Uncertainty, stocks and commodity prices during the Ukraine-Russia war

This article mainly investigates whether the war in Ukraine-Russia induces uncertainties and how this affects the returns of world stock market indices and commodity prices. To do so, we use the Economic Policy Uncertainty index (EPU), 96 stock market indices and the prices of 67 commodities worldwide over the period from January 2022 to April 2023. Our empirical results show that the war between Ukraine and Russia increases uncertainties, and which negatively affect the performance of global financial markets and lead to higher commodity prices. These negative shocks tend to be smaller the longer the war persists. We also observe that responses to war-induced uncertainties are stronger in Europe and America. Overall, we provide unique evidence of the impact of war on uncertainties and how this is transmitted to stock market performance and commodity prices.