Conflicts and stand-offs like the most recent Israel- Palestinian war have global implications, not only for peace and security, but also for the economy and global stock markets. Despite a certain level of uncertainty that war can bring, stock markets have shown resilience over time. 

In his article on counterintuitive market outcomes, Ben Carlson, Director of Institutional Asset Management at Ritholtz Wealth Management, wrote "From the start of World War II in 1939 until it ended in late 1945, the Dow was up a total of 50%, more than 7% per year…” In the days and weeks following the Russia/ Ukraine conflict, the S&P 500 fell more than 7%, but within a month, the market had rebounded and the S&P 500 was trading at a higher level than before the invasion. 

So what can we expect from the Israel - Hamas conflict? Although Israel is only about the size of New Jersey, it has a huge influence on the US Stock Market. According to Bloomberg, funds in the US hold more than $43 billion in Israeli stocks and bonds. More than 100 Israeli companies are listed on US exchanges, with a combined market cap of more than $150 billion – Israel has the fourth most companies listed on the Nasdaq after the United States, Canada and China. Analysts are predicting that if the conflict remains between Israel and Palestine, then the markets will likely forget about it after a few days or weeks. 

Historical evidence suggests that conflicts can have an impact on stock market performance. Past conflicts have shown that stock markets can experience initial declines in response to escalating tensions and uncertainties. However, once the Israel-Hamas conflict reaches a resolution, the stock market has the potential to experience a recovery and stabilization period. Historically, military surprises typically decline the S&P 500 for about 30 days after the initial conflict, and then recover about 60 days after the event. 

Tickers to consider:  IKT

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