Unemployment - A Trigger for Stock Market: A ...

Unemployment - A Trigger for Stock Market: A Case Study on Unemployment and Stock Market

Author Name : Mrs. Serah Sudhin

ABSTRACT

The global financial crisis in 2008 and its aftereffects worsened the poor growth of financial markets with decline in market liquidity and capitalization. Earlier political efforts to recover investors’ confidence and stock market growth didn’t yield great outcomes as stock markets failed to recover to their pre-crisis era. This paper is an empirical case study to determine the long-term effects of unemployment on the stock market and correlation between both. This study focuses on the influence of macroeconomic news on the overall economy, including that of unemployment on stock market returns. It is found that unemployment leads to a significant and positive impact on the stock market. The findings further explore the correlation with a belief that unemployment can be the main factor to determine stock market. Hence, policymakers should consider unemployment news seriously for the growth of the stock market.

Keyword – stock market, unemployment, correlation, global financial crisis, investments, macroeconomic news