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Geopolitics Impacting Financial Markets

At the start of the year, all participants agreed on a US recession and rate cut from June onwards. This kept equities stable from October 2023 till year-end. But to everyone’s surprise, neither of them has taken place as we enter the second half of the year. 


Global financial markets especially equities have given a return of 10.88% with the S&P500 outperforming by almost 4%. The common theme is volatility has steadily declined over the last six months. US Bond VIX fell by 14% and crude oil VIX fell by 27%. 


Given such trends in financial markets during a year where 50% of the global population is voting for a new government and dealing with two major wars among other conflicts. One wonders if these indices are market-managed. 


The proof of it is hard to come by as it is something beyond the reach of many. But given that July will be witnessing major events such as the NATO Summit, and UK & France elections among other decision-making events it will surely be a crucial month.


The main problem in such scenarios is that by the time it is answered most of the gains and corrections in financial markets have already happened. The coming months will also decide on the US President and Israel Hezbollah conflict among other business uncertainties. 


One thing is for certain by the conclusion of this year there is a high probability that we might get the answer to how geopolitical decisions impact the markets.

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