Do Wars Crash the ASX? 40 Years of Market Drops, Recoveries & What Investors Need to Know
- Dr Jo
- 1 hour ago
- 2 min read
Unpacking essential stock market ideas
Analysis by Dr Jo
Updated March 21, 2026
How WARS impact the Australia Share Market
From 1980 to today, global conflicts have had a surprisingly modest and short-lived impact on the Australian share market compared to major economic shocks. Events such as the Falklands War (1982), Gulf War (1990–91), 9/11 (2001), Iraq War (2003), Russia–Georgia (2008), Crimea (2014) and the Russia–Ukraine invasion (2022) typically triggered initial declines of around 2% to 10%, with one deeper drawdown during the Kuwait crisis (~18% peak).
WAR and the Australian Sharemarket, 1980 - 2026
What stands out is the speed of recovery. Of roughly 10 major conflict-related events since 1980, around seven recovered within three months, and most were back above pre-event levels within 12 months. Markets often stabilised quickly once uncertainty peaked, suggesting investors adjust rapidly to geopolitical risk unless it spills into the broader economy.
Australia Share Market vs Global Conflicts (1939–2022)
In contrast, non-war crises have driven the largest declines. The Global Financial Crisis (2007–09) saw the ASX fall by more than 50%, taking several years to fully recover. Similarly, the COVID-19 shock (2020) triggered a rapid ~35% decline, but this was followed by one of the fastest recoveries on record—within months—due to unprecedented stimulus.
This contrast highlights a key insight: wars alone rarely derail markets. It is the economic backdrop—interest rates, inflation, liquidity—that determines the depth and duration of declines.
Today, after an extended bullish period, analysts note that valuations in parts of the market appear elevated. Recent volatility may reflect not just geopolitical tension, but a natural cooling phase as markets transition from stimulus-driven momentum toward more normalised conditions. In that sense, current movements may be less about crisis—and more about resetting expectations.
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Disclaimer
The information in this blog is for educational purposes only and does not constitute financial advice. Investing in ETFs and other financial instruments carries risks, including potential loss of principal. Before making any investment decisions, consult with a licensed financial advisor who can provide personalized advice based on your financial situation, goals, and risk tolerance.
Consulting a financial advisor ensures you receive expert guidance tailored to your needs, helping you make informed decisions and manage your investments effectively. Always conduct your own research and consider seeking professional advice to understand the potential risks and rewards associated with your investment choices.
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