DOI: 10.21637/GT.2012.00.01.

World Events Impact the German Stock Market: DAX Analysis January 2000 to October 2009

BENSCH, Tino – JÄGER, Clemens – JÄGER, Tina

Actual stock market developments can be explained by looking at headlines, topics and omnipresent kinds of daily information to comprehend their relationship. Objective of this paper is to analyze the major market movements of the DAX from 2000 to 2009 regarding to news events impacts. The New Institutional Economics only offers a certain explication to some extent. Human rational behavior of the concept of the Homo Economicus cannot be completely transferred to reality. The theory of Behavioral Finance offers a closer approach of a more realistic explanation of irrational behavior on stock markets. Impacts on the financial markets are related with macroeconomic information, non-economic news and market anomalies. Macroeconomic information and activities have dissimilar influences on the stock market. Non-economic news also affects the stock markets in an uncertain way. The analysis of the DAX containing data from 2000 to 2009 30 major daily changes of the DAX become evident. 57 percent of these movements are clearly related to specific events or news, whereas 43 percent cannot be explained by specific news events. The time period is mainly affected by two major events in the recent years: the 9/11 in 2001 and the subprime crisis in 2008. A research of news and popular headlines does not seem to be representative.

KEYWORDS: stock market, DAX analysis, behavioral finance

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