Geopolitical Risk and Investor Sentiment: Analysing the Impacts on FTSE 350 Stocks

Abstract

This study examined how the Russia–Ukraine conflict has affected the financial performance of FTSE 350 manufacturing firms. It focuses on four key areas: supply chain resilience, energy price volatility, currency exchange rate fluctuations and changes in government policy. The conflict has created major disruptions in global markets, leading to higher operational costs, reduced stability and a decline in investor confidence. A review of existing literature provides the conceptual and theoretical grounding for understanding these impacts, particularly through the Resource-Based View, which highlights the importance of firm capabilities in responding to geopolitical uncertainty. The study adopts a positivist approach and uses secondary quantitative data from financial statements covering the years 2021 to 2024. Financial ratios such as debt level, gross profit margin, return on assets and sustainable finance indicators were analysed to measure changes in performance before and during the conflict. A t-test was used to determine whether the observed changes were statistically significant. The results show varied outcomes across firms. Some companies improved profitability and asset utilisation, while others experienced increased debt exposure, lower margins and weaker sustainability scores. Firms heavily dependent on energy or international trade were particularly affected by market volatility and currency movements. The study concludes that geopolitical instability has increased both operational and financial risks for FTSE 350 manufacturing firms. Companies that diversified supply chains, strengthened risk management systems and adopted sustainability-focused strategies were better positioned to manage these challenges. The findings highlight the importance of resilience-building, sustainable finance integration and proactive risk mitigation. Recommendations are provided for firms, policymakers and researchers. Future studies are encouraged to combine quantitative data with qualitative insights to deepen understanding of how companies navigate periods of geopolitical disruption.