How Global Events Are Impacting the Australian Stock Market
The performance of the S&P/ASX 200, and more generally the Australian Stock Market, is not exclusively influenced by domestic factors in an increasingly interconnected world. Through every conceivable channel, including trade flows, commodity demand, currency fluctuations, investor sentiment, and capital flows, globally-driven shocks—from changes in monetary policy to geopolitical tensions and pandemics—leak into Australian equity markets. Knowing how world events impact the local market is crucial for both traders and investors. This article explores the major channels of influence, several recent examples, and considerations for participants engaging with Australia’s stock market. 1. Framework: Why global events matter for the Australian stock market Australia’s equity market is not an island. One of the key insights from the Reserve Bank of Australia (RBA) is that Australia’s openness to global capital and trade means that returns on Australian assets tend to move toward global ...