Impact of Macroeconomic Factors on Stock Exchanges: A Case Study of Emerging and Developed Economies

This study aims to investigate the impact of macroeconomic variables on stock exchanges in developed and emerging countries. For this purpose, macroeconomic variables are GDP growth rate, inflation rate, saving, and Foreign Direct Investment (FDI). Furthermore, the stock market which are under observation were six in total and for which, three were taken from ‘BRICS’ nation such as Brazil, India, and China and remaining three were taken developed nation such as United Kingdom (UK), United States of America (USA), and Germany and cover a period from 2004 to 2014. The findings reveal that GDP growth rate, saving, and foreign direct investment (FDI) has positive and significant impact on performance of stock market whereas, other macro-economic variables like inflation has a negative impact on performance of stock exchanges either it may be the case of emerging or developed economies. According to research and analysis, we recommend that appropriate monetary and fiscal policies should be adopted to control the unpredicted behavior of stock market. Furthermore, regulatory bodies like IMF, World Bank and ministry of finance (MOF) of each country should do its work to lessen down its impact on stock market performance.