How Does the Russian-Ukrainian War Rock Stock and Commodity Markets? Fresh Insights from Joint Network-Connectedness Analysis

Abstract

ABSTRACT The outbreak of the war in Ukraine has had a profound and far-reaching impact on the global economy, with notable repercussions observed in stock markets, and particularly pronounced effects evident in commodities markets. This paper examines the connectedness network among 27 NATO stock markets, Russian stock market and a set of three commodity indices (energy, precious metals, and agricultural commodities) over the period 2017-2023. The empirical strategy consists of time and time-frequency connectedness metrics. The empirical results reveal that the connectedness structure has shifted during the Russian-Ukrainian conflict. Moreover, hit by a series of Western sanctions, Russia’s stock market appears to be the most isolated of the considered markets during the war period. Furthermore, the energy, agricultural and precious metals commodities seem to be efficient hedging instruments for investors in the stock markets of the NATO countries during the war period.