Answer to Question #54464 in Macroeconomics for Kelvin

Question

Share markets all over the world often increase or decrease together. Why do you think it is the case? What does a rise in the stock market indicate to you about the level of current and expected growth in the world economy?

Answer 1

A stock market or equity market is the aggregation of buyers and sellers (a loose network of economic transactions, not a physical facility or discrete entity) of stocks (also called shares); these may include securities listed on a stock exchange as well as those only traded privately.

There is a nearly infinite number of factors that can cause the stock market to move significantly in one direction or another. This can include such things as economic data, geopolitical events and market sentiment, among a myriad of other factors. There is a constant in each of these situations, however. In any stock market move, whether up or down, there is a significant difference between supply and demand.
A rise in the stock market indicates, that level of current and expected growth in the world economy is comparatively high and the economy is expected to grow in the nearest future.