"Coupling" is the technical term used to describe the closed relationship between two stock markets.
There are people who are curious about why the fall in the United States' stock markets can have adverse effect on other stock markets that open the next day. Why?
We need to understand the economy to explain this phenomenon. If the economy of particular country has closed relationship with the other one, they tend to share the same fate in the stock market. It also depends on how matured the investors of a particular country. Everyone has the choice to buy or sell at a particular time. No one forces you to sell or buy any stocks. There are people who like to refer to other stock markets to make their decisions. These people are usually of more of a trader type than investor type. They don't hold position for a long time. They are even day traders. Those who are familiar with Forex should be very clear about this as Forex trading are traded for a very short term only.
Eventually, all fund managers know that during a bear market, those who sell last will get the worst selling price. That is the reason why stock market falls very quickly whenever there is economy related bad news in an influential country as investors choose to cash out as a safety measure. If the news turns out to be not so threatening, investors can buy back anytime.
In summary, why does a stock market fall? Just to play it safe.
How to play safe in next week's stock market? Monitor in the sideline.
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