Harnessing El Nino in 2023 & Its Impact on ETF World
Nasdaq El Nino, the infamous and recurring weather phenomenon characterized by an abnormal warming of the Pacific Ocean, has long been a topic of interest for meteorologists and scientists. While its impacts on weather patterns and natural disasters are well-documented, El Nino's reach extends beyond meteorology, leaving its mark on the financial world as well.
There is a 60% chance for a transition from ENSO-neutral to El Nino during May-July 2023, and this will rise to about 70% in June-August and 80% between July and September, according to the update, which is based on input from World Meteorological Organization.
El Nino and Stock Market Volatility
El Nino has a multifaceted relationship with the global stock markets. Often, the sectors most affected are energy, agriculture, insurance and commodities. These industries are intrinsically linked to weather conditions, making them susceptible to the changes that El Nino brings.
A study examining data from the El Nino events between 1980 and 2021 reveals a pattern of volatility in the stock markets during these periods. When an El Nino event is declared, sectors like agriculture and energy typically experience increased volatility due to the unpredictable weather patterns that impact crop production and energy consumption.
