Football Finals and Their Surprising Impact on Stock Markets
Stock markets await the outcomes of Euro 2024 and Copa America, expecting potential boosts. What history tells us about the impact of football victories on economies.
Published July 13, 2024 - 00:07am
Stock markets are eagerly eyeing the Euro 2024 final between England and Spain, and the Copa America final between Argentina and Colombia. What does this mean?
History suggests that winning the Euro Championship often boosts the victor's stock market. For instance, after Greece clinched the title in 2004, its market outperformed the STOXX 600 by an impressive 20%. Spain, after winning in 2008, experienced a softer blow during the global financial crisis, losing 5% less than others. Their 2012 victory saw them outperform by about 4% during the euro zone debt crisis. However, not all winners thrive: France and Portugal underperformed post their Euro wins in 2000 and 2016 respectively.
Meanwhile, World Cup victories also spur economic benefits. Research from Britain's University of Surrey found that GDP growth can increase by at least 0.25 percentage points in the following two quarters. Goldman Sachs noted that post-1974 World Cup winners generally enjoyed stock market outperformance, with Brazil in 2002 being a rare exception due to a recession. Additionally, Argentina's stock market soared by almost 50% against the MSCI's pan-Latam index after their 2021 Copa America victory, while Colombia's market recently experienced greater volatility.
Winning these major football finals often translates to significant stock market gains. Historical data suggests that investors could see improved performance from the markets of the winning countries. For instance, Greece and Spain saw notable gains post-Euro victories, and Argentina's 2021 Copa America win led to a 50% outperformance against the regional index. Investors should keep a close eye on these finals, as the winning country's market might just get an adrenaline boost.
Beyond stock markets, football success has broader economic impacts. World Cup victories typically boost GDP growth significantly. Institutions like the University of Surrey and Goldman Sachs have highlighted the ripple effects on economic performance. With both the Euro and Copa America finals set, the outcomes could influence not just market trends but also overall economic conditions in the victorious countries, potentially spurring investment and consumer confidence.