The Interaction Between Stock Prices and Price of Crude Oil

Recently, we have seen many changes and innovations in the financial and commodity markets. Financial markets became more closely linked to commodities as crude oil as investors began to look for new investment opportunities in times of financial market stagnation. The level and dynamics of crude oil price have important social and political consequences. They have an impact on producers' incomes and consumers' purchasing power. The study entailed the cause-and-effect relationship, and dynamic correlation between price of crude oil and prices of selected indexes. This study aims to analyse the relationship between financial markets and price of crude oil. Results shows that indeed, the relationship between crude oil price and financial markets exists. A long-run relationship was spotted in the case of Shanghai composite index price and crude oil price as well as cause and effect of crude oil over indexes. Other than that, the dynamic conditional correlation exists between crude oil and MSCI world, crude oil and SP500 indexes. The recommendation and suggestion for investors are also described within this study.