- Traders, like many of us, get distracted when big World Cup games come on in the middle of work.
- Trading volumes in major stock-market exchanges fell more than prior years during the 2014 World Cup especially when Germany or Brazil was playing, according to Thomson Reuters data.
- A European Central Bank study showed that trading also slowed during the 2010 World Cup.
- This year, two group-stage games kick off at 11am ET and 2am ET, right in the middle of the US trading day.
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 1pm local Brazil time, smack in the middle of the trading session. In fact, there was a US 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 1pm 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:
And Germany’s DAX, where the results are less consistent perhaps because it’s in a very different timezone:
Worse timing this year
This year, it won’t be a big distraction at all for Australian traders, as all the games are played between 8pm and 6am AEDT. But the timing is even worse for traders on the far-western side of the Atlantic this year than it was in 2014, as the games begin on Thursday with the host country Russia taking on Saudi Arabia. Two group-stage games take place at 11am ET and 2pm ET, both while markets are open. During the last tournament, kickoff was at the closing bell at 4pm ET.
And so, the data would be fascinating to see once the 2018 World Cup is over, since trader favourites like Brazil and Germany are in the tournament.
After the 2010 World Cup, the European Central Bank looked into minute-by-minute data for 15 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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