An early exit of the England team from Euro 2016 would wipe £6bn off the stock market in a single day, according to a finance expert.
The European football tournament kicks off with France playing Romania at 9pm local time (8pm BST).
Alex Edmans, a professor of finance at the London Business School, believes the effect of football results on the national mood is so strong that it can spill over into the stock market with impacts measured in billions of pounds.
He said: “My research shows that a loss in a major football competition can have a profoundly negative effect on investor mood. Share prices are affected not only by fundamentals but also by emotions. Sports have huge effects on people’s emotions.”
Edmans and his co-authors, from the University of Colorado and BI Norwegian Business School, investigated the link between 1,100 international football matches and stock returns in 39 countries in a paper entitled Sports Sentiment and Stock Returns.
The results showed that being eliminated from a regional tournament like Euro 2016 led to the national stock market falling by 0.3% the next day.
Edmans said: “When applied to the UK stock market, this translates into a single-day loss of £6bn.”
Guardian sports writers are predicting that Germany, France or Spain could reach the final, with England expected to get as far as the quarter-finals.
There is no evidence, however, that there would be a boost to the London stock market were England to go further than expected. Somewhat surprisingly, the Sports Sentiment paper found no effect of a win in any sport, including cricket, rugby and ice hockey.
Edmans said: “One reason could be that sports fans are notoriously over-optimistic about their team’s prospects. If fans go into each game expecting they’ll win, there’s little effect if they do win, but they become depressed if they lose.
“Another is the asymmetry of the competition. Winning an elimination game merely sends you into the next round, but losing leads to instant exit.”
