Modeling the Dynamics of the EU Stock Indices Based on the Analysis of Structural Market Data

The last several years were quite challenging for the whole world. People, businesses, and governments must adapt to new realities and find new ways to survive. The shock of the world pandemic brought uncertainty to quotidian life, then the Russian-Ukrainian war forced people to accept new obstacles. Meanwhile, governments must look for paths to keep calm, not only nations but also make everything possible to keep low economic indicators such as interest rate, inflation, unemployment, etc. within all these periods. In this study, the statistical importance of dependence of earlier mentioned and statistical metrics including exchange rate, current account, inflow and outflow of portfolio investment on the price of the stock indexes of Germany, France, Italy, and Greece is examined. These EU countries have been strategically selected due to their pivotal roles in the European economic landscape, coupled with their acute susceptibility to instability-triggered fluctuations. For instance, the resonance of social mass protests in France, and the intricate interplay of national debt increasing in Italy and Greece, make them particularly interesting cases for this analysis. By examining the interplay between economic indicators and stock index movements in these nations, this study sheds light on the relationship between macroeconomic variables and financial market performance. Through rigorous statistical analysis, the aim of this research is to uncover potential patterns and dependencies that might offer valuable insights into the ways in which economic dynamics interact with stock market trends in times of upheaval. Ultimately, this research aspires to contribute to a deeper understanding of the mechanisms underpinning the equilibrium between economic fundamentals and financial market behavior during tumultuous periods.