How are stock markets across the globe interrelated ?
Well, before we begin. Like the idea so I will have the will to update this idea regularly. '
The stock markets world over are related in one way or another, though cannot be said to be perfectly correlated with each other but have rub-off effects. Sometimes it leads to contagion effects across markets.
Let us see of the major reasons:
1. Most of the world economies depend one on another. US being the largest economy in the world, has most of the economies depend on its economy, in some way or another. Either, they export or import from US. Likewise, China has emerged as the largest trading nation on the world. China exports to major economies, likewise imports commodties and raw materials from large commodity based economies.
2. Currencies link world markets. USD being dominant currency in the world has another influence on the world markets. The dollar movements has profound influence on other markets.
3. Some of the companies are listed in more than one regional market. Say Toyoto. It is listed in Tokyo stock exchange. It is also listed in US stock exchange. So any price movement affecting the company, will have impact in all the dealings related to the stock in different markets.
4. Similar companies in the same industry can get simultaneously rerated or derated in different markets. Suppose investors in one country, value a particular company say Evergrande in one country at a particular multiple and rerated as a industry denominator, such valuations will have rub off effects across similar companies in the same industry across markets.
These are some of the reasons, by no means exhaustive, only suggestive that cause movements in correlated manner across various stock markets all over the world. As a result of this interrelation across the global markets I strongly believe FTSE 100 to follow the footsteps of US market, probably falling less, because it went up less since March crash compared to major US indexes.
Please keep in mind these are not financial advice by any means.
The stock markets world over are related in one way or another, though cannot be said to be perfectly correlated with each other but have rub-off effects. Sometimes it leads to contagion effects across markets.
Let us see of the major reasons:
1. Most of the world economies depend one on another. US being the largest economy in the world, has most of the economies depend on its economy, in some way or another. Either, they export or import from US. Likewise, China has emerged as the largest trading nation on the world. China exports to major economies, likewise imports commodties and raw materials from large commodity based economies.
2. Currencies link world markets. USD being dominant currency in the world has another influence on the world markets. The dollar movements has profound influence on other markets.
3. Some of the companies are listed in more than one regional market. Say Toyoto. It is listed in Tokyo stock exchange. It is also listed in US stock exchange. So any price movement affecting the company, will have impact in all the dealings related to the stock in different markets.
4. Similar companies in the same industry can get simultaneously rerated or derated in different markets. Suppose investors in one country, value a particular company say Evergrande in one country at a particular multiple and rerated as a industry denominator, such valuations will have rub off effects across similar companies in the same industry across markets.
These are some of the reasons, by no means exhaustive, only suggestive that cause movements in correlated manner across various stock markets all over the world. As a result of this interrelation across the global markets I strongly believe FTSE 100 to follow the footsteps of US market, probably falling less, because it went up less since March crash compared to major US indexes.
Please keep in mind these are not financial advice by any means.
Trade active:
In the name of god let's see how it goes
Comment:
Potential target 7000. Can we be wrong of course .
Trade closed manually:
We got an unexpected bounce . I'm out with break even. We need to wait for some time until getting to shorts again
