How oil, gold, and stock markets reacted in the month after previous global shocks
"We just don't have enough information in terms of how long this is going to last, or what the longer-term ramifications of this would be," SEI chief investment officer Jim Smigiel said in a Yahoo Finance appearance Monday as he urged individual investors to "take a breath, don't do anything major."
It remains to be seen if this conflict will hold to previous market patterns. This weekend's strikes in Iran are already significantly more widespread than those in the 12-day war as well as more consequential — most notably in the killing of Ali Hosseini Khamenei, who had served as Iran’s Supreme Leader since 1989.
The larger pattern: One day offers little indication of one month
No matter the immediate twists and turns of this conflict, first-day price changes during moments of global stress are little correlated with where prices end up a month out.
In the events analyzed by Yahoo Finance for this story, including the start of the Russia-Ukraine war, US intervention in Libya, and the 2003 Iraq War, the direction that prices moved after one day matched the direction after one month less than 56% of the time.
Prices often only moderately changed after one month's time, even if they had giant spikes on the first day, the analysis found.
For example, the price of gold spiked by 6.85% in the first trading day after the Sept. 11, 2001, attacks, but then fell. It was up a more moderate 2.28% over a 30-day span.
Similarly, the price of oil spiked by more than 34% a few days after Russia's invasion of Ukraine commenced, but had returned to earth after 30 trading days, up only 1.53%.
It's a lesson that energy analysts have returned to in recent days.
"We are reminded that Oil peaked about a week following Russia's invasion of Ukraine," Chris Verrone of Strategas wrote in a note, laying out plenty of differences this time around.
At the end of the day, he wrote, "we'd still be more inclined to be a buyer of pullbacks among the Energy equities in the weeks ahead."
It was part of a wider expectation that price moderation may be in the offing, though recent history includes one exception worth remembering.
Iraq's invasion of Kuwait in 1990 triggered price changes over the first day that not only stuck — but grew over the month of trading that followed.
That shock began when then-Iraqi president Saddam Hussein's troops massed along the Kuwaiti border and then crossed on Aug. 2. Oil rose 11.64% after one day — then soared almost 57% over a 30-day span.
Likewise, the S&P 500 started down 1.14% after one day of that conflict and fell further in the subsequent weeks, dropping more than 10% after 30 days.
But even there, prices eventually recovered a few months later when allied forces expelled Iraqi troops from Kuwait and Hussein's army returned to Baghdad.
Ben Werschkul is a Washington correspondent for Yahoo Finance.
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