The World Cup stock market effect: Is it an actual thing?
- Robin Powell
- 3 days ago
- 8 min read
The World Cup stock market effect, the idea that football's biggest tournament reaches into share prices, has been a fixture of the financial pages for years. The attention shock is real and enormous. But a new working paper suggests the market response is far smaller than the headlines claim, and that some of it was never there to begin with.
On 26 June 2014, the United States played Germany in the World Cup, and on the trading floors of New York and Chicago the people paid to watch the markets stopped watching them. Anthony Grisanti, an energy trader at the New York Mercantile Exchange, told CNBC's 'Futures Now' that the market had gone still as the game kicked off, and that the machines themselves seemed to have joined in: 'Maybe even the computers were watching.' In Chicago, Jim Iuorio of TJM Institutional Services said the whole floor was ignoring the markets. The cattle pit, he reported, broke into its own game at half-time, until he could not tell whether the cheering around him was for that or for the match on the screens. Crude oil closed the day 66 cents lower, in a session almost no one was following.
That the tournament hoovers up attention is not in dispute. Whether that attention reaches into prices is the harder question. Daniel Gatto, in a working paper released this year, measured the shock through Wikipedia. Page views of the tournament's main articles ran at 5.7 times their off-tournament level in 2018 and 8.0 times in 2022. In the hour of the 2022 final, views of the Lionel Messi article jumped from 1,984 to 7,582. Across ten matches he reconstructed minute by minute, the kick-off hour spike averaged 3.4 times the pre-match baseline. The 2026 tournament, the first played across US time zones, drops kick-offs squarely into US market hours. If there is a World Cup stock market effect, this is the moment it should appear.
What the original World Cup stock market effect studies found
The idea of a World Cup stock market effect did not come from nowhere. It rests on a body of respected, much-cited work.
The clearest result concerns trading itself. In a 2017 paper in the Journal of Money, Credit and Banking, originally circulated as a European Central Bank working paper, Michael Ehrmann and David-Jan Jansen looked at 15 national markets during the 2010 and 2014 World Cups. When a country's own team was playing, activity on its home exchange dropped sharply: trading volumes fell by as much as 48 per cent. Prices on the local market briefly drifted away from what global markets were doing. Trading followed the ball.
A second, separate finding is about mood rather than attention. In 'Sports Sentiment and Stock Returns', published in the Journal of Finance in 2007, Alex Edmans, Diego García and Øyvind Norli found that a country's stock market tended to fall the day after its team was knocked out. Across 39 nations, a World Cup elimination defeat was followed by a next-day decline of around half a percentage point, or 49 basis points, in the losing country's index. Defeats moved markets; wins barely registered. These are real results, arrived at carefully and published in serious places. The question a new paper raises is not whether they happened, but how far they reach.
What happened in the markets that hold the money
Gatto went looking for the World Cup stock market effect in the venues where most of the world's money changes hands, minute by minute, and largely failed to find it. His working paper, not yet peer-reviewed, examines one-minute data on 11 instruments across five kinds of market: crypto spot and perpetual contracts, equity, commodity and currency futures, and cash equities, centred on the 2018 and 2022 tournaments.
During matches, trading volume barely moved. Pooled across all 11 instruments it was 2.3 per cent higher, not lower; crypto spot was 2.7 per cent lower. None of it was statistically significant, and the figures did not even point consistently in the same direction. Liquidity was just as unbothered: across 2.2 million instrument-minutes of bid and ask data, quoted spreads shifted by 0.2 per cent, comfortably within the range of noise.
These are not the weak rejections of an underpowered test. Gatto's nulls are tight. His equivalence tests rule out anything as large as a 30 per cent drop in every market group; in the deepest venue, crypto spot, he can exclude declines beyond about nine per cent. To check the test could see an effect if one were there, he injected an artificial decline of the size the original studies report, 30 to 45 per cent, and recovered it with essentially full power. The day-after loser effect fares no better when tested broadly: across 20 national indices, the return after a team's own defeat averaged half a basis point, with a p-value of 0.96, which is statistical language for nothing at all.
There is an honest limit here, and Gatto states it plainly. The original studies measured trading by local investors on their own national cash exchange, and that exact minute-by-minute figure is one thing his data cannot reach, because free foreign intraday data do not exist. He bounds the original effect rather than overturning it. 'We do not overturn the distraction effect in its own setting', he writes. The fair summary is not that the effect has been debunked, but that it does not travel to the markets that now carry most of the trading.
How a non-effect gets measured into existence
The most useful part of the paper has nothing to do with football. It shows how the headline effect can be conjured out of nothing by two perfectly ordinary ways of counting.
The first is a problem of what is open. A natural way to measure distraction is to watch how closely different markets move together and see whether that loosens during matches. It does: a standard co-movement measure falls during match windows, exactly as the theory predicts. But hold fixed which instruments are trading at the time, and the fall disappears. The decline was never about traders looking away. It was about which markets happened to be open when the whistle blew. Gatto ran a simulation with no real effect built into it, and it produced a significant 'decline' every single time, in all 400 runs.
The second is a problem of what gets counted. In US cash equities, trading during regular hours was 5.9 per cent lower during matches, which sounds like distraction until you notice it is not statistically significant. Fold in the thin pre-market and after-hours sessions and the number flips to a 19 per cent rise — positive, where distraction should push the other way — driven entirely by which sleepy trading sessions got swept into the sample.
The everyday version of this is judging that a high street has gone quiet by comparing a Tuesday-morning headcount with a Saturday-afternoon one. The footfall has not changed. The moment you chose to count it has. An event-study finding, in other words, can be an artefact of when and what you measure rather than anything happening in the world. It is the same reason apparently reliable calendar signals like the January barometer fall apart on closer inspection.
The same pattern, beyond football
The World Cup stock market effect turns out to be a clean example of a more general rule: a distraction can move attention and trading without leaving a mark on prices in deep markets. The pattern shows up well away from sport. In a 2022 study in the Review of Accounting Studies, Doron Israeli, Ron Kasznik and Suhas Sridharan found that unexpected bursts of national news reduced retail investors' attention to company earnings announcements and dampened their trading, but left no observable trace on prices, and affected ordinary investors rather than institutions.
There is a deeper reason not to get excited even when a real edge does turn up. Effects that look genuine on paper tend to wear away once they are published and other people start trading on them. R. David McLean and Jeffrey Pontiff, writing in the Journal of Finance in 2016, tracked 97 documented stock-market predictors and found their returns were 26 per cent lower out of sample and 58 per cent lower after publication. The act of discovering an anomaly is part of what kills it.
Not everyone reads the evidence as bleakly. Theis Jensen, Bryan Kelly and Lasse Pedersen (the last affiliated with the quant firm AQR) argued in 2023, also in the Journal of Finance, that the majority of asset-pricing factors do replicate across a sample spanning 93 countries. The decay is real; how severe it is remains contested. What is not in much doubt is the practical wall at the end of it. Net of trading costs, even the strategies that feel most like a sure thing, buying every dip among them, tend to leave the average retail investor with close to nothing.
An unlikely route to a familiar place
So the deep markets shrug. The one group that reliably does not is the group being encouraged to trade on the noise in the first place.
The evidence that active, attention-led retail trading tends to go badly is among the oldest and most consistent in the field. Brad Barber and Terrance Odean, studying 66,465 US households in their 2000 paper 'Trading Is Hazardous to Your Wealth', found that the average household earned 16.4 per cent a year while the market returned 17.9 per cent, and the most active traders earned just 11.4 per cent. In later work they showed that individual investors are reliably net buyers of whatever is grabbing attention. More recently, the Indian regulator SEBI reported that 91 per cent of individual traders in equity derivatives lost money in the year to March 2025, with combined losses of more than a trillion rupees.
A once-in-four-years attention shock, dropped neatly into the trading day, ought to have been the cleanest possible test of the World Cup stock market effect. It turns out to teach the lesson the evidence has taught all along. The final whistle goes. The deep markets, which never looked up, carry on as before. The traders who turned to watch the football turn back to their screens, where nothing much has happened. The one prompt still flashing is on a phone, inviting someone to act on a tournament that, for the markets that hold the money, barely registered.
Resources
Barber, B. M., & Odean, T. (2000). Trading is hazardous to your wealth: The common stock investment performance of individual investors. The Journal of Finance, 55(2), 773–806.
Barber, B. M., & Odean, T. (2008). All that glitters: The effect of attention and news on the buying behavior of individual and institutional investors. The Review of Financial Studies, 21(2), 785–818.
Edmans, A., García, D., & Norli, Ø. (2007). Sports sentiment and stock returns. The Journal of Finance, 62(4), 1967–1998.
Ehrmann, M., & Jansen, D.-J. (2017). The pitch rather than the pit: Investor inattention, trading activity, and FIFA World Cup matches. Journal of Money, Credit and Banking, 49(4), 807–821.
Gatto, D. (2026). The reach of the World Cup distraction effect: Evidence from global trading venues [Working paper]. SSRN No. 6955879.
Israeli, D., Kasznik, R., & Sridharan, S. A. (2022). Unexpected distractions and investor attention to corporate announcements. Review of Accounting Studies, 27, 477–518.
Jensen, T. I., Kelly, B. T., & Pedersen, L. H. (2023). Is there a replication crisis in finance? The Journal of Finance, 78(5), 2465–2518.
McLean, R. D., & Pontiff, J. (2016). Does academic research destroy stock return predictability? The Journal of Finance, 71(1), 5–32.
Investing without the nudges
The discipline this piece points to, keeping your attention off the noise and on a plan you have already decided, is the subject of How to Fund the Life You Want by TEBI editor Robin Powell and Jonathan Hollow. Bloomsbury published the second edition, written for UK investors who want to know what moves long-term outcomes and what is simply something flashing on a screen. Buy it on Amazon.
For readers who would rather have a professional help them tune out the noise, TEBI's Find an Adviser directory lists advisers who have publicly committed to evidence-based investing.
