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When politics turn volatile: Equity market responses to the Trump–Zelensky confrontation

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  • Karoubi, Bruno
  • Seeballack, Parvesh

Abstract

This study analyzes how the 28 February 2025 Trump–Zelensky meeting affected European and U.S. stock markets. Event-day abnormal returns were modest and mostly negative across continental Europe, particularly in countries near Ukraine or reliant on Russian energy, while distant market such as the UK showed slight gains. Cumulative abnormal returns reflected delayed market adjustments to unexpected meeting developments, later reversing after Ukraine’s allies coordinated at the 2 March London summit. Regression analysis confirms geopolitical risk and negative media coverage reduce returns, with heightened effects during uncertainty. Media sentiment amplifies market reactions to geopolitical events.

Suggested Citation

  • Karoubi, Bruno & Seeballack, Parvesh, 2026. "When politics turn volatile: Equity market responses to the Trump–Zelensky confrontation," Economics Letters, Elsevier, vol. 263(C).
    • Handle: RePEc:eee:ecolet:v:263:y:2026:i:c:s0165176526000947
    DOI: 10.1016/j.econlet.2026.112900
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    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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