Stock Market Could Drop 50% Based On Ukraine War

The stock market has staged a modest rally since it dropped sharply in mid-June. Some experts believe it is a so-called bear rally and that prices will fall once more. What is rarely mentioned about the stock market is that there is a looming danger in Ukraine, based primarily on Russian attacks near the Zaporizhzhia nuclear power plant. The plant was supposed to be inspected by a team from the International Atomic Energy Agency. Shelling around the plant kept the inspectors out of the area. The shelling also shows the danger that the plant itself may be hit.

The plant’s reactors are in a containment area that is built to stop the leakage of radioactive material. Should this be hit by a shell or bomb that is powerful enough, it could be breached. Radiation likely would be released into the air.

CNBC has reported that a substantial explosion at the plant could cause airborne radioactive material to cover parts of Germany, Poland and Slovakia. These nations together have a population of 150 million people. The effects could be unimaginably devastating. Volodymyr Zelenskiy, Ukraine’s president, recently said, based on a report from the Guardian, “Russia has put Ukraine and all Europeans in a situation one step away from a radiation disaster.” Other assessments of the situation have drawn a similar picture.

The stock markets usually rise and fall on economic news and earnings reports from the largest companies. Recently, its movements have been driven mostly by inflation and fear of recession. It moves almost daily based on comments from senior officials at the Federal Reserve.

It is worth recalling that the start of the Gulf War in 1990 pushed the market down over 8% in the month after the incident began. After the 1973 oil crisis, the market dropped 43% over the next year. Neither of these triggers is close to the magnitude of radiation spread across part of Europe.

There is no way to handicap the chance of a nuclear disaster in Ukraine. Since much of the shelling in the war has been indiscriminate, it is even harder to forecast. Suffice it to say, there is some chance of a catastrophe, which would take the stock markets down at an unimaginable pace.

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