The Wall Street Journal reports:
Here’s a question that’s probably not on the CFA exam: What happens to financial markets if two nuclear-armed nations go to war? After a week of escalating tensions between the U.S. and North Korea, some financial analysts are now taking a stab at it.
Strategists at Nordea Markets estimate that in the unlikely event of “a potentially uncontained military conflict” in which global superpowers like China and Russia get involved, the European Central Bank would have to implement “highly dovish forward guidance” and the yield curve would likely flatten due to weaker risk appetite.
Here’s the forecast from Shane Oliver, head of investment strategy and chief economist at AMP Capital: Should there ultimately be a significant military conflict, with North Korea likely launching missile attacks against South Korea and Japan, “this would entail a more significant impact on share markets with, say, 20% or so falls before it became clear that the U.S. would prevail.”
The WSJ’s headline for this piece: “How Do You Price A Problem Like Korea?”
Analysts are trying to work out what happens to markets in the event of an all-out nuclear war https://t.co/hGEOi45G44
— Wall Street Journal (@WSJ) August 11, 2017
Stock market will drop to zero on account of everybody being dead. There, analyzed.
— Keith Cambridge (@BelfArcane) August 11, 2017
My analysis comes to the conclusion that they would be f*cked beyond recognition. https://t.co/VoFBMxLnXd
— Mr. Ezil Galoth (@DrWutt) August 11, 2017