Question

How international events impact the stock market
Please give me at least two examples

Answer 1

Any events that impacts the economy impacts the stock market. The value of stocks can be affected by a variety of reasons. It can be highly volatile due to complex reasons. Some of the factors directly impact the stock market and some other indirectly. For eg:

• In the aftermath of the 2001 Sept 11 terrorist attacks, the world has become cautious due to fear. Global investors started pulling out many of their investments due to the volatility and traders started looking for shorting opportunities. As a result, the indices crashed a bit. World events such as war, terrorism, civil unrest, etc can seriously impact the value.It can be termed as an direct impact.
• When Coronavirus impacted the globe as a pandemic, without any skips, the whole world markets crashed heavily due to the fear of the virus and the imposition of lockdowns across countries. It took more than a month to recover from the steep fall and it still seems volatile due to the rising cases of Coronavirus across the globe.
• When there is a major political change happening a P5 country like United States, there will be impact in the economies worldwide as US Dollar is an internationally accepted medium for exchange and any impact Dollar has will have wide impacts on the whole world. Exchange rates will fall and debt will be restructured and trade will get affected.
• When Brexit vote happened and subsequently resignation of David Cameron happened, markets plunged worldwide due to the uncertainty that followed about the future of UK..

Likewise, every news that has a value globally will impact stock markets as stock markets are a leading indicator of economy.