![Analysis of previous stock market crises shows that catch-up movements can be rapid.](https://img.lemde.fr/2021/01/15/0/0/3720/4961/664/0/75/0/cc2d383_535909641-pns-339120.jpg)
tWhen the early days of the war in Ukraine had plunged the world into fear, against the backdrop of Vladimir Putin’s warning about Russian nuclear weapons, stock markets collapsed. Eight weeks later, across the Atlantic, the effects are all but obliterated. In Paris, without hitting the all-time high of 7,316 points on Jan. 5, the CAC 40 index is now moving around 6,500 points, well above the 5,962 points it had fallen to when the invasion began from Ukraine.
Based on the slightest hypothetical progress in the attacker-offender talks, it seemed as if investors at times pretended the Ukraine issue was on its way to being settled. They gave the impression that the financial consequences of this conflict on the eastern flank of Europe would fade into the not-so-distant horizon. Admittedly, it is the custom of stockbrokers to anticipate, buy to the sound of cannons and sell to the sound of horns, at the risk of being accused of insensitivity to the misfortunes of the world. However, these predictions are very fragile.
According to the polls
First, informed observers agree that Vladimir Putin’s war could last. Then, even if she stopped quickly, she’d… affect the economy for a long time. Finally, in addition to the conflict in Ukraine, there are many other threats. In France, the stock market will evolve in the coming days at the pace of the polls. Investors don’t want to believe in Marine Le Pen’s election and risk acting brutal if polls don’t move in that direction. But it is mainly the economic climate that has changed in the world.
The period in which liquidities poured into the financial markets, in favor of their progress, is coming to an end. Central bank responses to the rise in inflation may have slowed down, but they will, at a more sustained pace than expected some time ago, raise their policy rate† A more expensive money that, combined with a rise in commodity prices, will weigh on the global economy. Investors will become feverish in the coming months, leading to index volatility, i.e. sudden price changes in a very short period of time. Should savers shun equities in this regard? Especially not! First, because this type of investment can only be conceived over a long period of time. Then, because what the analysis of past stock market crises teaches us is that catching up can be as rapid as it is unexpected. Woe to those who are not invested in the markets at the time: they risk missing out on much of the recovery.