With a number of protests taking place across the world some of the legitimate protests have been taken over by a small minority who have committed public order offenses. You may be wondering what impact these offenses and civil disorder may have on the financial markets. So, to what extent do the markets respond to issues of social justice, and is there a risk that these recent pockets of unrest spill over into the currency, commodity, and equity space?
History tells us, it’s unlikely
A recent article on CNBC looked at the impact of US civil unrest on stock markets from a historical perspective. Here are the key points that we have taken out:
- Tina Fordham, head of global political strategy at Avonhurst, told CNBC on Tuesday that historically, political unrest in developed markets hasn’t had much impact on equity markets.
- Investors expect that, although this violence is alarming, that it will blow over and that the U.S. is a law and order country and things won’t get further out of control.
- Jim Cramer said on Monday that the reason the stock market had rallied after a weekend of protests was because it was blind to social justice.
So, bear in mind that the elements of unrest are not going to seriously derail the markets. Law and order will largely be maintained and that should leave room for the peaceful protests to continue as they put their message across to a watching world.