Disruptions in global trade routes: market reactions to the US–Houthi conflict in the consumer cyclical sector

Rizky Yudaruddin, Dadang Lesmana, Yanzil Azizil Yudaruddin, Norliza Che Yahya and Ayesha Anwar

International Journal of Development Issues, 2025, vol. 24, issue 3, 315-336

Abstract: PurposeThis study aims to investigate the market reaction in the cyclical consumer sector to the US–Houthi conflict. Furthermore, the authors explore the impact of this conflict on market reactions by market and region.Design/methodology/approachUsing an event study methodology, this paper analyze a sample of 1,973 companies. This paper used multiple event windows, including a 15-day period before the invasion announcement as the preinvasion event and a 15-day period after the invasion announcement as the postinvasion event.FindingsThe authors find that pre the event of war, the market tended to show a positive reaction, but toward the event day until post event, the market in the consumer cyclical sector actually reacted significantly negatively to the conflict, especially in developed and developing markets. The Asia and Pacific market is the market that feels the most negative impact from the US–Houthi conflict compared to other markets. Furthermore, in terms of industry types in the consumer staples sector, Food and Tobacco and Personal and Household Products and Services felt the negative impact, although the majority of all industries reacted significantly negatively.Originality/valueThis study focuses on the US–Houthi conflict, an event that has not been extensively studied in the context of market reactions. Unlike previous research, this study specifically examines the impact of the conflict on the consumer cyclical sector, emphasizing the significance of trade route disruptions, particularly the Suez Canal, on global markets. By providing insights into how such geopolitical events affect different regions and industries, this study offers valuable guidance for policymakers and managers in mitigating the adverse effects of geopolitical risks on market stability.

Keywords: US–Houthi conflict; Market reaction; Event study; Consumer cyclical sector (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/ijdi/article/24/3/315/1249 ... -trade-routes-market (text/html)
https://www.emerald.com/ijdi/article-pdf/24/3/315/ ... i-09-2024-0244en.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:ijdipp:ijdi-09-2024-0244

DOI: 10.1108/IJDI-09-2024-0244

Access Statistics for this article

International Journal of Development Issues is currently edited by Dr Dilip Dutta

More articles in International Journal of Development Issues from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().