European vs. US Markets

[expensif]

Ladies and gentlemen, I hope you don't mind giving a newbie some advice.

Are there any correlation between the US indices and the european markets, and in that case how big is the correlation?
What i mean is that, for example, if nasdaq goes up (or down), will the ftse, dax and cac40 i.e. follow the next day?

Are the european markets affected when the U.S. Markets open, and in that case how?


I have studied this for some time, but i wondering if my findings are just coincidents or if it is true.

 

[FetteredChinos]

yes, yes, and er yes..

though the european markets tend to lag the us..

ie the relationship is not linear.

eg after the uk close, the us might move 100 points, but the ftse futures may only budge 20-30 points or so.


either it is due to our natural cynicism in good old blighty, and assuming that the move will partially retrace by the next day's open, or that the european markets are made up of slightly more defensive stocks than the Dow (and also a larger number of stocks), which tempers their volatility somewhat.

even so, you cant trade the european markets by the moves in the US. each market has its own foibles, and so you need to trade them in isolation. but it does pay to keep half an eye on the US, just to see if there is a spike on data etc..

FC