Global events such as economic, political and social developments are fast felt in US financial markets. Investors and policymakers can understand this influence when they make decisions while navigating the volatile environment.
This paper is going to discuss how global events impact the US financial market with a focus on the stock market, currency exchange rates and foreign investments. Such slowdowns in big economies such as the USA or China result in worldwide impacts. For example, during the 2008 economic disaster which began with Lehman Brothers collapsing, India’s markets tripped downwardly.
Impact on Sensex
The Sensex (the Bombay Stock Exchange benchmark index) sank steeply following a negative outlook by investors. Weak economic conditions reduce demand for Indian exports thus eroding firms’ revenues and stock prices. Major global interest rates are controlled mostly by central banks including the US Federal Reserve. When interest rate increases by the Fed, it makes the dollar strong since investors will be looking for higher returns. Consequently, a lower attraction of Indian assets causes capital outflows from the country’s markets.
This leads to the depreciation of the Indian rupee hence making imports expensive and affecting inflation. Political happenings such as polls in key global economies can have momentous consequences. For example, when a new US president is elected many times trade policies and diplomatic relationships change.
Impact on Export Industry
New administrations that go for protectionism may be harmful to Indian exports. Conversely, the policies that promote free trade are favourable to the Indian industry. Country clashes such as the US-China trade war disrupt world supply chains and trade levels. During this time of war, Indian markets experienced volatility because of uncertainties in global trading dynamics.
In most cases, investors take a step back from risks and emerging markets like India sell off. Trade treaties between nations could have significant implications for the Indian financial markets. The signing of a regional comprehensive economic partnership (RCEP) by several Asia-Pacific nations excluding India raised concerns about India’s competitiveness in the region for example.
Impact on Global Trade
Whether there are deals with or without India, investor sentiment will be affected thus determining the level of trade; hence stock prices and market performance will also be impacted eventually. Global trade flows can be disturbed by the imposition of tariffs and trade barriers by major economies. For instance, when the US imposed tariffs on Chinese goods, it resulted in global trade shifts that affected Indian exporters and importers.
Thus, higher tariffs will lead to increased costs for Indian companies reliant on imported goods, thus undermining their profitability and stock performance. India’s economy and financial markets are sensitive to changes in world oil prices because the country depends heavily on oil imports. This leads to an increase in import cost if there is any rise in oil price resulting in higher inflation hence impacting its current account deficit.
Impact on Value of Currency
In this eventuality, the Indian rupee is often devalued vis-Ã -vis major currencies such as the dollar. Contrarily falling oil prices may drive down import costs, reduce inflationary pressures and boost market sentiment. India is one of the largest consumers of gold across the globe. Indian economy as well as financial markets can be impacted by fluctuations in global gold prices; whereby rising gold prices raise import costs which hurts both the trade balance and all so depreciation rupee value.
Other commodities like agricultural products or metals are important too; affecting related sectors’ stocks whenever their prices change due to various dynamics of global supply and demand concerning these commodities. The Covid-19 pandemic, as an instance of a worldwide incident, has hit Indian financial markets. It triggered lockdowns that disrupted businesses and led to economic contractions globally. In March 2020, the Sensex fell by over 30% causing a severe decline in the Indian stock markets. However, stimulus packages and later vaccine rollouts helped markets recover.
Furthermore, global social movements such as Black Lives Matter protests in America can affect markets indirectly. Such movements may result in policy changes impacting corporate practices and investor sentiments. For example, firms that focus on social responsibility could see positive investor interest which would influence their stock prices.
Impact on Industrial and Technology Market
This is especially applicable when it comes to certain technological breakthroughs being made in industrialized nations which may have ripple effects on the Indian market. There is an increase in foreign direct investment into India’s information technology, pharmaceuticals and renewable energy sectors due to innovation. Specifically, advances in digital payments technology have bolstered investor confidence in Indian fintech companies.
Cybersecurity threats that are realized specifically in a country’s major economic partners can similarly affect the global economy systems. The global companies including India-based companies might end up facing higher compliance costs due to large-scale data breaches / cyber-attacks. They, in turn, are followed by fluctuations in the market as investors adjust their expectations with regard to risk. 

Impact on Economy and Supply chain
With a developing and growing economy, the supply chain from any part of the world is capable of disrupting Indian markets in the future, as any natural disaster can always occur anywhere. Examples of such factors are hurricanes experienced in the US or typhoons prevalent in South East Asia which may cause an interruption in the production and supply of different goods, which influences their price and accessibility in India. Holders of such stock may experience that its price is affected by such disruptions, should their companies rely on an international supply chain. 

International climate treaties like the Paris accord, force countries to go green. These policies pertain to central issues that affect countries especially those which form an elastic part of the world economy including India; the energy sector, automotive as well as manufacturing industries. Investment in sustainability might be beneficial in the sense that firms implementing sustainable activities might be able to attract more foreign investment thus affecting their market performance.
For instance, an optimistic view on the global economy’s improvement may improve investment moods thus encouraging investors to invest more in Indian markets. On the other hand, distraught regarding the global recession induces panic selling thus affecting the markets. 
Another cause of changes in markets can be actual speculation tied to global occurrences.
Traders seem to use prospect theory to make choices regarding the potential results of events in, for instance, central banking, trade, or geopolitics among others. Abstract activities may contribute to the necessary short-term market fluctuations in India in relation to the mentioned stocks and their aggregated trading amounts. 
The turmoil in one region’s financial markets can domino and affect other regions of the world because of what is known as the contagion effect.
Conclusion
There are many examples including the Asian financial crisis 1997 and the global financial crisis 2008. These crises forced capital flight from the EMs of which India is one, and they witnessed steep declines in stock prices, as well as the currency. Through the hockey stick graph, it was pointed out that the worldwide financial systems are linked, which implies that any disturbance may cause panic selling in the affected world region. Global events affect India’s financial markets in several aspects concerning share prices, foreign exchange, and international investment systems.
Many factors that approach the economic fruit have an influential say in market trends such as; slow economic growth, fluctuating interest rates, changed political situations, societal trends, advancement in technology, perceived environmental issues and market sentiments respectively. This knowledge assists investors and policymakers in managing the existing influences and fostering stability in the financial markets. With globalization, special focus needs to be paid to global events and their impact on the Indian markets.
