Why this time is not different: The history of geopolitical turmoil finds they usually lead to stock-market gains.
Major geopolitical risk events of the last twenty-five years have invariably proved to be buying opportunities in the end
By Jules Rimmer
Published: Jan. 21, 2026 at 4:35 a.m. ET
HSBC’s strategists believe Trump’s original demands and tariff threats are maximalist and and will be dialed back gradually as a compromise is sought Photo: Getty Images
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Key Points
About This Summary
- Geopolitical crises, like the Greenland crisis, typically present buying opportunities as 75% of past crises saw market recovery.
- The S&P 500’s average performance after major geopolitical events shows a 2.20% gain after 22 days, despite an initial -0.50% decline.
- U.S. economic conditions, including the labor market and inflation, are seen as stable, supporting expectations for two rate cuts in 2026.
The Greenland crisis, and the tariff risk it’s thrown up, has triggered a sell-off across most asset classes, including a trifecta of declines in U.S. stocks, bonds and its currency.
The S&P 500
SPX-2.06% slumped 2.1% on Tuesday as the 10-year Treasury
TMUBMUSD10Y4.288% rose 6 basis points and the dollar fell vs. the euro, the British pound and the Canadian dollar. The kneejerk flight to safety lifted only a few traditional haven assets like the Swiss franc
CHFUSD+0.95% and gold
For HSBC’s strategists, however, geopolitical risk events like this one invariably present a buying opportunity once the dust has settled. In a note published Tuesday, chief multi-strategist Max Kettner observes that in the past twenty-five years, 75% of crises are “faded,” by which he means the negativity dissipates and the markets gradually recover,” and so on this occasion, he and his team refuse to heed calls that “this time is different”.
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| S&P 500 performance after major events | |||||
| Event | Date | t | t+1 day | t+5 days | t+22 days |
| USS Cole bombings, 2nd intifada | 10/12/00 | -2.50% | 3.30% | 4.40% | 1.70% |
| September 11 attacks | 9/11/01 | -4.90% | -0.60% | -9.80% | 0.60% |
| US invasion of Afghanistan | 10/7/01 | -1.40% | 2.30% | 1.80% | 4.30% |
| US names sponsors of terror | 3/1/02 | 2.30% | 2% | 2.90% | 0.50% |
| Moscow theatre hostage crisis | 10/23/02 | 0.70% | -1.50% | -0.60% | 4.30% |
| Before Iraq invasion | 2/1/03 | 0.50% | -0.14% | -3% | -2.80% |
| Iraq invasion | 3/20/03 | 0.20% | 2.30% | -0.80% | 4.20% |
| Madrid bombing | 3/11/04 | -1.50% | 1.20% | 1.40% | 2.10% |
| Beslan school siege | 9/1/04 | 0.20% | 1.10% | 1.20% | 2.80% |
| London bombings | 7/7/05 | 0.30% | 1.20% | 2.40% | 2.20% |
| 2006 transatlantic aircraft plot | 8/1/06 | -0.40% | 0.60% | 0.10% | 2.80% |
| Obama announces troop surge in Afghanistan | 12/1/09 | 1.20% | 0% | -1.50% | 2.30% |
| Arab Spring | 3/1/11 | -1.60% | 0.20% | 1.20% | 1.60% |
| North Korean satellite exploded | 4/12/12 | 1.20% | -1.20% | -0.80% | -3.40% |
| Boston Marathon bombings | 4/15/13 | -2.30% | 1.40% | 0.70% | 7.10% |
| Russia annexes Crimea | 3/1/14 | -0.70% | 1.50% | 1.10% | 1.60% |
| Missile hits plane in Ukraine | 7/1/14 | 0.70% | 0.10% | 0.00% | -2.30% |
| Paris attacks | 11/13/15 | -1.10% | 1.50% | 3.30% | 2.70% |
| San Bernardino shootings | 12/2/15 | -1.10% | -1.40% | -1.50% | -2.90% |
| Syria tensions | 4/1/18 | -2.20% | 1.30% | -1.40% | 0.60% |
| US-Iran tensions | 7/1/18 | 0.30% | -0.50% | 2.50% | 3.60% |
| US-China tensions | 8/1/19 | -0.90% | -0.70% | -0.50% | -0.70% |
| US-Iran tensions | 1/3/20 | -0.70% | 0.40% | 1.00% | 3.20% |
| U.S. troop withdrawal from Afghanistan | 4/14/21 | -0.40% | 1.10% | 1.20% | 1.30% |
| Russia invades Ukraine | 2/24/22 | 1.50% | 2.20% | 1.80% | 6.80% |
| Israel-Hamas war | 10/7/23 | 1.20% | 0.40% | 1.50% | 1.80% |
| Israel begins operations in Gaza | 10/27/23 | -0.50% | 1.20% | 5.90% | 10.80% |
| Israel strikes Iran nuclear sites | 6/13/25 | -1.10% | 1% | -0.10% | 4.60% |
| Average | -0.50% | 0.70% | 0.50% | 2.20% | |
| Hit ratio | 42.90% | 75.00% | 64.30% | 82.10% | |
| Source: Bloomberg, HSBC | |||||
Kettner cites the most recent examples of the 2025 meltdowns after President Donald Trump on April 2 announced what he called “Liberation Day” tariffs, and the Israeli attacks on Iran, as evidence for the success of adopting a strategy of looking through short-term volatility. He expects something like a repeat of last year’s pattern where Trump made maximalist demands at the outset but then gradually dialled down both the demands and the accompanying rhetoric to reach a compromise.
Not that Kettner and his team are complacent: he warns that U.S. rates and risk assets are close to the “danger zone.” He views the 4.4% level on U.S. 10-year yields
and 5% on the long bond
as crucial support, and were another wave of selling to breach those levels, then prolonged weakness across asset classes might be the outcome.
Kettner, though, does not foresee this. He argues that economic activity in the U.S., the labor market and inflation are “firmly in a Goldilocks backdrop” that should keep the Fed dovish and prevent a repricing of the expectation of another two rate cuts in 2026.
Moreover, Kettner interprets the backwardation in the VIX
futures curve — whereby short-term contracts are more expensive than those further out — as a technical indicator that markets are already oversold. He also maintains that fourth-quarter earnings, given low sequential expectations, have an easy benchmark to exceed, thereby bolstering sentiment toward stocks.
About the Author
Jules Rimmer is a markets reporter in London.Rimmer spent more than 30 years as a trader and stockbroker in financial markets, starting at Salomon Brothers in the Liar’s Poker era, taking in ING Barings, Jefferies and ending it in emerging markets at Investec. He hung up his headset and pivoted to journalism in 2021.
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