Allianz Endowed Chair of Finance

Doctoral Student Publishes New Paper

How many words do you need to shake up markets? In a recently published paper, Tobias Burggraf and co-authors Toan Huynh and Ralf Fendel found that one tweet or 280 characters from Donald Trump’s Twitter account are enough.

The study investigates the impact of political news on stock price movements. Analyzing more than 3,200 tweets from US President Donald Trump’s Twitter account, the authors find that tweets related to the US-China trade war negatively predict S&P 500 returns and positively predict VIX. Granger causality estimates indicate that the causal relationship is one-directional – from Trump tweets to returns and VIX. Finally, the results vary across industries depending on their degree of trade intensity with China.

The study is a collaboration between the Allianz Endowed Chair of Finance, the Chair of Monetary Economics and the Chair of Behavioral Finance and is a prime example of how research across disciplines can boost creativity and scientific thinking.

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Tobias Burggraf, Ralf Fendel & Toan Luu Duc Huynh (2019): Political news and stock prices: evidence from Trump’s trade war, Applied Economics Letters, DOI: 10.1080/13504851.2019.1690626.