HOW GEOPOLITICAL TENSIONS REACT TO FINANCIAL MARKETS
Keywords:
Key words: Geopolitical risk, financial markets, investor behavior, market volatility, safe-haven assets, trade war, conflict impact.Abstract
Abstract:Geopolitical tensions—ranging from military conflicts and trade wars
to political instability—have a significant impact on global financial markets. These
events often result in increased market volatility, shifts in investor sentiment, and
capital flight to safe-haven assets. This article explores how financial markets respond
to various types of geopolitical disruptions, analyzes historical examples such as the
Russia-Ukraine conflict and U.S.-China trade war, and discusses strategies investors
and policymakers use to manage geopolitical risk. The paper concludes that while
short-term market reactions are often dramatic, long-term effects depend on the nature
and duration of the geopolitical crisis.
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