What We're Reading

How soccer affects the stock market

Brad Plumer reports that soccer is so popular it is able to bring financial markets to a halt, it seems. A new paper from the European Central Bank finds that during the 2010 World Cup, the number of stock trades plunged an average of 45 percent in countries whose teams were playing at the time. (A goal caused a further 5 percent drop.)

“We conclude,” write Michael Ehrmann and David-Jan Jansen, “that stock markets were following developments on the soccer pitch rather than in the trading pit."

Activity in Chile fell 83 percent when its own team was playing, while trading in Argentina dropped 40 percent even when other teams were in action. Even the USA saw a 40 percent drop during its own games.

Plumer notes that a few Democrats in the U.S. and countries like France and Germany have proposed a financial transaction tax to, in part, tamp down on market volatility. But if that doesn’t pan out, there's always the option of simply holding more World Cups.

Read the whole story at The Wall Street Journal »

Next story loading loading..