What is the relationship between the price of crude oil and the European and American stock market
The stock market is a barometer of the national economy, especially for the United states.As the world currency, the appreciation or depreciation of the dollar is the natural choice of the market economy in a certain range, which is determined by the supply and demand of money.
And this speculation will further push up the commodity futures prices, but the high price of crude oil futures will exacerbate the producer concerns and further suppress the U.S. economy, investors are expected to reduce the deterioration of the environment and the economy, reflected in the stock market's stock market fell. The decline in the stock market will further exacerbate the vicious circle, capital fled, pushing up the futures, and ultimately lead to inflation. To avoid this vicious cycle, central banks often have to take action to control the supply of money to avoid excessive fluctuations in currency exchange rates.
When the international oil price rises because of the demand or political factors, the US economy will be in recession due to the high dependence on imported crude oil. In order to protect domestic interests, as a world currency, the dollar can promote exports through devaluation to stimulate domestic economic growth. However, in order to avoid the loss caused by the depreciation of the dollar, professional investors will choose to buy commodities in the futures market, such as crude oil, gold or agricultural products to offset the loss of value caused by the devaluation of the currency.
As a non renewable energy, crude oil is the driving force and foundation for the development of the world economy.
