Abstract
Orientation: Macroeconomic news announcement poses a risk to stock returns, especially that
of United States (US) on emerging markets because of globalisation.
Research purpose: The purpose was to investigate the impact that US macroeconomic news
announcements have on the Johannesburg Stock Exchange (JSE).
Motivation for the study: Investment in financial markets is volatile. Globalisation means that
greater economies’ macroeconomic news announcements could impact emerging financial
markets. Knowing which announcements have an influence could improve investment
decisions.
Research design, approach and method: This study is qualitative, following secondary data
analysis. Analysis was carried out using volatility modelling, paired with an event study to
add robustness.
Main findings: The generalised autoregressive conditional heteroskedastic (GARCH) models
indicated that US macroeconomic news announcements made in relation to unemployment
were statistically significant, with a negative impact on the JSE. This was supplemented by
the event study in which interest rate announcements that were made in August 2008 (during
the global financial crisis) were found to have a statistically significant impact on the JSE. The
coronavirus disease 2019 (COVID-19) pandemic did not appear to have a statistically
significant impact in the results obtained from the event study.
Practical/managerial implications: Investment industry professionals and policymakers
should consider unemployment announcements from the US to enhance investment decisions
while managing stock market volatility.
Contribution/value-add: The results make a novel contribution towards the findings during
the initial COVID-19 period and generalisability of the method as well as the theoretical
expansion of the theoretical application of globalisation on stock markets.