There is a fascinating research paper upcoming that looks at the effect of World Cup soccer wins and losses on country stock market indices. In short, the authors document a strong negative stock market reaction to losses by national soccer teams, on the order of 7%. (There is no corresponding effect for soccer wins.) The authors also find a significant but smaller effect for international cricket, rugby, and basketball.
Particularly interesting is that the effect is not priced into the index, even when the loss is highly expected. That is the case, surprisingly, in Western European countries with liquid and highly developed stock markets. Granted, the World Cup doesn’t come along often enough to turn this into a portfolio trading strategy, but you can be sure there will be people watching the odds and shorting futures on country indices over the next few weeks of World Cup play.
As a related aside, there is a good Google Calendar feed here (in ical format) of upcoming World Cup games.