The World Cup has officially kicked off, giving way to a month of football that is watched around the globe. While sporting events typically have little impact upon financial markets, the sheer size of this tournament means that there are likely to be elements of the market which are affected. A research paper from the European Central Bank (ECB) and central bank of the Netherlands has highlighted the influence the World Cup can have upon market volumes. In particular, the effect can be felt most keenly at times when there is a major game taking place during market hours, with volumes falling (48% in 2014 and 36% in 2010) in the local market during a match. This figure is further reduced by 10% around the time of a goal. These periods can see the local market decouple from global events impacting price action at the time. Therefore, for example, if US President Donald Trump made a major economic announcement, the DAX would feel the repercussions less keenly if Germany were playing at the time. This of course allows for significant opportunities to trade the temporary differentials between similar markets during football games.
One of the key areas to watch from a political standpoint is whether the Russian ruble can reverse some of its 2018 losses as the country seeks to receive a reputational boost while playing host to the world. The actions of both Russian fans and Russian hospitality is going to be key, with President Vladimir Putin understanding that there are significant PR benefits to running a positive tournament. Quite whether it will create enough goodwill to start the shift towards reducing the sanctions is another matter.
