While major financial markets today are considered to be free-floating, dictated almost unconditionally by demand and supply, there exists ample evidence of monetary authorities playing primary roles in swaying market activity. The stand-out economic factor influencing global markets this year has been the bearish trend in oil prices. On the other hand, central banks play their part in market manipulation via monetary policy decisions. Divergent central bank monetary policies yield varying results on their respective markets. Currently, the U.S. looks toward interest rate policy normalization, Europe and Japan advance their quantitative easing (QE) programs, and many emerging markets lower interest rates to stimulate growth.
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