IMPACT OF MACROECONOMIC FACTORS ON STOCK MARKET INDICES: EMPIRICAL EVIDENCE FROM GERMANY AND MALAYSIA
IMPACT OF MACROECONOMIC FACTORS ON STOCK MARKET INDICES: EMPIRICAL EVIDENCE FROM GERMANY AND MALAYSIA

Summary/Abstract: This study investigates the impact of the exchange rate, Federal Funds rate (FFR), inflation (CPI), industrial production index (IPI), and CBOE market volatility index (VIX)on stock market indices in both a developed and a developing economy. The research provides empirical evidence regarding the relationship between these macroeconomic factors and stock market performance, shedding light on their influence in different economic contexts. Using comprehensive datasets from the selected economies, the study employs econometric techniques such as regression analysis to examine the effects of these factors on stock market indices. Data for the study is obtained from the International Monetary Fund database and investing.com. Data spans from January 2015 to August 2022. The findings suggest that the exchange rate has a statistically significant impact on stock market returns in both countries, while the CBOE market volatility index (VIX) has a statistically significant impact on stock market returns in Germany. The other observed macroeconomic variables did not show a significant impact on stock market returns in the observed countries. The results provide valuable insights for investors, policymakers, and market participants, enabling them to make informed decisions and develop effective risk management strategies.

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