Russia-Ukraine War and Price Volatility of Global Commodities: The Role of Public Sentiments

Abstract

We analysed how public sentiments have affected global commodity market volatility during the Russia-Ukraine war. Using principal component analysis, we created a sentiments index from 30 carefully selected Google trends search keywords related to the war. We tested the predictability of the sentiments index against market volatility. Our results show that while public sentiments increase commodity market volatility, incorporating the sentiment index into our predictive model significantly improves its precision.