Insights From Commodity Markets Reaction to the Russia–Ukraine War

Abstract

The article aims to investigate how the Russia–Ukraine war has affected India’s base metal, energy, and bullion markets using short-term event technique. The official website of Multi Commodity Exchange of India Limited (MCX) has provided the daily prices for nine specific commodities and selected commodity indexes. The study discovered that the two countries’ conflict had no discernible effect on the Cumulative Abnormal Returns (CARs) of a few selected indices. However, more in-depth examination of specific commodities showed that the CAR of just the base metal index was considerably impacted. The study also observed that the war had an impact on returns of investors who experienced positive returns only in case of nickel whereas negative returns in case of copper, lead and zinc. However, analysis of the cumulative average abnormal return (CAAR) of the selected indices has revealed a consistent and significant negative impact which could be due to other external factors influencing prices of the commodity index and individual indices. The present study is quite useful to investors, traders, analysts, policy makers and risk managers as it assists them to make informed investment decisions, manage risk, identify potential opportunities in the market and develop trading strategies.