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World Cup result 'can hurt' domestic stock market

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Posted: Friday, July 11, 2014 6:21 am | Updated: 9:20 am, Fri Jul 11, 2014.

LONDON (AP) — Argentina and Germany face off in the World Cup final on Sunday and research shows investors in both countries should be alert to potential drops on their stock markets the day after in case of defeat.

With markets driven by psychology as well as economic fundamentals, defeat can depress trading sentiment.

Alex Edmans, a professor at London Business School and Wharton School of the University of Pennsylvania, said defeats in the World Cup have generally resulted in declines greater than the world market.

One exception was Brazil's stock index, which rallied the day after the national team's 7-1 thrashing by Germany in the semifinals. That, said Edmans, can be explained by the fact that the defeat was so bad it increased the chances of change in government in October elections.

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