How Does the Stock Market React to War? The 3-Phase Pattern of Geopolitical Conflicts
The S&P 500 drops 5-7% in the first 10 days of geopolitical conflict but averages 8-10% gains 12 months later. Gulf War returned 11.7% annually, Iraq War saw 13.6% gains in 3 months. Markets follow a Shock→Repricing→Rotation pattern, with institutions repositioning in Phase 2.