Recently, Global stock indexes have started to turn positive again. This comes despite ongoing trade wars between the United States and China. Earlier this year, the two sides announced a “phase one” trade deal, but the agreement was never implemented. In addition, China was hit by a coronavirus that spread globally, prompting fears of a global pandemic. In addition, global stock markets have been volatile in many countries, from Venezuela to Thailand.
Regional differences between the major global stock indexes are less important over the course of days or weeks, as larger movers in the global market tend to drown out smaller local factors. However, you can still get a quick read on risk sentiment by tracking one particular stock index. Since major global indexes contain stocks from almost every country and region, they can provide a broader picture of risk appetite than any single country. Listed companies in global stock indexes can also serve as a great resource for identifying which companies are the most volatile.
While currency strength and inflation do not influence global stock indexes, they are important for assessing the performance of individual nations’ stock markets. The indexes of individual nations are negatively correlated with their currency value, meaning that a strong economy’s stock market tends to perform better than a weaker one. However, the correlation between currencies and stock market performance is higher between countries with high-performing economies than those with poorer economic performance. As a result, it’s important to carefully study the performance of global stock indexes as a whole.
The results from this study show that certain global stock indexes have a significant impact on the stock market during an epidemic. While the Dow Jones Industrial Average, for example, suffered a substantial decline during the epidemic, the Chinese Stock Exchange Composite Index experienced a sharp increase in value. In contrast, S&P 500 index and Euronext 100 indexes experienced no significant difference. These findings are promising for future research. These findings will provide guidance to investors and speculators who trade in the global stock markets.