Evolution of International Stock Market Indices and the Dynamics of Global Financial Market Volatility

Abstract

This paper examines the evolution of major international stock market indices and the dynamics of global financial-market volatility across distinct macro-financial regimes. Using monthly time series for representative equity benchmarks (with a focus on the S&P 500 and the MSCI World) and implied volatility (VIX), the analysis documents along-run upward trend punctuated by sharp regime breaks. The post–global financial crisis expansion (2011–2019) is as sociated with accommodative monetary conditions and compressed risk premia, while the COVID-19 shock triggers an a brupt drawdown followed by a rapid “V-shaped” recovery supported by unprecedented fiscal–monetary intervention. A second regime shift emerges in 2022, when geopolitical turmoil, the energy shock, and aggressive policy-rate hikes raise discount rates and equity risk premia, translating into a market correction and elevated implied volatility. The 2023–2026interval illustrates renewed equity resilience amid persistent geopolitical risks, tariffs-related uncertainty, and renewed volatility pressures. The findings highlight that volatility is not merely a by-product of returns, but a regime-dependent state variable shaped by monetary policy, geopolitical risk, and global risk appetite, with direct implications for diversification, hedging, and risk management. CZU: 336.761.5; JEL: G12, G15, C32