This research would like to study the influence that US has on the global market by proving the global stock and commodity markets are correlated to the Fed's interest rate policy. Meanwhile, hope this research can help investors to evaluate the market trend and make appropriate investment decision.
we look into detail by examining the correlation between the US stock market and different periods of rate hike, rate cut and neutral, respectively. The results are :
(1) In rate hike period, normally, the US stock market performed well. It's the time with economy booming at high growth rate and strong domestic demand that the Fed needs to take action, hiking rate, to cool down the market.
(2) In the rate cut period, the US stock market was not good. That is because the rate cut decision is normally adopted due to slowing down economy, weak domestic demand, and stock market underperformance. Thus, the accumulated performance won't be too exciting during the rate cut period.
(3) In the neutral period, the stock market performed excellently. Especially at the time after Fed's rate cut period, the stock market is booming due to the high liquidity and low interest rate environment, stimulating consumers spending and enterprises investment.
(4) In the rate hike period, the oil price and commodity index (comprised by Reuters by averaging19 different commodity future index) were at the best performance. Besides, it also benefited the energy related share price. However, in the rate cut or neutral period, they were up and down without clear trend.
(5) At the last, we further study the unexpected rate cut will surprise the market in upside.
Given the results of these examinations, it is a good timing to buy when it's approaching the end of rate cut period. If the rate cut is unexpected or the extent is over expectation, investors shouldn't be too pessimistic. Instead, they should believe the government will continuously introduce favorable policy to boost the economy and it is good timing to invest in stock market.
| Identifer | oai:union.ndltd.org:NSYSU/oai:NSYSU:etd-0715108-192019 |
| Date | 15 July 2008 |
| Creators | Yeh, Chao-kun |
| Contributors | Jen-Jsung Huang, David Shyu, Hsioujen Kuo |
| Publisher | NSYSU |
| Source Sets | NSYSU Electronic Thesis and Dissertation Archive |
| Language | Cholon |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.lib.nsysu.edu.tw/ETD-db/ETD-search/view_etd?URN=etd-0715108-192019 |
| Rights | not_available, Copyright information available at source archive |
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