How one goooaaal! can stall stock markets

Research shows activity in trading pit may dip during big games

It’s a beautiful game, especially when it’s played after the close of markets. Matches at the Euro 2012 soccer championship are to start in the evening as organizers hope to avoid the boot to trading volumes delivered by the 2010 FIFA World Cup in South Africa, when many of the games were played during regular trading hours. Research for the European and Dutch central banks found a 55per-cent plunge in activity when South Africa was playing, with a goal triggering an additional 5-percent trading slowdown. Equity activity fell 33 per cent during matches that didn’t involve the national side. “Stock markets were following developments on the soccer pitch rather than in the trading pit,” wrote economists Michael Ehrmann and David-Jan Jansen. Several academic studies have drawn a link between football and market volumes, with research in 2007 concluding that losing an international match can lead to lower next-day returns on the national stock market of up to 49 basis points.

For international cricket, rugby and basketball games, the loss effect is smaller, but still significant, according to the Journal of Finance paper called “Sports Sentiment and Stock Returns.”

It argued that “the loss effect” can even spread to North America, where interest in European soccer is growing, and where many investors trade on international exchanges.

The championship kicked off with a 1-1 draw between Poland and Greece in Warsaw Friday and continues until July 1.