What is the effect of national and international policies and events on the performance of international financial markets?

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readerofbooks | College Teacher | (Level 2) Educator Emeritus

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This is a great question, because it assumes that national and international policies have an effect on international financial markets. 

Let me give you a few examples of policies that have an effect on international financial markets. 

First, last year there was an incredible drop in oil prices. A barrel of oil went from 120 dollars to 45 dollars. That is a staggering drop. The main reason for this is Saudi Arabia refused to cut production. Had they cut production, the price of oil would have stabilized. If they cut a lot of production, the oil markets would rally.  At it stands, the stance of OPEC and Saudi Arabia has made oil cheap. 

Second, central banks around the world have great power as well. If the policy of a country is not to raise interest rates, then stock markets will rally, because there is so much cheap debt. People will continue to borrow, but if interest rates rise, international markets will go down. The bigger the country, the more profound the impact will be. 

In short, countries like America can impact the world in significant ways through policies. Also all of this does not even mention things like war, terrorist attacks, embargoes, and the like. 

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