sharjah (United Arab Emirates)
Abstract: Over the past decade, commodities have been exposed to a wide variety of significant global events, such as financial crises, rising inflation, booms, and recessions, and, most recently, the coronavirus (COVID-19) pandemic. Most recently, in February 2022 commodities had witnessed a military conflict (Russia-Ukraine conflict) and simultaneously played a significant role. The key question is: how has the conflict impacted commodity markets? The impact of war-related events on the commodity markets through an event-study approach and how the commodity markets have evolved throughout this period through a regression analysis and an extreme event study are discussed. Our results found that negative war-related events have a positive and significant short-term impact on commodities returns in the first 24 hours following the event, which peaks at around 12 hours. This contrasts with the negativity effect of wars on stock markets. However, the commodity markets did not manage to avoid the significant short-term negative impact caused by the start of the war that also affected global stock markets.
