Stock Market Behaviour: What’s up with Wall Street?

I still remember the interview that I watched on TV3’s Ringgit Sense a while back involving our second Finance Minister, Tan Sri Nor Mohamed Yakcop. According to him, speaking of international trade, we are relying less and less on the United States of America. This was when he was questioned about the impact on Malaysia if the US goes into a recession.

However, as we have seen up until today, we are still being affected by what has happened in Wall Street overnight, stock market-wise of course. So, what’s up with that? Generally, if the Dow Jones declines, it will somehow influence the direction of the local market the next day.

Now, based on my limited knowledge, I shall try to explain this peculiar occurrence.

First of all, we need to understand that the stock market is not driven by economic data, or any fundamental data for that matter. This is especially true in the short-term.

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