In this empirical project I will try to explain the relationship between the olive oil prices, platinum prices and stock market in the United Point out using yearly time series data. Considering that the gold and oil prices are increasing their effect on currency markets is also increasing and we will observe how fluctuations in oil prices and rare metal prices impact the stock market in the United States. So here oil prices and platinum prices will be our informative variable and stock market index will be our explained variable. In this study we uses multiple regression analysis to describe the relationship. The information is collected from years 1961 to 2010 therefore the sample size is 50. The explanatory varying gold is at average all of us dollars every ounce and crude oil is at average all of us dollars per barrel both are on every year basis and are nominal. The data is collected from the internet site inflationdata. com. (Source: -http://www.fintrend.com/charts/gold-vs-oil-chart/). The explained variable stock market is symbolized by the SNP 500 because it is one of the most commonly used benchmark to get overall ALL OF US stock market. I've taken yearly returns are taken from season 1961 to 2010. (Source: - http://www.financeandinvestments.blogspot.com/2011/05/historical-annual-returns-for-s-500.html). The style used for multiple regression evaluation is of the form Y sama dengan 0+ 1X1+ 2X2+ u Here Sumado a = stock exchange annual results in percentage, X1 sama dengan crude oil rates in us dollars every barrel, X2= gold prices in all of us dollars per ounce The normal and Poor's 500 can be an index that contains 500 significant companies of the US and is one of the most frequently used benchmarks pertaining to the overall U. S. currency markets. It is better than Dow Jones Industrial Average mainly because DJIA simply contains 35 companies thus SNP five-hundred can better represent the complete US stock market. I chose gold because precious metal is considered as the universal commodity and an investment application. Gold is a global currency and hedge against inflation and other foreign currencies because it is a stable commodity so it has a direct impact on the performance in the stock market. The relationship between gold prices and stock market is usually expected to stay positive which means since gold rates increase the share prices are required to be boost as well. Oil is also an issue that affect the stock market and analyst firmly believe that there is a direct romance between the price of essential oil and currency markets. The relationship between oil and stock rates is acknowledged to be a bad which means that when oil prices go down the stock prices are expected to go up. However there is no right and wrong answer that just how oil and gold prices affect the wall street game but majority of analysts around the globe agree that price of gold and oil has a direct influence on stock market. LITERARY WORKS REVIEW
A tremendous amount of literature exists that displays the relationship among stock market returns and other macroeconomic variables. In the 1970s Famma executed survey around the behavior of stock market results and his Famma theory of efficient market hypothesis suggest that stock market are just efficient whenever they reflect the true fundamental macroeconomic behavior. Within study performed by Poterba and Summers in 1988 they showed that the US inventory returns have got a mean reverting tendency and so they can be predicted to some extent. Based upon these future studies we are able to say that effective market speculation holds in the US market and strong human relationships between stock exchange and genuine economic factors like GDP, inflation, commercial production and employment. Seeing that gold and oil have a strong marriage with inflation so therefore so we can declare the fluctuations in the two gold and oil prices have a impact on the stock market. Sectors like digital, rubber, substance, cement, vehicle, food and textile will be influenced simply by changes in the essential oil and platinum...
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Abken, P. A, 1980, " The Economics of Price of gold MovementsвЂќ, Wall Street Journal, Vol
Roberts, C. M and Kaul, G, 1996, " Petrol and Stock MarketsвЂќ, The Journal of Finance, Volume. 2, pp 463-491
Faff, R. T, and Brailsford, J