Will There Be a Spillover Effect?
Given all of the geopolitical turmoil of late that’s rocked many of the biggest emerging markets in the world, it’s logical to ask ourselves if there will be a spillover effect — some call it “contagion” — here in the U.S. equity markets.
During the past month, stocks in the S&P 500 have maintained their upward bias in the face of geopolitical tumult, climbing about 2.6% in the past four weeks. And though we have seen some selling in stocks during the past couple of days, that selling certainly hasn’t been anywhere close to the selloff we’ve witnessed in those markets closest to the latest political upheaval.
For example, in perhaps the most inflamed hotbed of geopolitical turmoil, Russia, we’ve seen stocks tumble nearly 15% during the past month. In just the last five trading sessions, the Market Vectors Russia ETF (RSX) has plunged 6.3%. The chart here of RSX clearly shows the damage done to Russian equities since tensions with Ukraine began earlier this year.
Read more about the consequences the spillover effect could have on the U.S. market at Eagle Daily Investor.