Don’t be shy about switching one of the financial-TV screens to a sports channel during the World Cup — chances are that trader colleagues around the world are doing the same.
At least that’s what happened during the last two tournaments. During big games in the 2014 World Cup, trading volumes on major international stock-market exchanges plummeted by more than comparable periods in the prior years, according to data provided by Thomson Reuters. Traders were especially distracted whenever Brazil, the host nation, and Germany, the eventual champion, were playing.
For investors in the US and Brazil, it didn’t help that one of the games kicked off at 1 p.m. local Brazil time, smack in the middle of the trading session. In fact, there was a Federal Reserve press conference and statement mid-tournament on June 18. Thankfully, it coincided with a group-stage duel between the less-distracting pair of Australia and the Netherlands.
In the charts below, the deep-blue bars represent trading volumes during a big 2014 World Cup game. In each cluster, the lighter bar on the left shows volume on the comparable day a year earlier, and the bar on the right is a similar day a year after.
At 1 p.m. local time on June 30, France faced Nigeria in Brazil. It was Argentina versus Switzerland on July 1, France versus Germany on July 4, Brazil versus Germany on July 8, and the Netherlands versus Argentina on July 9. The US faced Belgium after the market closed on July 1.
Here’s the S&P 500:
Here’s Brazil’s Bovespa:
Andy Kiersz/Business Insider; data via Thomson Reuters
And Germany’s DAX, where the results are less consistent perhaps because it’s in a very different timezone:
Worse timing this year
Compared to 2014, the timing is worse for traders on the far-western side of the Atlantic this year as the games begin on Thursday with the host country Russia taking on Saudi Arabia. Two group-stage games take place at 11 a.m. ET and 2 p.m. ET, both while markets are open. During the last tournament, kickoff was at the closing bell at 4 p.m. ET.
And so, the data would be fascinating to see once the 2018 World Cup is over, since trader favorites like Brazil and Germany are in the tournament.
After the 2010 World Cup, the European Central Bank looked into minute-by-minute data for fifteen global exchanges including Brazil, the US, and the host South Africa . The researchers found that when a team was playing, the number of trades in the home country fell by 45% while volumes were 55% lower. Also, whenever a team scored, trading activity dipped by another 5%.
“We conclude that stock markets were following developments on the soccer pitch rather than in the trading pit, leading to a changed price-formation process,” the ECB said in a 2012 paper.
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