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Geopolitical Uncertainty and Stock Market Reactions: Evidence from Developed Markets

In: Proceedings of the 2026 11th International Conference on Social Sciences and Economic Development (ICSSED 2026)

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  • Zhiyan Jin

    (Jilin University)

Abstract

This study employs an event study methodology to compare the impacts of two major geopolitical shocks on G7 equity markets, revealing pronounced regional heterogeneity. While most G7 economies experienced significant negative abnormal returns (AR) on the event dates, the market reaction was substantially more volatile during the first shock than the second, suggesting a transition from immediate trauma to a more delayed response. Distinct geographical patterns emerged: European G7 members consistently recorded positive cumulative abnormal returns (CARs), whereas North American markets (Canada and the United States) demonstrated negative cumulative performance. Notably, Japan exhibited divergent return patterns across the two events. These findings offer critical insights into market efficiency, risk transmission, and asset price resilience amid heightened global uncertainty.

Suggested Citation

  • Zhiyan Jin, 2026. "Geopolitical Uncertainty and Stock Market Reactions: Evidence from Developed Markets," Advances in Economics, Business and Management Research, in: Joanna Rak & Md Rabiul Islam & Noralina Omar & Dragana Ostic (ed.), Proceedings of the 2026 11th International Conference on Social Sciences and Economic Development (ICSSED 2026), pages 119-128, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6239-701-9_13
    DOI: 10.2991/978-94-6239-701-9_13
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