The Stock Market Reaction to Presidential Tweets in the Case of the US-China Trade War

Inhaltsverzeichnis (Table of Contents)

• 1 Introduction
• 2 Literature review
  • 2.1 Financial markets' reaction to new information
  • 2.2 The impact of macroeconomic announcements on U.S. stock markets
• 3 Event Study
  • 3.1 Event Review - the US-China trade war
    • 3.1.1 Emergence and sources of conflict
    • 3.1.2 Development and imposed tariffs
  • 3.2 Methodology and theoretical framework
    • 3.2.1 Assumptions
    • 3.2.2 Event definition and selection criteria
    • 3.2.3 Event window, post-event window and estimation window
    • 3.2.4 Expected return models and (cumulative) abnormal returns
    • 3.2.5 Null hypothesis and statistical validation
  • 3.3 Data description
• 4 Discussion of results
  • 4.1 Events' impacts on aggregated stock market valuations
  • 4.2 Events' impacts on stock markets on a country level
    • 4.2.3 U.S. American stock market - S&P 500
    • 4.2.4 Chinese stock market – Hang Seng Index
    • 4.2.5 German stock market – DAX
  • 4.3 Overview and conclusion
  • 4.4 Quality of the study and limitations

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This paper analyzes the impact of U.S. President Donald Trump's Twitter activity on international stock markets, specifically during the US-China trade war. By employing the event study methodology, the paper aims to understand how these tweets affect the S&P 500, the Hang Seng Index, and the DAX.

• Impact of political communication on financial markets
• Event study methodology and its application to analyzing stock market reactions
• The role of Twitter in shaping market sentiment and influencing investment decisions
• Comparative analysis of market responses across different countries
• The dynamics of the US-China trade war and its implications for global markets

Zusammenfassung der Kapitel (Chapter Summaries)

The introduction provides an overview of the research question and its relevance in the context of a digitalized world, where the actions of high-ranking officials can have significant implications. Chapter 2 reviews existing literature on financial markets' reaction to new information and the impact of macroeconomic announcements on the U.S. stock market.

Chapter 3 delves into the event study methodology. It describes the context of the US-China trade war, outlining the conflict's origins and the development of imposed tariffs. The chapter then outlines the methodology's theoretical framework, including assumptions, event definition, selection criteria, event windows, and the calculation of abnormal returns. Finally, it presents the data description used in the analysis.

Chapter 4 discusses the findings of the study, analyzing the impact of Trump's tweets on stock market valuations both across markets and on a country level, examining the responses of the S&P 500, the Hang Seng Index, and the DAX.

Schlüsselwörter (Keywords)

This paper focuses on the impact of political communication, particularly through Twitter, on global stock markets, specifically examining the US-China trade war and its implications for the S&P 500, the Hang Seng Index, and the DAX. The research utilizes event study methodology, analyzing market reactions to new information and focusing on concepts like abnormal returns, market sentiment, and the role of social media in shaping investment decisions.