- Markets and Economy
- Does a geopolitical crisis equal a market crisis? Not necessarily.
- It’s natural to feel concerned during periods of global crisis and market uncertainty.
- 2025-06-26 09:09
It’s natural to feel concerned during periods of global crisis and market uncertainty. The human toll of these conflicts reminds us that market movements are secondary to the real-world impact on people’s lives. However, making investment decisions based on emotional reactions to headlines can potentially derail long-term financial plans.
Historical perspective on market resilience
When examining significant global events since 2000, markets have consistently demonstrated resilience over time. From national tragedies to regional conflicts and international tensions, markets have responded in various ways initially. However, the historical pattern shows that despite periods of uncertainty during these difficult moments, markets generally have recovered over the longer term.
Markets eventually have recovered from past crises
(Fig. 1) S&P 500 Index January 1, 2000, through June 23, 2025.
Past performance is no guarantee of future results. It is not possible to invest directly in an index. Chart is for illustrative purposes only.
Sources: T. Rowe Price and S&P. See Additional Disclosure on the back for more information about S&P data.
Short-term volatility vs. long-term growth
While immediate market responses to crises can be pronounced, data show that these reactions are typically temporary.
- After the Iraq War began in 2003, markets rebounded 28.96% over the subsequent 12 months despite the initial decline.
- This pattern of recovery has repeated across various geopolitical shocks, underscoring the power of patience.
How markets have bounced back after crises
(Fig. 2) S&P 500 Index performance during and after past crises.
Event |
Date |
1 Day |
12 Months |
3 Years |
|---|---|---|---|---|
9/11 terrorist attacks |
9/11/01 |
-4.90% |
-16.80% |
2.66% |
Start of Iraq War |
3/20/03 |
2.30 |
28.96 |
16.28 |
7/7 London bombings |
7/7/05 |
1.17 |
7.64 |
3.45 |
Russian takeover of Crimea |
2/20/14 |
-0.20 |
14.70 |
10.86 |
Paris terrorist attacks |
5/13/05 |
1.51 |
9.34 |
12.68 |
Brexit Vote |
6/23/16 |
-3.59 |
17.81 |
14.07 |
U.S./Iran tensions escalate |
1/6/20 |
-0.27 |
17.58 |
8.01 |
Coronavirus pandemic |
2/20/20 |
-0.40 |
17.44 |
8.16 |
U.S. pulls out of Afghanistan |
8/30/21 |
-0.12 |
-10.66 |
9.33 |
Russia invades Ukraine |
2/24/22 |
2.25 |
-5.86 |
13.48 |
Israel-Hamas war (Hamas attacks Israel) |
10/7/23 |
0.60 |
35.42 |
N/A |
Israel-Hamas war (Israel strikes Iran) |
6/12/25 |
-1.11 |
N/A |
N/A |
Israel-Hamas war (U.S. strikes Iran nuclear sites) |
6/22/25 |
0.96 |
N/A |
N/A |
Past performance is no guarantee of future results. It is not possible to invest directly in an index. Table is for illustrative purposes only. See Additional Disclosure below. Sources: T. Rowe Price and S&P. One-day return for 9/11 attacks after reopening of market on 9/17/01.
A forward-looking approach
Rather than viewing geopolitical tensions as a reason to abandon investment strategies, consider them within the broader context of market history. While past performance doesn’t guarantee future results, markets have historically demonstrated resilience following geopolitical shocks.
What’s Next?
Portfolio Considerations During Global Events
Consider whether your current asset allocation aligns with your long-term goals.
- Recognize that short-term volatility is an expected feature of equity markets
- Focus on your investment time horizon rather than day-to-day market movements
By understanding the historical relationship between geopolitical events and market performance, you can approach uncertain times with greater confidence and clarity.
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Additional Disclosure
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Important Information
This material is provided for informational purposes only and is not intended to be investment advice or a recommendation to take any particular investment action.
The views contained herein are those of the authors as of June 2025 and are subject to change without notice; these views may differ from those of other T. Rowe Price associates.
This information is not intended to reflect a current or past recommendation concerning investments, investment strategies, or account types, advice of any kind, or a solicitation of an offer to buy or sell any securities or investment services. The opinions and commentary provided do not take into account the investment objectives or financial situation of any particular investor or class of investor. Please consider your own circumstances before making an investment decision.
Information contained herein is based upon sources we consider to be reliable; we do not, however, guarantee its accuracy.
Past performance is not a guarantee or a reliable indicator of future results. All investments are subject to market risk, including the possible loss of principal. All charts and tables are shown for illustrative purposes only.
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