The Research On The Impact From International Commodity Futures' Price Fluctuations To China's Stock Market

With China's accession to the World Trade Organization and the rapid economic development, China's economy becomes increasingly dependent on the outside. The volatile price of international commodity futures is bound to bring substantial impact on china's economy, and the stock market as barometer of China's economy will be subject to international commodity futures price fluctuations. China's stock market is bound to have some association with the international commodity futures markets.Therefore, researching on the relationships between the international commodity futures market and China's stock market has important theoretical and practical significance.This paper analyzes the impact of the international commodity futures price index'changes on shanghai security composite index and upstream and downstream industry sector respectively. We study the relationship between the international commodity futures markets and the U.S. stock market as a comparative analysis to China. The author describes the transmission mechanism between the international commodity futures markets and the China's stock market. Conduction mechanism will be separated into two transmission paths, one transmission path based on the real economy and the other based on financial analysis. In order to compare with China, we also study the U.S. stock market. At last, we study the influence of the international commodity futures prices on the upstream and downstream resource sectors.The international commodity markets will affect China's price level, but this effect is less significant and slower compared to the United States based on the real economy transmission path. Price level rising has a positive impact on the China's stock market in the short term, but long-term is negative. There is a long-term positive cointegration relationship between China's stock market and commodities futures markets, while a negative long-term cointegration relationship in the USA based on financial pathway. Commodity futures prices rising has a positive impact on the upstream resource sector,while negative impact on the downstream resource sector. The impact on the upstream sector is greater than the impact on the downstream sector. At last, the author provides some suggestions based on the conclusions.