Will the chaos in Afghanistan affect the U.S. stock market?

Taliban fighters have taken over the Afghanistan after a stunning blitz across the country that saw them seize most of the country in just over a week. Afghan President Ashraf Ghani has also fled abroad, leaving the government in collapse, while demoralized Afghan security forces offered no resistance. The lightning sweep comes after the U.S. spent nearly 2,500 American lives (and some 150,000 Afghan lives) trying to ensure the territory would not become a terrorist haven while attempting to refashion the nation into a pro-Western democracy.
Backdrop: Towards the end of his presidency, former President Donald Trump announced that U.S. troops would leave Afghanistan by 2021 provided the Taliban met the terms of a peace accord signed the previous year. President Biden went along with the plan, announcing in April that all U.S. forces would leave Afghanistan by Sept. 11, but the news prompted the Taliban to launch an offensive to regain much of the country. That month, the group took control of 73 districts of 421 nationwide, and by August, insurgents controlled 222 and conquered the largest cities and strongholds over the past week.
Quote: “We’ve seen that force [Afghan military] has been unable to defend the country, and that has happened more quickly than we anticipated,” Secretary of State Antony Blinken told CNN’s State of the Union. “This is manifestly not Saigon,” he added. “We went to Afghanistan 20 years ago with one mission, and that mission was to deal with the folks who attacked us on 9/11. And we succeeded in that mission.”
What the markets are feeling: Military conflict or attacks generally don’t have much impact on stocks, and even if they do, the sentiment is usually short-lived. That’s especially the case here, where the war lasted two decades and the pullout was highly publicized. If anything, some are looking at the economic impacts of the long-running conflict, which has cost the U.S. taxpayer an estimated $2.26T.
What to watch next: The U.S. has begun moving personnel from its embassy compound in Afghanistan to the airport in Kabul, where the American “core diplomatic presence” will now be headquartered. Ahead of the departure, the State Department instructed staff at the embassy to eliminate sensitive material, with officials racing to destroy military equipment and hard drives containing classified information. United Airlines (NASDAQ:UAL) has also started rerouting its India flights to avoid Afghanistan airspace, while Emirates has suspended Kabul flights. While many are weighing in over whether America’s longest war was worth it – as well as the pace of the withdrawal or future threats – that debate will continue for some time and maybe one for the history books.

Leave a Reply

Your email address will not be published. Required fields are marked *