Geopolitics influencing Global Markets

In the past few months, the world has witnessed a series of changes in trade, conflicts, and financial markets. These changes, at least in financial markets, represent a pattern similar to 2022, when the Russia—Ukraine war started. Global equities fell over the year, and corporate bond spreads became wider, especially in the developed world. 

For many decades, geopolitics has played a more significant role in deciding the trend of financial markets. This became less influential during 2001-2019, but in the last five years, the influence has regained its strength. 

This and last week's events, including the April events, have only made this further true as positive and negative movement impacts the financial world directly. Yesterday, there was a flurry of positive movements in the geopolitical world that led to equity indices moving higher and volatility crashing. 

It is now important to see whether these are only pauses to the changes or do they bring more stability. If the latter is true, then volatility will be the first trigger in the financial world, as any negative impact would cause it to spike. The next few months will be deciding for the next few quarters, if not more. Whether these rallies remain or reverse.