Global economies are a little like housemates—what one does tends to impact everyone else. Australia may be geographically isolated but our share market is deeply connected to what’s happening overseas. Many ASX-listed companies operate internationally or rely on global supply chains. That means when the US raises interest rates or China signals a slowdown, local stocks are likely to react.
“It partly comes down to interconnectedness and size,” says CommSec market analyst Steven Daghlian. “The Australian share market is tiny compared with the likes of the US or China and news travels fast. Global events, especially from economic superpowers, can impact our investor sentiment, supply chains, commodity prices and even our currency.” It’s not just deliberate moves, either. Events like wars or pandemics tend to hit with little warning and when they do, markets around the world—including ours—feel it.
“As a general rule, the bigger the economy, the more attention it deserves. That’s especially true for the US and China.” - Steven Daghlian, CommSec market analyst
The effects of real-world events
Even seemingly faraway events can impact the value of your portfolio. Let’s rewind to a few big examples. When Russia invaded Ukraine in 2022, global oil prices surged, pushing up costs for everything from air travel to household power bills. COVID-19 was another stark reminder of overseas impacts—shuttered factories in Asia meant shortages everywhere from industrial equipment to retail shelves.
More recently, Aussie stocks tumbled after the US announced sweeping new tariffs in early 2025. “The US-China trade war caused big swings in local sectors,” says Daghlian. “Gold prices hit record highs, lifting gold producers here. But some manufacturers, like appliance makers and medical suppliers with ties to tariff-affected countries, saw their share prices fall. On the flipside, companies with US-based operations like BlueScope steel were lifted by the same news.”
