UEFA Euro 2020 took place this year in Europe after it was postponed due to the COVID-19 pandemic. The final match was between Italy, and the U.K and all eyes were on the two teams. Last Sunday, the two teams gave it all on the pitch, and the enthusiasm has made many people invest in the stock market. Since then, the Italian stock market rose to 0.92%, while U.K’s stock market remained flat. Financial experts believe that these actions on the European stock market are not just a mere coincidence.
The correlation between sports and the stock market
In an article about the stock market and how sports influence it, researchers Edmans Garcia and Norli have reached exciting results. The study was initially published as two separate ones, but in 2007, a joint article appeared in the Journal of Finance. According to the research study, investors are influenced by their moods when they invest in stocks. Many factors influence their moods, but one of them is sports competitions. The researchers analyse this type of behavioural finance by correlating major sports events worldwide and the stock market.
According to the research, international soccer games severely impact mood and investors’ moods are changed by the results. The results showed that in the countries where the national team lost an important game, the stock market suffered an immediate negative effect, sometimes exceeding 7%. On the contrary, in the countries where the national soccer team won an important match, the stock market rose. Some of the most important soccer champions that influence the stock markets were the World Cup, EuroCup, Copa America. The study also analyses the impact of other sports and competitions, such as the Olympic Games.